Wall Street’s top financiers struck a pessimistic tone about the global economy at a flagship gathering in Saudi Arabia aimed at deal brokering, as a violent conflict between Israel and Hamas that has killed thousands of people unfolds.

The annual event is typically used by attendees to build relationships with some of Saudi Arabia’s biggest companies and its $778-billion sovereign wealth fund, drawn by the promise of deals as the kingdom seeks to wean its economy off oil.

Broader conflict

But an escalation between Islamist group Hamas and Israel into a broader conflict overshadowed the event dubbed “Davos in the Desert”, a nod to the annual gathering of world leaders and corporate bosses in the Swiss Alps.

JPMorgan Chase Chief Executive Jamie Dimon encouraged Saudi Arabia not to abandon a United States-led initiative for the kingdom to establish official relations with Israel.

“Despite what happened in Israel, I urge you all to keep up that effort,” Dimon told the Future Investment Initiative (FII) in Riyadh. “It is the only way to get there with some leadership from Saudi Arabia, for the folks of the Middle East.”

Ties on ice

Saudi Arabia is putting U.S.-backed plans to normalise ties with Israel on ice, two sources familiar with Riyadh’s thinking said, signalling a rapid rethinking of its foreign policy.

Geopolitical tensions heightened by the Middle East conflict pose the biggest threat to the world economy, World Bank President Ajay Banga said.

“There is so much going on in the world and geopolitics in the wars that you’re seeing and what just happened recently in Israel and Gaza. At the end of the day, when you put all this together, I think the impact on economic development is even more serious,” Banga said.

Although the globe’s top financiers dwelt little on the conflict, speaking instead about topics such as artificial intelligence, the economic fallout of war combined with record debts created a bleak backdrop.

“There’s no question if these things are not resolved, it probably means more global terrorism, which means more insecurity, which means society is going to be fearful … and … we see contractions in our economies,” BlackRock Chairman and CEO Laurence Fink said.