President Trump is starting a visit to Saudi Arabia on Tuesday with a wish list of $ 1 trillion for investments in the United States – an amount that is equivalent to the entire Kingdom gross domestic product Last year.
The Saudi crown prince offers $ 600 billion during Mr Trump’s presidency.
Neither of them is realistic, economists say.
With a laundry list of his own precious mega projects to build and with oil prices far below the level that is needed to finance the expenditure, Saudi Arabia is confronted with a budget deficit that can more than balloon can be balloon $ 70 billion this year. It is getting more and more borrow instead of borrowing.
But that did not stop with Crown Prince Mohammed Bin Salman, de facto leader of the authoritarian Saudi monarchy, of promise in January to invest $ 600 billion in the United States while Mr. Trump is in position. Not long after, Mr. Trump him a ‘fantastic guy’.
Then the president said he would ask the crown prince to bypass that figure up to $ 1 trillion. And get the oil price – the source of the enormous wealth of the kingdom – to start up.
“We have been very good for them,” said Mr. Trump.
Economists said that Saudi investments in the United States would probably increase during Mr Trump’s government, but it was unlikely that they would even approach $ 1 trillion.
The figure that Mr Trump is looking for exceeds the value of all assets in the strong sovereign wealth fund of the Kingdom, which is worth around $ 925 billion and is largely connected to domestic companies.
“I don’t see how they get somewhere close to $ 600 billion, let alone $ 1 trillion,” said Tim Callen, an economist and former international monetary fund mission chief in Saudi Arabia.
“We are more focused on the domestic economy,” he said, and called this a “big paradigm shift.”
But for the Lord Trump and Prince Mohammed, these finer details are not necessarily the point. They speak the same language, Mr. They call and describe as “two boys who like to throw very large numbers.”
Mr. Trump has cultivated strong business ties with Saudi Arabia. During his first term, his son -in -law and adviser Jared Kushner developed an end relation A transactional mind set shared with Prince Mohammed and the two.
Mr. Trump and the Saudi crown prince both have a preference for striking statements, leaving questions about the feasibility for their subordinates to find out.
In some cases, the big statements of Prince Mohammed flourish. It was quickly detached Social limitations In the one-ul-ultrasound kingdom, so that women in the workforce and teenagers to dance Rage in the desert. Other plans, such as a $ 200 billion solar energy project that would have been the largest in the world, have been quiet Swept aside.
Mr. Trump claimed that during his Saudi visit of 2017 he obtained $ 450 billion in investments in the United States. But Mr. Callen said that he has analyzed public data and has determined this amount is not fully delivered.
The export of American goods and services to Saudi Arabia, while Mr Trump was in function from 2017 to 2020 was $ 92 billion, Mr Callen found less than the total during the second term of President Barack Obama, which ended in 2017.
Asked about this discrepancy and about Mr Trump’s target to secure $ 1 trillion in investments during the coming visit, said the director of the White House, Steven Cheung secure more than $ 5 trillion in new investments in the US economy -bring production, increase production and create well -paid jobs. “
Mr Trump said that it was the prospect of hundreds of billions of dollars in investments that led him to prioritize Saudi Arabia to start his first major overseas tour of this period – as he did in 2017 during his first term.
After Saudi Aarabia, the president will visit two other rich Gulf fellow people during this trip, Qatar and the United Arab Emirates.
His state visit to Saudi Aarabia this week is expected to be a spectacular affair, full of Pagentry that is a sharp contrast to the relative of President Joseph R. Biden Jr. cold Visit to the Kingdom in 2022.
During the first Saudi state visit of Mr Trump, he was welcomed with a traditional sword dance and a statue of his face projected on the facade of the lush Ritz-Carlton Hotel in Riyad, the capital.
As they did last time, Saudi officials are planning to announce a flurry of deals after the president arrived.
The government is organizing an investment forum on Tuesday with a long selection of American managers, including the Chief Executives of IBM, BlackRock and Citigroup. Many of them already have Saudi ties.
This month, the Ministry of Foreign Affairs announced that it had approved a possible sale of $ 3.5 billion in air air missiles to Saudi Arabia. A memorandum of understanding with the US about mining and mineral resources is also expected.
Some deals can be provisional similarities that never come true. Others can pack earlier deals again, something that could serve to supplement the total figure of investments that Mr Trump can say that he has guaranteed.
Saudi -Arabia is still the world’s largest oil exporter, who produces hundreds of billions of dollars in income every year. Are American investments are extensiveincluding more than $ 100 billion from Treasury Holdings and $ 2 billion in A fund managed by Mr. Kushner.
In general, the Saudi Sovereine Wealth Fund has invested $ 110 billion in the United States since 2017, plus another $ 58 billion in purchasing expenses, the fund said in a statement to the Times. It did not respond to questions about expanding his investments in the country and the Saudi Ministry of Finance did not respond to a request for comments on the subject.
The Saudi state spends a lot of his income from the public sector salaries. And under Prince Mohammed it has invested in a growing number of domestic mega projects.
The government predicts budget shortages via at least 2027.
The The most expensive mega project is NeomThe prince’s crown jewel. It is a whole new region that he wants to build in the remote north -western corner of the Kingdom, with a mountain range and a skyscraper that extends horizontally for 100 miles.
When he announced Neom in 2017, he called it a project of $ 500 billion. But estimates of potential costs have since risen in the trillions, and only $ 50 billion has only been spent on the basic infrastructure.
Diriyah Gate, a huge culture and tourist hub in Riyad, is now expected to cost more than $ 60 billion, a number that is tailored to the early estimates of $ 20 billion. A Luxury tourism project More than $ 20 billion has already cost on the Red Sea.
The Kingdom is also planning to host The World Expo in 2030 and men’s football World Cup in 2034 – both events that require substantial expenses for infrastructure.
Saudi Arabia, who due to the expenditure through his sovereign power fund, needs Saudi Arabia the oil prices for around $ 108 per barrel to even break the state, said Ziad Daoud, the most important emerging market economist in Bloomberg. The price of Brent Crude is currently floating above $ 60 per barrel.
Saudi officials could invest large amounts in the United States, but they should borrow to do it, Mr Daoud said.
“And $ 1 trillion is far -fetched,” he added.
Many people consider Saudi Arabia as a country “that gives fairs and loans and investments”, but that has changed, said Mr Daoud.
In order to invest more in the United States, Saudi officials can also balance their portfolio – perhaps by selling assets in other countries, said Farouk Soussa, An economist in the middle -east at Goldman Sachs. But it is unlikely that they can free up $ 1 trillion.
Mr. Soussa estimated that the total assets of the Kingdom abroad was around $ 1.4 trillion, a large part of which is in the United States.
“How much is available to go to the US is everyone’s gamble,” he said.
Ismael to Contributed report from Dubai, United Arab Emirates.
- Advertisement -
