Early this week, in an interview with 60 Minutes, President Donald Trump remained noncommittal about whether he would impose sanctions on Saudi Arabia as punishment for the alleged killing of Saudi-born Washington Post Journalist Jamal Khashoggi.  The President cited concerns over the economic impact of cancelling arms sales to the Kingdom, and other measures, saying, “From the standpoint of jobs, economic development, a lot of other reasons, I would like to do something where we could maybe look at other things.”

The President’s fears are no doubt informed by the official stance of the Saudi government. According to NPR, late Sunday, Saudi Arabia’s state-run news agency quoted an “official source” as affirming that if the United States were to impose sanctions over the Khashoggi matter, the Gulf kingdom would respond with “greater action.”  The Saudi government seemed to quickly backtrack somewhat on its belligerent rhetoric, posting to their official Twitter account, “. . . the Kingdom of Saudi Arabia extends it appreciation to all, including the US administration, for refraining from jumping to conclusions on the ongoing investigation.”

However, despite any apparent moderation in tone, it remains the case that the if it were so inclined the House of Saud could draw blood in a contest of reciprocal financial sanction.  It is true that Saudi Arabia is far more dependent on the United States than the reverse; thanks to increased supply from South America and booming development domestically, the United States is not as dependent on the Gulf state for oil as it once was.  Nevertheless, the Saudi sovereign Public Investment Fund (PIF) invests heavily in the United States, particularly among the “FAANG stocks” of Silicon Valley and other American tech giants.  The Fund is one of the largest in the world, with over $220 billion in investments globally, and over $50 billion of that in tech giants Tesla ($2 billion); Uber ($3.5 billion); Virgin Group and its space companies ($1 billion); and, SoftBank Group Corp.’s $100 billion technology fund ($45 billion).

Tech stocks have fallen in the past week, following the market as a whole.  One week ago today, tech stocks experienced their worst decline in seven years: Apple down 4.6%; Amazon down 6.15%; and the NYSE FANG+ Index down 17.5% from its June peak, according to The Street.  There has been a slight rebound in the past week, but markets are still volatile.

If they wished to retaliate against a possible US sanctions regime, the Saudis could exacerbate this volatility by withdrawing a significant amount of their PIF funds from US tech companies.

All the evidence the public is privy to shows that Jamal Khashoggi was murdered by a despotic regime who considered him a de facto enemy of the state. The evidence is mostly second hand, as of now, but even if truth of the crime takes on the most diabolical phantoms of our collective imagination, the potential blowback costs of any action on the part of the President warrant a certain prudence.  For now, it appears that the President is so disposed.