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Saudi Arabia is a Powerful Node

This article is about Saudi Arabia’s presence in the international investment community. Of course, Saudi Arabia’s role in international politics has come under a lot of scrutiny since it came to light that a progressive Saudi journalist was (reportedly) tortured and murdered in a Turkish consulate. In this article, CNN details several of a major investments made by the Saudi government and prominent citizens. Most notably, in a $45 billion SoftBank (Japanese) fund, the Saudi government has invested around $3.5 billion in Uber and it holds a 5% stake in Tesla. Beyond that, the Saudi government has significant investments in Blackstone, GM, Slack, DoorDash, and Arm Holdings, a British-based software company, among many, many others. Saudi Prince Alwaleed Bin Talal is also a long-time investor in Twitter and Snapchat.

Reading this article made me think about the concept of power in networks. It’s pretty easy to say that, in the financial world, Saudi Arabia is connected to a lot of important companies in a wide variety of countries. With so many strong ties to influential companies all over the world, strong sanctions on the Saudis could lead to significant welfare losses to the global economy as a whole. I think it’s very telling that massive companies such as GM choose to do business with the Saudis instead of pursuing other investment opportunities. If the UN chooses to issue sanctions, many projects will be dropped or put on hold for lack of funds. From a networks perspective, it’s as if Saudi Arabia is a very powerful, central node that shares edges with many other relatively powerful nodes. These other nodes choose to enter agreements with Saudi Arabia because they are trying to maximize their welfare. If Saudi Arabia is removed from the network entirely, these nodes will have to enter agreements with their next best options, which will result in a significant welfare loss for the network as a whole.


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