Trump’s Saudi trip yields mutual financial rewards

The influx of US investment in the economy is a badly needed political triumph for the Saudi government.

Dividends. US President Donald Trump and first lady Melania Trump leave Riyadh aboard Air Force One on, May 22. (AFP)


2017/05/28 Issue: 108 Page: 5


The Arab Weekly
Jareer Elass



Washington - Much of the attention surrounding US Presi­dent Donald Trump’s visit to Saudi Arabia focused on his speech addressing the need for Muslim countries to more fully commit to combating Islamist extremism. Equally important, however, is that Saudi officials signed deals with US companies worth hundreds of bil­lions of dollars, a move with impor­tant political and economic impli­cations for both countries.

Saudi Foreign Minister Adel al-Jubeir said the value of all the agreements signed between the Saudis and US firms would total more than $380 billion over ten years, including a $110 billion arms package signed by Trump and Sau­di King Salman bin Abdulaziz Al Saud that helps bolster a flagging US defence industry while provid­ing Riyadh with enhanced regional military security.

As part of the flurry of deal sign­ing, state oil giant Saudi Aramco announced that it reached $50 bil­lion worth of agreements with US companies.

The reality is that some of the deals had been previously an­nounced while others are memo­randums of understanding (MOUs) with details and numbers yet to be fleshed out. They were orchestrated to highlight the reset of the bilateral relationship following the Obama administration’s eight years in of­fice. The agreements help satisfy key elements of both governments’ political and financial agendas.

For the Saudis, investment in the kingdom by US companies will fos­ter development of non-oil sector businesses and generate private-sector jobs for Saudi nationals, two critical goals of Saudi Vision 2030, the fiscal programme created and overseen by King Salman’s son, Deputy Crown Prince Mohammed bin Salman bin Abdulaziz.

An important aspect of the deals signed during Trump’s visit was the emphasis on local content so the kingdom can manufacture goods previously imported while building domestic labour expertise.

The influx of US investment in the economy is a badly needed po­litical triumph for the Saudi gov­ernment, which has largely pinned the success of Saudi Vision 2030 on the much-anticipated initial public offering (IPO) of Saudi Aramco.

The IPO, expected in the second half of 2018, will involve selling up to 5% of the state-owned energy giant.

By committing to invest in the United States, Riyadh is helping Trump score political points as he tries to expand domestic job crea­tion, a key focus of his presidential campaign.

Saudi Aramco signed 16 deals with 12 US firms on May 20, primar­ily MOUs and joint venture agree­ments that emphasised local con­tent. Houston-based oil services company McDermott International signed an MOU with the Saudi state oil firm valued at $2.8 billion that will involve the US company moving its ship fabrication facili­ties from Dubai to a new shipbuild­ing complex that Saudi Aramco is to open in the kingdom. The deal will create up to 2,000 jobs, with McDermott committed to boosting the number of Saudi nationals in its Middle East workforce to 40% by 2030.

Dallas-based Jacobs Engineer­ing reached agreement with Saudi Aramco to form a Saudi-based joint venture company to provide professional programme and con­struction management services for social infrastructure projects in the kingdom and across the MENA region. Jacobs Chairman and CEO Steve Demetriou said the venture would include projects associated with the kingdom’s Public Invest­ment Fund (PIF), the sovereign wealth fund that, as part of Vision 2030, is intended to diversify the Saudi economy away from reliance on oil revenue.

US technology and engineering giant General Electric signed $15 billion worth of commercial agree­ments with the Saudi government, including projects to make Saudi power generation more efficient and provide digital technology to Saudi Aramco’s operations.

The Saudi government was in­tent on showing its own earnest­ness in strengthening its economic connection with the United States. The PIF and US private equity firm Blackstone announced that it was studying a proposal to establish a $40 billion vehicle to invest in in­frastructure projects, primarily in the United States. Trump proposed in his recently released budget plan spending $200 billion over the next decade to generate $1 trillion in new investments in ailing US infra­structure.

That announcement coincided with news from the world’s largest private equity fund, Softbank Vi­sion Fund — established by Japan’s Softbank Group and the PIF with backers including Apple Inc and Abu Dhabi’s Mubadala Investment — that it had raised more than $93 billion to invest in technology sec­tors such as artificial intelligence and robotics. Much of the fund’s money is expected to be invested in the United States, with the Saudi government undoubtedly gaining access to critical new technology that will help diversify its econo­my.


Jareer Elass is a Washington-based energy analyst, with 25 years of industry experience and a particular focus on the Arabian Gulf producers and OPEC.


As Printed
MENA Now
Editors' Picks

The Arab Weekly Newspaper reaches Western & Arabic audience that are influential as well as being affluent.

From Europe to the Middle East,and North America, The Arab Weekly talks to opinion formers and influential figures, providing insight and comment on national, international and regional news through the focus of Arabic countries and community.

Published by Al Arab Publishing House

Publisher and Group Executive Editor: Haitham El-Zobaidi, PhD

Editor-in-Chief: Oussama Romdhani

Managing Editor: Iman Zayat

Deputy Managing Editor and Online Editor: Mamoon Alabbasi

Senior Editor: John Hendel

Chief Copy Editor: Richard Pretorius

Copy Editor: Stephen Quillen

Analysis Section Editor: Ed Blanche

East/West Section Editor: Mark Habeeb

Gulf Section Editor: Mohammed Alkhereiji

Society and Travel Sections Editor: Samar Kadi

Syria and Lebanon Sections Editor: Simon Speakman Cordall

Contributing Editor: Rashmee Roshan Lall

Senior Correspondents: Mahmud el-Shafey (London) & Lamine Ghanmi (Tunis)

Regular Columnists

Claude Salhani

Yavuz Baydar

Correspondents

Saad Guerraoui (Casablanca)

Dunia El-Zobaidi (London)

Roua Khlifi (Tunis)

Thomas Seibert (Washington)

Chief Designer: Marwen Hmedi

Designers

Ibrahim Ben Bechir

Hanen Jebali

Published by Al Arab Publishing House

Contact editor at:editor@thearabweekly.com

Subscription & Advertising: Ads@alarab.co.uk

Tel 020 3667 7249

Mohamed Al Mufti

Marketing & Advertising Manager

Tel (Main) +44 20 6702 3999

Direct: +44 20 8742 9262

www.alarab.co.uk

Al Arab Publishing House

Kensington Centre

177-179 Hammersmith Road

London W6 8BS , UK

Tel: (+44) 20 7602 3999

Fax: (+44) 20 7602 8778

Follow Us
© The Arab Weekly, All rights reserved