Saudi Arabia’s Soft Power Play

Here is today’s Foreign Policy brief: Saudi Arabia’s sovereign wealth fund completes purchase of Newcastle United, the Nobel Peace Prize goes to journalists Maria Ressa and Dmitry Muratov, and German Christian Democratic Union leader Armin Laschet signals his impending resignation.

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Money can’t buy you love, but it can change the subject. Saudi Arabia is aiming for the former but will settle for the latter in its purchase of Newcastle United, an English club in the world’s most popular soccer league.

The deal for Saudi Arabia’s sovereign wealth fund—called the Public Investment Fund (PIF)—to take over the club was delayed last year over a dispute surrounding the kingdom’s tacit support for a pirate sports broadcaster, beoutQ, a play on beIN, the Qatari channel it sought to undercut. Once that issue was resolved on Tuesday, the sale was finalized within 24 hours as protests from human rights groups as well as direct appeals from Hatice Cengiz, the fiancée of murdered journalist Jamal Khashoggi, ultimately went unheard.

The move is part of recent high-profile Saudi investments in entertainment properties. In the past year, the fund has invested more than $1.3 billion in Disney, concert promoter Live Nation, and even the beleaguered Carnival Cruise Line.

What differentiates those businesses from Newcastle United is they have a track record of actually making money. Newcastle, guided until now by spendthrift owner Mike Ashley, made a loss of $35 million in 2020. Before the pandemic, the balance sheet was not much better; the $47 million profit it made in 2019 would barely register on the books of the estimated $500 billion Saudi fund.

Even if it doesn’t make business sense, there’s a bigger game afoot. “They’re using the soft power of football, which has a worldwide appeal, to try and change the narrative about Saudi Arabia,” Kristian Ulrichsen, an expert in Gulf state politics at Rice University’s Baker Institute for Public Policy, told Foreign Policy. “People are talking about the country now for something that isn’t about Yemen or about Khashoggi or human rights.”

The kingdom is playing catch-up with its rival Qatar, which has owned the fashionable Paris Saint-Germain soccer club for the past nine years, helping fund purchases of global megastars like Argentine soccer player Lionel Messi as it seeks to build a global brand.

Judging by the thousands of fans who celebrated the takeover in Newcastle on Thursday night, the Saudi investment may already be paying off. Fans on social media have already begun goading others by comparing the size of Saudi Arabia’s wealth fund to that of Abu Dhabi royal Mansour bin Zayed Al Nahyan, whose investment group owns Manchester City, an English club he acquired from former Thai Prime Minister Thaksin Shinawatra in 2008. In a sport where money buys success, the source of the funds appears less of a concern.

The move also allows Saudi Arabia to gain leverage with the British government, which has faced public pressure over its arms sales to the Gulf kingdom, by its de facto investment in one of England’s poorest areas. It will also be a relief for British Prime Minister Boris Johnson, who was personally pressed by Saudi Crown Prince Mohammed bin Salman to ensure the deal went through.

In accepting the takeover bid, the Premier League said it was satisfied that the sovereign wealth fund’s ownership did not mean the Saudi government would directly interfere with the workings of the club. That’s not enough for human rights groups like Amnesty International, which have called for changes to ownership rules to include complying with human rights standards.

The idea that the Saudi fund operates separately from the government doesn’t stand up to scrutiny, Ulrichsen said: “Not only is there not a separation of the state, but if you look at the contemporary Saudi state in 2021, PIF is—in my view—the most important part of that state because it’s the implementing vehicle [Mohammed bin Salman] has turned to time and time again to turn his visions into reality.”

Fans in Newcastle are less concerned about the geopolitical goals of their owners. “The World Cup next year is going to be in Qatar, and that’s one of the worst places in the world [for human rights], so why should Newcastle United be affected by the human rights side of it?” 80-year-old fan Ray Sproul told the Guardian. “Man City have had their owners for years, and no one’s shouting and screaming at them. We’re just interested in football. We’re ordinary football supporters, and that’s it.”

Nobel Peace Prize. The Norwegian Nobel Committee announced today that Philippine American journalist Maria Ressa and Russian journalist Dmitry Muratov will share the 2021 Nobel Peace Prize for their defense of press freedom. Ressa, a longtime CNN journalist and co-founder of the website Rappler, has been a fierce critic of Philippine President Rodrigo Duterte’s human rights abuses and was convicted of “cyber-libel” in 2020 in a case that was widely denounced as politically motivated. Muratov is the editor in chief of the independent Russian newspaper Novaya Gazeta, known for its hard-hitting investigative journalism. Since 2000, seven members of the newspaper’s staff have been killed—including Kremlin critic Anna Politkovskaya, who was shot outside her apartment 15 years ago.

Czech elections. The Czech Republic goes to the polls today in parliamentary elections that represent a test of support for Czech Prime Minister Andrej Babis after he was named in the Pandora Papers earlier this week. Results should be known by Saturday. In Foreign Policy, Tim Gosling outlined the challenges facing the opposition democratic bloc as it seeks to take on Babis’s ANO party, which leads in polling heading into today’s vote.

Tax talks. Representatives from 140 countries gather virtually today to continue Organisation for Economic Cooperation and Development-led negotiations on a global minimum corporate tax. Although a framework agreement was signed in July, differences still remain on exemptions for certain industries. Ireland, one of the major holdouts on the proposal, said it would agree to increasing its rate from 12.5 percent to the proposed 15 percent rate on Thursday, a decision that leaves Hungary as the remaining European Union state yet to back the agreement.

China focus. The CIA is to form a dedicated China Mission Center, the agency announced on Thursday, as the Biden administration recalibrates the U.S. foreign-policy apparatus to better focus on Beijing. The move comes on the heels of a new Defense Department task force on China announced in June and the formation of a “China House” at the State Department, a development first reported by Foreign Policy’s Jack Detsch and Robbie Gramer in September.

Germany’s new government. German Christian Democratic Union leader Armin Laschet has called for a party congress next week, suggesting he is ready to relinquish his grip on leadership following the Christian Democrats’ worst-ever election results. Laschet’s resignation would pave the way for a new German government comprised of the Social Democratic Party, Free Democratic Party, and the Greens—if all three can agree to the terms of a coalition.

The mayor of Brockville, Ontario, (population approximately 20,000 people) has abruptly resigned from his position after he bought a new house outside the city limits, invalidating his claim on the office. In announcing his departure, outgoing Mayor Jason Baker said he regretted “that the purchase of my dream home has unknowingly caused this issue” and would prevent him from finishing his term, set to expire in 2022. Baker had offered to resign previously, but city officials suggested he could instead make use of a loophole and sign a lease with his own Brockville-based company, therefore establishing residency. The proposed solution was “ludicrous to me,” Baker said. “It didn’t pass my integrity test.”

“I decided that it was best [for council] to have a fresh start and get back to concentrating on the important business in front of them,” Baker added.