By Yara Bayoumy and Orhan Coskun
WASHINGTON/ANKARA (Reuters) - Saudi Arabia said on Saturday that dissident journalist Jamal Khashoggi died in a fight inside its Istanbul consulate, its first admission of his death after two weeks of denials that have shaken Western relations with the kingdom.
Riyadh provided no evidence to support its account, which marked a reversal of its initial statement that Khashoggi had left the consulate the same day he entered. Its statement made no mention of what had become of his body.
While Middle Eastern allies closed ranks around the kingdom after the Saudi statement, Western reaction varied with U.S. President Donald Trump saying Riyadh's explanation was credible and Germany strongly condemning it as "inadequate".
Turkish officials suspect Khashoggi, a Washington Post columnist and critic of the powerful Crown Prince Mohammed bin Salman, was killed inside the consulate by a team of Saudi agents and his body cut up.
Trump, who has forged close ties with the world's top oil exporter and maintains strong relations with the crown prince, Saudi Arabia's de facto ruler, said the Saudi account was credible and marked an important step.
"I think it's a good first step, it's a big step," Trump said in Arizona. "Saudi Arabia has been a great ally. What happened is unacceptable."
He said he would speak with the crown prince. But Trump again emphasised Riyadh's role in countering regional rival Iran and the importance that lucrative U.S. arms sales to Saudi Arabia have for American jobs.
In contrast, German Chancellor Angela Merkel, in a joint statement with her foreign minister, robustly condemned the account of Khashoggi's disappearance.
"We condemn this act in the strongest terms," their statement said. "We expect transparency from Saudi Arabia about the circumstances of his death ... The information available about events in the Istanbul consulate is inadequate."
Khashoggi, a U.S. resident, went missing after entering the consulate on Oct. 2 to obtain documents for his upcoming marriage. Days later, Turkish officials said they believed he was killed in the building, an allegation Saudi Arabia had, until now, strenuously denied.
The Saudi public prosecutor said that a fight broke out between Khashoggi and people who met him in the consulate, leading to his death. Eighteen Saudi nationals had been arrested, the prosecutor said in a statement.
A Saudi official told Reuters separately: "A group of Saudis had a physical altercation and Jamal died as a result of the chokehold. They were trying to keep him quiet."
For her part, Khashoggi's Turkish fiancée, Hatice Cengiz, tweeted in Arabic: "The heart grieves, the eye tears, and with your separation we are saddened, my dear Jamal," she said, also asking "#where is martyr Khashoggi's body?"
Turkish investigators, who have been combing a forest and other sites outside Istanbul, are likely to find out what happened to his body "before long", a senior Turkish official told Reuters on Saturday.
Saudi state media said King Salman had ordered the dismissal of five officials, including Saud al-Qahtani, a royal court adviser seen as the right-hand man to Prince Mohammed, and deputy intelligence chief Ahmed Asiri.
Some U.S. lawmakers were unconvinced by the Saudi account.
"To say that I am sceptical of the new Saudi narrative about Mr. Khashoggi is an understatement," Republican U.S. Senator Lindsey Graham said.
Another Republican Senator, Marco Rubio, called for an investigation and sanctions imposed against those responsible.
Turkish sources say the authorities have an audio recording purportedly documenting Khashoggi's murder inside the consulate. Pro-government newspaper Yeni Safak, citing the audio, said his torturers cut off his fingers during an interrogation and later beheaded him.
A group of 15 Saudi nationals arrived in Istanbul in two planes and entered the consulate on the same day Khashoggi was there and later left the country, a security source told Reuters.
The crisis prompted the king to intervene, five sources with links to the Saudi royal family told Reuters.
The king also ordered a restructuring of the intelligence service, to be led by Prince Mohammed, suggesting the prince still retained wide-ranging authority.
Before the Saudi announcements, Trump had said he might consider sanctions although he has also appeared unwilling to distance himself too much from the Saudi leadership. The White House said it would continue to press for "justice that is timely, transparent, and in accordance with all due process".
For other Western allies, a main question will be whether they believe Prince Mohammed, who has painted himself as a reformer, has any culpability. King Salman had handed the day-to-day running of Saudi Arabia to his son.
Britain said it was considering its "next steps", while Australia said it had pulled out of a planned investment summit in Saudi Arabia in protest at the killing. Spain said it was "dismayed" by information from Riyadh.
Amnesty International said the Saudi explanation appeared to be a whitewash of "an appalling assassination".
The Saudi findings "marks an abysmal new low to Saudi Arabia's human rights record," its Middle East director said.
But regional allies - including Egypt, Bahrain and the United Arab Emirates - issued statements in praise of the king.
The spokesman for Turkey's ruling AK Party said it would not allow a "cover up". [L8N1X00B2]
'NO ORDERS TO KILL HIM'
The dismissed official Qahtani, 40, rose to prominence after latching onto Prince Mohammed, becoming a rare confidant in his inner circle.
Sources say Qahtani would regularly speak on behalf of the crown prince and has given direct orders to senior officials including in the security apparatus.
People close to Khashoggi and the government said Qahtani had tried to lure the journalist back to Saudi Arabia after he moved to Washington a year ago fearing reprisals for his views.
Qahtani wrote on Twitter in August 2017: "Do you think I make decisions without guidance? I am an employee and a faithful executor of the orders of my lord the king and my lord the faithful crown prince."
In a tweet on Saturday, he thanked the king and crown prince for the "big confidence" they had in him.
Asiri joined the Saudi military in 2002, according to Saudi media reports, serving as spokesman for a coalition backing Yemen's ousted president after Prince Mohammed took Saudi Arabia into that country's civil war in 2015. He was named deputy chief of foreign intelligence in April 2017.
The prince had no knowledge of the specific operation that resulted in Khashoggi's death, a Saudi official familiar with the Saudi investigation said.
"There were no orders for them to kill him or even specifically kidnap him," said the official, speaking on condition of anonymity. There was a standing order to bring critics of the kingdom back to the country, he added.
"MbS had no knowledge of this specific operation and certainly did not order a kidnapping or murder of anybody," the official said.
The official said the whereabouts of Khashoggi's body were unclear after it was handed over to a local operator but there was no sign of it at the consulate.
In Saudi Arabia, there was widespread support for the king and the crown prince on Twitter, with hashtags such as "#I am Saudi and I defend it" and "#Saudi kingdom of justice" trending.
(Additional reporting by Tuvan Gumrukcu in Ankara, and Mohammed Zargham and Eric Beech in Washington, Stephen Kalin in Istanbul, Stine Buch Jacobse in Copenhagen, Marwa Rashad and Hadeel Al Sayegh in Dubai, Nadine Awadalla and Yousef Saba in Cairo; Jeff Mason in Arizona, Belen Carreno in Madrid and Thomas Escritt in Berlin; Writing by David Dolan and Yara Bayoumy; Editing by Angus MacSwan, Richard Balmforth)