Siemens’s CEO Shouldn’t Cancel His Saudi Trip

(Bloomberg Opinion) -- Joe Kaeser, Chief Executive Officer of Siemens AG, is of two minds whether to attend an investment conference in Riyadh, which other large Western companies have decided to skip after the disappearance of a prominent critic of the Saudi royal family, columnist Jamal Khashoggi. I think Kaeser should go ahead with his travel plans, and that Siemens should remain a “strategic partner” of the event.

Kaeser’s dilemma isn’t an easy one. German CEOs generally try to steer clear of politics, but he’s bucked the trend. The head of the country’s second-largest company, he has been a prominent critic of German nationalism: he attacked Alice Weidel, co-leader of the anti-immigrant Alternative for Germany party,  after one of her outbursts about headscarf-wearing Muslim women. “Better ‘headscarf  girls’ than the League of German Girls,’” he wrote on Twitter, referencing the girls’ organization of the Nazi party. “With her nationalism, Ms. Weidel damages our country’s global image.”

It’s logical, then, for Kaeser to see the Khashoggi disappearance and likely murder as damaging to Saudi Arabia’s global reputation—and Siemen’s, by association—and refuse to take part in the Saudi pretense of business as usual. 

On the other hand, as Kaeser has pointed out, “If we skip communicating with countries where people are missing, I can just stay home.” He added: “If I go, I am going to address and speak up in this country because I want my people, the thousands of people who work there, to be able to speak up and speak their mind.”

If Kaeser goes, he will be inevitably criticized for sacrificing his principles for cash. Siemens has around 2,000 employees in Saudi Arabia, working on several contracts. The company claims that a third of Saudi Arabia’s energy is generated using Siemens technology. In 2013, Siemens was awarded a $2 billion contract to build trains, signals and communications equipment for the new Riyadh driverless subway network. It regularly gets massive orders for gas turbines for electric power plants; one of these, for $400 million, came through last year. Just this year, it was hired to modernize a large airfreight terminal in Jeddah. Kaeser has said he expects revenue from the kingdom to reach $5 billion by 2020. 

The nature of the contracts is worth noting. Subways, power plants, air terminals—all this benefits the country and its people first, and the regime only indirectly.

Certain business deals with authoritarian regimes are difficult to justify from an ethical point of view. Arms sales are one example; nations know it’s wrong to supply weapons to  Saudi Arabia, which is waging a bloody war in Yemen, but they’ve had a hard time ending the practice. Last month, before Khashoggi’s disappearance, Spain canceled the delivery of 400 laser-guided bombs to the kingdom, refunding the $10.7 million paid for them, but then backpedaled, saying the contract would be honored. Earlier this year, Germany stopped weapons exports to all sides involved in the Yemen conflict—but in September it, too, approved a shipment of artillery positioning systems for armored vehicles. Saudi Arabia’s biggest arms suppliers, the U.S., the U.K. and France, don’t even try to stop sales. Their ethical problem is greater than Kaeser’s.

It’s also problematic for media organizations to overlook dictatorial regimes’ treatment of journalists and the freedom of expression in general. A number of media companies, including Bloomberg, have pulled out of partnerships with the Saudi investment conference since Khashoggi’s disappearance.

Siemens doesn’t sell weapons to Saudi Arabia, nor does it facilitate the suppression of dissent. It helps build an infrastructure that would benefit people under any government; people in all countries, dictatorships and democracies alike, need and deserve it. A contribution from Western companies builds trust for the countries in which the firms are based. It builds non-political goodwill that transcends regimes. 

The Saudi government hasn’t hesitated to apply political pressure on German businesses because of political disagreements with Chancellor Angela Merkel’s government; the weekly Der Spiegel reported in May that German companies had been shut out of Saudi government procurement contracts because of a diplomatic spat between the two countries. (Those difficulties are presumably gone now since the conflict has been resolved.) That’s how authoritarian states operate.

In the West, governments, businesses and society can be smarter about judging what kind of cooperation with such regimes is possible, and advisable. Cutting off all cooperation can only end up helping these regimes perpetuate the image of a Western enemy. Western businesses undermine that image wherever their operations benefit locals. 

I think the red line should be participating in projects that directly prop up a noxious regime. Siemens stops short of that in Saudi Arabia, and its participation in the now discredited conference would not be a sign of support for the Saudi government. Rather, it would be an effort to represent Germany’s peaceful business with dignity; if Kaeser goes, he’ll need to keep his promise to speak up, and commit to protect Siemens employees if they do, too. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is a Bloomberg Opinion columnist covering European politics and business. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

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