Donald Trump heads to Saudi Arabia eyeing extra Gulf funding in US

[ad_1] Sameer Hashmi Enterprise reporter

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With US President Donald Trump resulting from go to Gulf states this week, a key focus might be securing vital new funding for the US financial system.

"President Trump needs the announcement [of more Gulf money for the US]," says economist Karen Younger, a senior fellow on the Center East Institute assume tank.

"He needs to have an enormous poster in a gathering that describes the place these investments may go. And a few estimation of what they are going to do to the American financial system when it comes to job creation or his large push, after all, on home manufacturing."

Trump is because of arrive within the Saudi capital, Riyadh, on Tuesday 13 Might, to satisfy the nation's de facto chief Crown Prince Mohammed bin Salman.

Trump is then anticipated to attend a summit of Gulf leaders within the metropolis on 14 Might, earlier than travelling to Qatar that very same day, after which ending his three-day journey within the United Arab Emirates (UAE) on 15 Might.

The financial significance of the area to Trump is highlighted by the truth that the go to to Saudi Arabia was resulting from be the primary abroad journey of his second time period within the White Home. That was earlier than the loss of life of Pope Francis necessitated Trump attending his funeral in Rome in the direction of the tip of April.

Saudi Arabia was additionally the primary nation that Trump visited throughout his first time period of workplace, going towards the trendy practise of US presidents to begin with the UK, Canada or Mexico.

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Securing new investments within the US from Gulf states, and notably from their state-backed sovereign wealth funds, will assist Trump to sign again residence that his "America First" agenda is delivering outcomes.

The presidential go to is drawing high Wall Avenue and Silicon Valley leaders to Saudi Arabia. A Saudi-US funding discussion board on 13 Might in Riyadh will characteristic CEOs from BlackRock, Palantir, Citigroup, IBM, Qualcomm, Alphabet, and Franklin Templeton.

The push comes amid financial headwinds, as President Trump's new import tariffs have considerably disrupted world commerce, confidence, and the US financial system itself. US financial output fell within the first three months of this yr, its first fall in three years.

Again in January, Prince Mohammed mentioned that Saudi Arabia would make investments $600bn (£450bn) within the US over the subsequent years. Nonetheless, Trump has already mentioned that he'd like that to rise to $1tn, together with purchases of extra US army tools.

In keeping with Ali Shihabi – a Saudi commentator and writer, with shut ties to the Saudi authorities – plenty of financial agreements might be signed through the journey.

"These offers will additional combine the Saudi and US economies collectively, joint ventures within the kingdom, in the USA, procurements of American weapons and items," says Mr Shihabi.

Saudi Arabia's sovereign wealth fund, the Public Funding fund (PIF), which controls belongings price $925bn, already has quite a few investments within the US. These embrace Uber, gaming agency Digital Arts, and electrical automobile agency Lucid.

In the meantime, the UAE has already dedicated to investing $1.4tn within the US over the subsequent 10 years, in sectors reminiscent of AI, semiconductors, vitality and manufacturing. This was introduced by the White Home in March after the UAE's nationwide safety advisor, Sheikh Tahnoon bin Zayed Al Nahyan, met President Trump in Washington.

But Ms Younger from the Center East Institute says that the dimensions of those investments shouldn't be lifelike within the quick time period. She as an alternative says that they're long-term strategic strikes, and that the figures ought to be taken "with just a little little bit of a grain of salt".

Concerning particular offers that might be introduced throughout Trump's go to, it's extensively reported that Saudi Arabia will agree to purchase greater than $100bn of US arms and different army objects.

These are mentioned to incorporate missiles, radar programs and transport plane.

The US has been a longstanding arms provider to Saudi Arabia, however in 2021 the then Biden administration stopped promoting Riyadh offensive weapons, citing considerations concerning the nation's function within the conflict in neighbouring Yemen.

The 2018 killing of Saudi journalist Jamal Khashoggi was additionally extensively reported to be an element. A US report mentioned that Prince Mohammed had accredited the homicide.

The Biden White Home resumed the sale of those weapons final yr. Whereas it cited that the Saudis had stopped bombing Yemen, some commentators mentioned that the US was searching for Saudi help to assist finish the battle in Gaza and assist its future reconstruction.

