Alamy via Reuters
Crown Prince Mohammed bin Salman of Saudi Arabia and President Donald Trump’s first term. Promising Saudi Arabia ready to face second challenge and opportunity
No “younger brother” relationship Abraham expects and agrees Vision 2030 opportunity
As Donald Trump returns to the White House for a second term as President of the United States, Saudi Arabia looms large, presenting significant challenges as well as many opportunities for cooperation.
Richard Wilson, chairman of the Saudi-U.S. Trade Group, said it would be “difficult” to name a country that has changed more than Saudi Arabia since Trump was first elected in 2016.
“Saudi Arabia will want to make sure, first and foremost, that this is no longer a ‘younger brother’ relationship,” he says. “Saudi Arabia considers itself an emerging middle power and envisions a relationship with the United States similar to South Korea and Brazil.”
Among the foreign policy achievements of the first Trump administration was the signing of the Abraham Accords in 2020, normalizing relations between Israel and the UAE, Bahrain, and other Muslim countries.
Bringing Saudi Arabia into the fold is the obvious next step. Outgoing Secretary of State Anthony Blinken said last week that despite Israel and Hamas’ 15-month conflict, today they were “much closer” to a deal.
Dania Safer, executive director of the Gulf International Forum in Washington, believes President Trump will “push hard” toward a deal despite significant disagreements over the fate of a Palestinian state.
“It will be very interesting to see how President Trump engages with the Gulf states, especially Saudi Arabia, in terms of expanding the Abraham Accords,” she says. “When it comes to the Middle East, I believe that’s going to be my main goal as president.”
President Trump’s incoming Secretary of State, Marco Rubio, said during his confirmation hearing on January 15 that the deal was a “historic” accomplishment and that getting there would require rewards for all parties. said.
“What are the benefits of Saudi Arabia recognizing Israel and vice versa?” Rubio said. “You can think about a lot of different things. Is it the advancement of investments in high-tech areas? Is it the ability to invest in each other, and frankly, is it about security?”
A ceasefire in Gaza, along with developments in Syria and Lebanon, could help negotiations. But filling the remaining gaps will not be easy for the returning US president.
The main pillar of the U.S.-Saudi Arabia component of the three-part agreement is strengthening bilateral trade and investment. Both President Trump and Saudi Crown Prince Mohammed bin Salman are keen to attract foreign funding.
The next four years will see “real action” in investments, said David Hamoud, president and CEO of the American Arab Chamber of Commerce.
Vision 2030’s megaprojects are a natural fit for U.S. infrastructure companies, while the Public Investment Fund’s $1 trillion war chest could target U.S. investment managers, Hamoud said.
Saudi Arabia already has extensive assets in the United States, but faces constraints on its ability to raise them.
Oil prices below break-even and Vision 2030 spending are leading to slower growth and higher deficits. PIF is cutting overseas spending and focusing on domestic projects.
“We believe these economic trends mean that Saudi Arabia will have far less free capital to invest in the US than some of its peers, such as the UAE and Qatar,” said Rachel Ziemba of Ziemba Insights. speak yoke.
Like the UAE, building a technology industry in the face of tightening US export controls on artificial intelligence chips is a key goal for Saudi Arabia under the second Trump administration, as well as dealing with new US tariffs. It will be.
Of interest to Saudi Arabia’s energy sector, Ziemba said, is the possibility of a 25% tax rate being applied to imports from Canada, which is “by far the largest” supplier of oil and gas to the United States. .
“Saudi Arabia doesn’t exactly have an alternative fuel blend, but it’s definitely looking at whether that’s an opportunity,” Ziemba said.
Energy will continue to be at the center of bilateral relations, as opposing forces combine to produce unpredictable outcomes on issues such as oil prices and renewable energy.
Trump and his new team are climate change skeptics and see fossil fuels as part of the energy mix in the long run.
“This conceptualization will be welcomed by producers in the Gulf,” says Karen Young, a senior fellow at Columbia University’s Center on Global Energy Policy.
Although President Trump’s commitment to expanding domestic production is modest, private companies are creating the U.S. market, and officials point out that the government has little influence.
The Returning President’s Approach to Russia and Iran – More Sanctions? A deal to resolve the dispute? – It will also affect oil prices, but no one knows yet which direction it will go.
More broadly, Junaid Ansari, director of investment strategy and research at Camco Investments, said the US president’s pledge to prevent war in the Middle East and between Russia and Ukraine will “reduce” regional instability. , said to “help” financial markets. .
“As a result of his pro-business policies, we expect to see increased investment in the region from international investors and increased FDI in major projects,” he says.
