Trump’s Riyadh Triumph : Jobs for US, Arms for KSA, Chaos for ME


Beneath the pomp and show at Riyadh lies `flashy’ numbers and self-grandeur.  True to his promised style of functioning, President Trump did extract “potential” deals that are expected to bring lot of investments and jobs to the United States.  He commented, “Hundreds of billions of dollars of investments into the United States and jobs, jobs, jobs.”1

For King Salman bin Abdulaziz Al Saud, the summit is an un-dreamt bonanza. In a reversal of Obama’s regional policy, Trump bestowed on the King re-recognition of an un-questioned leadership of the Sunni Muslim world.  Fifty-Five Islamic countries, representing about two billion Muslims, participated in the Riyadh summit of the US and Islamic countries, held under the aegis of King Salman and President Trump.  Usual sermons of human rights, democracy and gender equality are conspicuous by their absence. Iran was the whipping boy which was condemned by both the leaders as the “source” of all terrorism.

Between the dreams of big dollars to the US and regional leadership of the Saudis, Trump sought to further his foreign policy goals of uniting the Sunni world to defeat the Islamic State and “de-fang” the Shi’ite Iran.  Trump got the GCC countries to agree to coordinate efforts to curb terror financing and setting up a global centre in Riyadh to monitor and combat extremist ideology.  His administration has promised to provide billions of dollars’ worth of military equipment to fight terrorism.

However, it is not certain if the two sides are on the same page on the issue of fighting radical Islamic terrorism.  Trump wanted the Islamic world to root out the menace of the Islamic State in Iraq and Syria (ISIS) and other extremist groups in the Middle East.  For Saudis, it is meant to fight the Iranians and its proxies in Yemen, Syria, Iraq and Lebanon.  They have already set up a coalition of 34 Sunni states to combat terrorism as they see it.

“Our responsibility before God and our people and the whole world is to stand united to fight the forces of evil and extremism wherever they are … The Iranian regime is the spearhead of global terrorism,” the King declared indicating his priorities of fighting terrorism.2

Deals agreed at the summit

The US and Saudi Arabia have signed agreements or exchanged Letters of Intent (LOI) for military sales worth about $ 110 billion.  This is said to be “the single largest arms deal in American history”.  These include assembling of 150 Lockheed Martin’s Black Hawk helicopters in Saudi Arabia ($ 6 billion).  The two governments have also committed to a further $ 350 billion in defense cooperation over next ten years.3

General Electrical Co announced projects, worth over $ 12 billion, in sectors such as power generation, aviation, digitization technologies, mining, oil and gas in the form of joint ventures with Saudi government.

Exon Mobil and Saudi Basic Industries Corp (SABIC) signed an agreement to proceed with engineering and design work for a $10 billion petrochemical plant in Texas.

Saudi Oil giant, Aramco, and American energy companies have announced potential deals worth around $ 22 billion.  These include a $ 3.8 billion agreement with Honeywell and a $ 2.8 billion contract with McDermott.

Motiva Enterprises LLC, a 600,000 barrels-a-day facility in Port Arthur, Texas, owned by Aramco, pledged additional investments in the US to the tune of $12 billion by the year 2023. Additional investments worth over $ 18 billion are also on the cards which could create thousands of American jobs.

JP Morgan and Chase Chairman James Dimon said that the bank has raised $ 27 billion for the Saudi government.  He has not confirmed if it is related to forthcoming initial public offering of Aramco, which is being assisted by the Bank.

Saudi Arabia has pledged $45 billion for the $100 billion Vision Fund, set up by the Japanese Soft Bank as a technology investment vehicle to fund technology startups in the US, which expect to create 50,000 jobs. The fund’s creation coincides with President Trump’s visit to Saudi Arabia.4

Saudi sovereign wealth fund committed $20 billion to a new investment fund, operated by Blackstone, for infrastructure projects, primarily in the US.  The company is run by Stephen Schwarzman, a close associate of President Trump. The Saudi commitment is about half of the capital Blackstone plans to raise for the fund.5

A $100 million donation was pledged by Saudi Arabia and Kuwait to $ 1 billion World Bank’s global women’s entrepreneurship fund, which was supported by Ivanka Trump, daughter of President Trump, and German Chancellor Angela Merkel. The announcement was made at a social media forum addressed by Ivanka Trump at Riyadh.6

Jared Kushner, Trump’s son-in-law and his Middle East adviser, is the key strategist behind the commercial deals with the Saudis.  He personally involved in getting the Lockheed Martin to cut the price of a radar system by about 12 per cent.7  This is in addition to $6 billion deal on Black Hawk helicopters.  From Saudi Arabia, it was the Deputy Crown Prince and son of the King, Muhammad bin Salman, who made the visit to happen.  He traveled to Washington in March last to prepare for the visit and for the new arms deals and financial investments.8

Success of Trump’s summits with foreign leaders weighed in investments and job creation

President Trump weighed his foreign policy initiatives in terms of potential commercial deals generating investments and jobs.  His long-held political views have been completely reversed once he saw chances of commercial dividends.  Prime Minister Shinzo Abe’s investment proposals to create 700,000 jobs in the US has metamorphed Trump’s negative impressions of Japan to a positive one.  Similarly, the Mar-a-Lago summit between Chinese President Xi Jinping and Trump changed the US-China equation into a `great’ relationship following, what some Chinese sources said, a package of investments aimed at creating more than 700,000 jobs, the number pledged by its rival, Japan.

