U.S. President Donald Trump speaks to members of the media before boarding Marine One on the South Lawn of the White House in Washington, D.C., U.S. (Photographer: Olivier Douliery)

Trump Weighs Action Against Saudis as Khashoggi Denials Continue

(Bloomberg) -- Saudi Arabia is running out of time to explain to the Trump administration what happened to journalist Jamal Khashoggi within its consulate in Turkey.

The administration increasingly regards Saudi Arabia’s denial of any involvement of Khashoggi’s disappearance as untenable, and President Donald Trump and his aides are more and more convinced that the Washington Post writer died after entering the Saudi consulate on Oct. 2 to pick up a document for his wedding, said three U.S. officials who asked not to be identified because of the sensitivity of the matter.

Trump Weighs Action Against Saudis as Khashoggi Denials Continue

Despite increasing pressure from Congress, Trump is reluctant to cancel multimillion-dollar arms sales to Saudi Arabia out of concern the U.S. ally will turn to Russia or China instead. But a range of other punishments are under discussion within the administration, from downgrading diplomatic relations or sanctioning Saudi officials to following major U.S. companies in withdrawing officials from an investment conference in Riyadh later this month.

White House economic adviser Larry Kudlow warned Sunday of “stern action” by Trump if Saudi Arabia is found responsible for Khashoggi’s disappearance. “If the Saudis are involved, if Khashoggi was killed or harmed or whatever bad outcome here, he will take action. That has been his strategy. Believe what he says,” Kudlow said on “Fox News Sunday.”

Critic of Regime

The administration is holding off -- for now -- as the Turks and Saudis jointly investigate what happened to Khashoggi, a Saudi citizen and U.S. resident who wrote critically of Crown Prince Mohammed bin Salman’s regime for the Washington Post. Turkish officials have said they believe he was killed and dismembered in the consulate; the Post and New York Times have reported that a team of Saudi agents flew to Istanbul and left the same day of Khashoggi’s visit.

Trump Weighs Action Against Saudis as Khashoggi Denials Continue

Saudi Arabia’s King Salman bin Abdulaziz spoke on the phone to Turkey’s President Recep Tayyip Erdogan and said no one can undermine the “strong relationship” between the countries, according to a report carried by state-run Saudi Press Agency. Kudlow said on ABC’s “This Week” that he expected Trump would get information about Khashoggi’s fate and take action within the week.

Saudi Arabia, the world’s biggest oil exporter, said on Sunday it would retaliate against any punitive measures with even “stronger ones,” according to a statement carried by the official Saudi Press Agency. In a subtle reference to the kingdom’s oil wealth, the statement noted how the Saudi economy “has an influential and vital role in the global economy.”

$200 Oil

Oil gained above $72 a barrel on rising tensions over Khashoggi’s disappearance, with crude futures in New York climbing as much as 1.9 percent after posting the biggest weekly loss since May.

Turki Al Dakhil, who heads the Saudi state-owned Arabiya news network, wrote in an article that U.S. sanctions against Saudi Arabia could wreak havoc on the global economy by taking oil prices to $200 a barrel and more. Faisal bin Farhan, a senior adviser to the Saudi embassy in Washington, said on Twitter that these comments didn’t represent the Saudi leadership.

“The most powerful weapon Saudi has is oil and its investments,” said Fawaz Gerges, a professor of international relations at the London School of Economics. “ I doubt Saudi will decrease the production of oil to the world economy because it will hurt itself and I doubt that Saudi will withdraw its investments.”

Trump’s Reluctance

Trump has ruled out halting arms sales, telling reporters at the White House on Saturday that the U.S. would be “punishing ourselves” by cutting off billions of dollars of revenue for American military contractors. “There are other things we can do that are very, very powerful, very strong and we’ll do them,” he said, without elaborating.

One U.S. official said options include sanctions against Saudi officials, ejecting some of the kingdom’s diplomats from Washington or otherwise downgrading relations.

Another said Trump’s national security advisers believe they can pressure the Saudis without destroying the diplomatic relationship, which is why they’re waiting for facts to emerge, including the results of the joint Turkish-Saudi probe, before taking action.

Trump Weighs Action Against Saudis as Khashoggi Denials Continue

The Saudi ambassador left Washington last week to return to Riyadh, and one of the officials said he was instructed by Secretary of State Michael Pompeo and National Security Adviser John Bolton to return to the U.S. with answers about Khashoggi’s disappearance.

Trump has said since Friday that he planned to discuss the Khashoggi matter with King Salman bin Abdulaziz, but hasn’t shown much urgency to place the call. He’s also delegated conversations with Prince Mohammed to aides, including Pompeo, Bolton, and his son-in-law Jared Kushner, who has developed a personal relationship with the de facto Saudi ruler.

Close Ties

The president’s reluctance to hew a tougher public line reflects the close ties his administration has forged with Prince Mohammed. The prince has twice visited the president in the Oval Office, most recently in March to kick off a glitzy investment tour of the U.S. that included stops on Wall Street and Hollywood.

Saudi behavior condemned elsewhere in the world has been ignored or tacitly encouraged by the Trump administration, including its involvement in the Yemeni civil war that’s resulted in thousands of civilian deaths, its isolation of Qatar, a diplomatic spat with Canada, and Prince Mohammed’s detention of scores of wealthy Saudis in 2017 as part of a supposed corruption crackdown.

Congressional Pressure

Still, one of the officials said Trump is taking the Khashoggi matter very seriously and is waiting for hard evidence. Trump’s close advisers believe that the Saudis were behind Khashoggi’s disappearance, the official said.

Trump is under mounting pressure from Congress. Several Republicans have said arms sales should be curtailed, and Senator Bob Corker of Tennessee, the Republican chairman of the Foreign Relations Committee, said last week that he had warned the Saudis himself that their relationship with the U.S. risked collapsing.

Trump Weighs Action Against Saudis as Khashoggi Denials Continue

On Sunday, Florida Senator Marco Rubio, another member of the foreign relations panel, said that Trump risked sacrificing the moral high ground with other misbehaving foreign leaders.

“Our moral credibility, our ability to call Putin a murderer because he is, our ability to call Assad a murderer because he is, our ability to confront Maduro in Venezuela or any of these other human rights atrocities like what we see in China, all of that is undermined and compromised if we somehow decide that because an ally who is important did that we’re not going to call it out,” the Republican said on NBC’s “Meet the Press.”

‘Go Pretty Far’

“If this is proven to be true, there is going to be a response from Congress. It’s going to be nearly unanimous. It’s going to be swift. And it’s going to go pretty far,” Rubio added.

Trump Weighs Action Against Saudis as Khashoggi Denials Continue

Prince Mohammed has already suffered symbolic repercussions. U.S. corporations and news organizations including Bloomberg LP, the parent company of Bloomberg News, have backed out of a high-profile investment conference scheduled for next week in Riyadh that has been styled as “Davos in the Desert.”

Jamie Dimon, chief executive officer of JPMorgan Chase & Co., won’t attend the conference, according to a spokesman for the biggest U.S. bank. Ford Motor Co. Chairman Bill Ford canceled a multi-stop trip to the Middle East including a planned appearance at the Future Investment Initiative conference, Reuters reported, citing the company.

Treasury Secretary Steven Mnuchin remains on the agenda for now, drawing concern even from the president’s own party. “I don’t think he should go,” Rubio said on a separate appearance on CNN’s “State of the Union.”

Kudlow said Sunday that Mnuchin’s participation is under evaluation.

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