<img sizes="(min-width: 1280px) 50vw, (min-width: 1008px) 66vw, 96vw" srcset="https://ichef.bbci.co.uk/news/240/cpsprodpb/ba3f/live/af854110-2c10-11f0-86ff-4b4962751948.jpg.webp 240w,https://ichef.bbci.co.uk/news/320/cpsprodpb/ba3f/live/af854110-2c10-11f0-86ff-4b4962751948.jpg.webp 320w,https://ichef.bbci.co.uk/news/480/cpsprodpb/ba3f/live/af854110-2c10-11f0-86ff-4b4962751948.jpg.webp 480w,https://ichef.bbci.co.uk/news/640/cpsprodpb/ba3f/live/af854110-2c10-11f0-86ff-4b4962751948.jpg.webp 640w,https://ichef.bbci.co.uk/news/800/cpsprodpb/ba3f/live/af854110-2c10-11f0-86ff-4b4962751948.jpg.webp 800w,https://ichef.bbci.co.uk/news/1024/cpsprodpb/ba3f/live/af854110-2c10-11f0-86ff-4b4962751948.jpg.webp 1024w,https://ichef.bbci.co.uk/news/1536/cpsprodpb/ba3f/live/af854110-2c10-11f0-86ff-4b4962751948.jpg.webp 1536w" src="https://ichef.bbci.co.uk/news/480/cpsprodpb/ba3f/live/af854110-2c10-11f0-86ff-4b4962751948.jpg.webp" loading="lazy" alt="Getty Images A vast construction site in the Saudi capital" class="sc-4abb68ca-0 ldLcJe"/> Getty Pictures Saudi Arabia is investing in building and infrastructure because it tries to maneuver its financial system away from oil

Mr Shihabi says Saudi Arabia might be searching for assurances from the White Home that the US will implement a "extra environment friendly procurement system", enabling the Gulf state to entry ammunition and army tools much more shortly and simply.

"The Trump administration is initiating procedures to facilitate these offers. So, it is anticipated that this course of will enhance instantly," he provides.

Synthetic intelligence is the opposite matter that can dominate the agenda throughout Mr Trump's go to. Talks are anticipated to centre on attracting larger Gulf funding into US tech corporations, and boosting the area's entry to cutting-edge American semiconductors.

The UAE and Saudi Arabia have been investing billions of {dollars} into tech and AI sectors as attempt to diversify their economies away from oil.

The Emiratis, particularly, are eager to determine themselves as a world AI hub.

Final week, the Trump administration scrapped the Biden-era chip laws that positioned restrictions on exports of superior US chips to greater than 120 nations together with the Gulf states.

The White Home is anticipated to draft new guidelines that might probably contain direct negotiations with nations just like the UAE.

"For the UAE, that is completely important," says Ms Younger. "They're aggressively constructing out their AI capability. So, for them gaining access to US expertise is crucial to be the perfect."

Whereas a lot consideration might be on Trump courting Gulf capital for the US, Saudi Arabia is equally centered on drawing American funding into its formidable Imaginative and prescient 2030 program.

Led by large building tasks, such because the constructing of a linear metropolis known as The Line, Imaginative and prescient 2030 is central to the Saudi authorities's persevering with efforts to diversify the nation's financial system away from oil.

It additionally entails pouring assets into leisure, tourism, mining and sports activities.

Nonetheless, overseas direct funding into Saudi Arabia declined for a 3rd straight yr in 2024, reflecting persistent challenges in attracting abroad capital.

The autumn in world oil costs for the reason that begin of the yr has additional strained Riyadh's funds, rising strain to both elevate debt or lower spending to maintain its growth objectives.

Oil costs tumbled to a four-year low amid rising considerations {that a} commerce conflict might dampen world financial development.

The decline was additional fuelled by the group of oil producing nations, Opec+, asserting plans to extend output.

Saudi Arabia is a part of that group, and a few commentators mentioned that the rise was partially a need to please Trump, who has known as for decrease oil costs.

Different analysts mentioned the explanation was extra that Opec+ stays assured that the worldwide financial system is rising.

The US-Saudi Enterprise Council, is an organisation that goals to spice up commerce ties between the 2 nations.

It's hoping that Trump's go to will push American companies to discover extra alternatives in Saudi Arabia, particularly in sectors like AI, healthcare and schooling.

"The Saudi authorities is trying closely to spend money on these sectors. There's a very large urge for food for Saudi corporations to collaborate with American corporations," Huthaim Al Jalal, who heads the Riyadh workplace for the organisation, tells the BBC.

Saudi officers are mentioned to be assured that some offers in these sectors might be secured throughout Trump's go to.

For Saudi Arabia, Trump's go to is about strengthening ties with their longest-standing Western ally - a relationship that grew strained through the Biden years. For President Trump, it's about touchdown funding offers that may be framed as a win for his financial agenda.