The Riyadh summit has generated a “massive” financial bonanza that triggered a change in his attitude toward Islam and Muslim countries to more of placating. It is much larger than what Japan or China have offered.

In contrast, the summits with German Chancellor Angela Merkel, Turkish President Recep Erdogan and a host of others have nothing much on offer and hence lack any luster.  This has a lesson for future summit meetings with President Trump.

Are the Deals at Riyadh more of a show or have substance?

There are serious doubts whether the huge Dollar deals would ever be realized.  Most of them are yet Letters of Intent and might take several years to become reality, if at all.  The big numbers, however, have their own use as “perceptions” do matter in governance.

According to Bruce Riedel, respected Middle East expert, “The red carpet treatment for Trump, however, was often more show than new substance. The billions in arms deals and other economic agreements signed were almost entirely letters of intent, not final contracts, and most had been in the works for some time. Given the price of oil, it remains unclear how the Saudis can afford them.”9

William D. Hartung, director of the Arms and Security Project at the Center for International Policy, concurs with Riedel.

“The $110 billion figure looks suspiciously like an effort to post some big numbers to underscore the administration’s uncritical support for Saudi Arabia, its animosity towards Iran, and its focus on “jobs, jobs, jobs,” as the president put it… What we have is a deal that is mostly a mix of offers already made and promises yet to be kept. And when and if some of the new offers are formally notified to Congress – a process that will at least reveal what systems are to be provided at what cost – there is no guarantee that they will produce signed contracts and actual deliveries of weaponry.”10

Does Trump’s Sunni-alliance herald a New Middle East Strategic Order ?

Trump’s Middle East policy hinges on defeating the ISIS and isolating Iran from ever posing a threat to the region in general and Israel, in particular.  It is a bold step on his part to make his first visit, as President, to Saudi Arabia and get it to organize an Islamic summit in an attempt to unite the Sunni world against ISIS and the Shi’ite Iran.  Saudi Arabia is fully on board as it serves its main agenda of pushing Iran to a corner.  But, how many of the other fifty-four leaders, who attended the summit, are enthusiastic of the “Sunni NATO”?

There are growing fissures even within the GCC.  “There are already signs that the Emirates and Saudi Arabia are at loggerheads over how to proceed with the war and over which areas of Yemen the two countries plan to control,” says Michael Horton, a senior analyst for Arabian affairs at the Jamestown Foundation.11  Aden airport was the scene of recent fighting in which Saudi Sudanese proxies tried to wrest control from forces, supported by the UAE. The Saudis, who launched the “Operation Decisive Storm”, have not attained any of its objectives despite more than two years of intense fighting.  Houthis, supported by Iran, remained as formidable as they were.

“Neither Saudi Arabia nor the UAE — and certainly not Yemen — will benefit from such a fight. Instead, AQAP and other militant Salafist organizations will profit even more than they already have,” said Horton.

Deputy Crown Prince Muhammad, the brain behind the Yemeni operations, is hoping for assistance from the US, including its ground troops, for his long-planned invasion of Houthi controlled Hodeidah.  Pakistani newspaper, The News12, reported of an exclusive meeting between the Crown Prince, Jared Kushner and former Pak Army Chief, Gen. Raheel Sharif, who is head of the Saudi-led Islamic military alliance that ostensibly formed to fight terrorism but focusing mainly on Yemen.

President Trump barely mentioned Yemen in his address to the summit and his Generals are “cold” to any intervention in Yemen.  Beyond expensive military sales to Saudis, there will hardly be any support for the “mis-adventure” from the Americans.

Most Islamic countries are skeptical of Saudi military alliance and have not shown much enthusiasm to be part of it as it deepens the Sunni-Shia divide.  Even its staunch client state, Pakistan, has refused to join such an alliance.  Islamabad, despite allowing its former Army chief to command the military alliance, is frantically trying to balance its relations between Riyadh and Tehran, which did not go well with either of them.

Majority of other countries have joined the alliance out of respect for the House of Saud, and have little appetite to fight Iran or the Islamic State in Iraq and Syria. They would rather like to focus on fighting their own domestic radical Islamist groups.

Tamara Cofman Wittes, a Brookings scholar and former State Department official in Obama administration, said “Trump’s goal of aligning with the Sunni states fundamentally conflicted with his desire for closer relations with Russia, which has sided with Iran in bolstering the government in Syria’s civil war.”13

Notwithstanding the harsh rhetoric against Iran to placate King Salman and Israel, President Trump has done little to unveil any details of a strategy to isolate the Islamic Republic.  Instead, he waived, before his departure to Riyadh, some of the sanctions as required under the nuclear accord, although added some symbolic sanctions on human rights violations.  He has no plans to disturb the Russian-led coalition in Syria and rather willing to coordinate with it to defeat the ISIS.

Hence, it is more a mirage to think of an united Sunni world to fight the ISIS or isolate Iran.  However, Riyadh is getting huge arms supplies and American support for its leading role in the region in reversal of Obama policies.  US also offers enormous investment opportunities for huge Saudi capital being unleashed through divesting huge portfolio of its oil behemoth, Aramco, as part of the 2030 Vision document.  Washington is getting big investments and thousands of jobs.

It is a win-win situation for the US and Saudi Arabia while the Middle East will remain as chaotic as it is.

Further fissures in Sunni alliance will not only be an advantage to radical Islamist groups like Al Qaida but encourage their other regional proxies to be as malicious as the ISIS.  Infusion of fresh military supplies, worth billions of dollars, would not make it easy either for the regional players or for those on the vicinity, Europe, India, China etc.