Creating new perspectives since 2009

Trump to receive $40bn in Saudi investment

May 12, 2017 at 4:53 pm

Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman and U.S. President Donald Trump on 14 March, 2017 [Kevin Lamarque/Reuters]

Saudi Arabia is believed to be preparing to boost its ties with the US by investing $40 billion in American infrastructure projects during President Donald Trump’s visit to Riyadh next week.

An unnamed source reported by Bloomberg, confirmed that the investment may be unveiled as early as next week to coincide with Trump’s visit to the kingdom, while no final decisions have been made and the announcement may still be delayed.

The unprecedented investment by the kingdom reflects the fact that both King Salman and Trump see each other as key to their grand vision for the country.

Saudi Arabia is planning to expand its sovereign wealth fund in an attempt to diversify away from oil. The kingdom will sell shares in the state oil company, Aramco, which is valued at more than $2 trillion. Last week it was announced that funds raised will be used to develop a domestic arms manufacturing industry, the mining industry and the entertainment sector.

Read: US $2bn sale of missiles to Emirates approved

Trump has said he intends to push for $1 trillion in US infrastructure investments over the next decade, with $200 billion coming from taxpayers and the rest from foreign and private investments.

News of the mega investment comes on the back of Trumps commitment last March to support the development of a new US Saudi programme in energy, industry, infrastructure and technology that could be valued at more than $200 billion in direct and indirect investments within the next four years.

Both Saudi Arabia and Trump are also said to be keen on resetting relations, which became fractured following the nuclear deal signed by former US President Barack Obama in 2015. It was reported that the kingdom claimed a “historic turning point” in bilateral relations after Trump met Saudi Arabia’s Deputy Crown Prince Mohammed Bin Salman in the White House earlier this year.

While the Saudi government’s economic reforms are still in the initial stages, there are already imminent setbacks. Some have questioned the $2 trillion evaluation of the kingdom’s sovereign wealth fund. Domestically there has been push back against slashed government spending and the suspension of some allowances for state employees, despite promise by Prince Salman that 50-70 per cent of income from its initial public offering of Saudi Aramco will be used on domestic investments.