The US and Saudi Arabia business deals we reported yesterday have been signed. The deals were finalized during President Trump’s visit to the Middle Eastern kingdom. US – Saudi Aramco deals amounted to $50 billion of the $200 billion overall total. The Saudi – US meeting was generally regarded as a success.
The Saudi objective is to make its economy less reliant on oil. Some of the deals involved Saudi Arabia manufacturing things that it had been importing, and so improving its import-export figures. Both the US and Saudi Arabia were determined on displaying that the meetings had been a great success.
As a result, some of the deals announced had been agreed previously, and others were simply memorandums of understanding, requiring further action and discussion, rather than formal agreements. Nevertheless, the meeting was deemed a success by participants and onlookers.
One of the triggers for the Saudis coming to such deals with US companies was the drop in oil prices. This has had a braking effect on the country’s economy, and created a budget deficit that the Saudi Arabian government has to address. One of the actions taken was to find other avenues whereby money could be invested in the country.
The Meeting in Riyadh came shortly after an Asian tour by King Salman of Saudi Arabia. Similar deals were struck during this tour, including a $65 billion total with Chinese firms. However, there were other deals made that involve Saudi money being invested in the US.
The Public Investment Fund is Saudi Arabia’s main sovereign wealth fund. This body is considering an agreement with Blackstone, the US private equity company. Their objective is to consider means by which $50 billion could be invested in infrastructure projects, principally in the USA.
The two countries would then be economically connected to the benefit of both. Saudi Arabia would use $20 billion of its Public Investment Fund, and could even invest up to $100 billion in helping to refurbish and replace decaying American infrastructure.
Saudi Arabia intends to draw up a new, streamlined set of rules over the next year to cover foreign investment within the kingdom. Several US companies were involved in the agreements reached. Among them was Jacobs Engineering, who agreed to JV with Saudi Aramco over business projects. As reported Saturday 20 May, Saudi Aramco will construct a new shipbuilding complex in Saudi Arabia. McDermott International will then transfer some its shipbuilding facilities from Dubai to Saudi.
GE reached agreements totaling $15 billion regarding a number of different goods and services. Lockheed Martin is to locate the final assembly and complete of around 150 S-70 Black Hawk helicopters in Saudi Arabia. The country is also determined to develop its own arms industry rather than purchase weapons from abroad.
Many more deals were made, and both US and Saudi Arabia claimed the meetings to be a great success. So far, however, they are no more than deals and agreements. Hopefully, they will progress smoothly, although the current situation in the US is very fluid.
The US and Saudi Arabia business deals appear to be beneficial to both countries, and to US – Middle East relations. There are certain areas of contention, such as the US continuing to increase oil production while Saudi Arabia along with the rest of OPEC, are expected to continue controlling oil production for another year at the OPEC meeting on Thursday.
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