These business partners will each drive a hard bargain
Saudi Arabia has had the better of the US in deals over the past seven decades, but negotiations will be tougher with an ‘America First’ president in the White House.
Of all the tasks on Crown Prince Mohammed bin Salman’s visit to the US, the most important may be enlisting partners for his efforts to transform the Kingdom’s economy. He needs a little business help, and the US is the best place to find that; its big business landscape is strong right now and offers much to other economies, especially an aspiring and growing economy such as Saudi Arabia’s.
Saudi Arabia and the United States have been close partners for all of the Kingdom’s history, but for 68 years the Saudi government and Saudi businesses have had the better of nearly every negotiation. This is not a complaint against the Saudi government. On the contrary, it is commendable that Saudi Arabia managed to obtain the best for its country and its people.
However, there is a new philosophy in Washington, and in America. With a new president and new administration, the US is again pursuing its own interests. Donald Trump loves to negotiate, and after more than four decades in the real estate business, he prides himself on driving a hard bargain. One of his favorite slogans is “America First.” Under this mantra, the US government — and increasingly American business as well — is pursuing its own interests with increased vigor. With this in mind, here are some business objectives the US will look to pursue as the crown prince visits.
Amazon is being courted to build a data center in the Kingdom, probably on the Red Sea coast for connection purposes. It could drive a hard bargain. In the US, Amazon is searching for a city to house its new second headquarters, and seeks a location that will give it tax breaks, subsidies, possibly free land, and a guaranteed labor pool of educated and skilled workers. Similarly, in Saudi Arabia Amazon will probably want the government to contribute to and simplify its construction and relocation costs for a new data center. It will want guaranteed access to skilled labor. Even though Saudi Arabia has a large educated population, Amazon may very well require imported labor with specific skills from regional countries and around the world.
Other American businesses that are being courted by Saudi Arabia, from banks and private equity groups, to tech and manufacturing firms, will probably follow suit. In Boston, GE may discuss nuclear power technology with the Saudi delegation — in fact, the chief executive of GE met with the Saudi oil minister Khalid Al-Falih only last week, and GE is a leading nuclear engineering company. Overall, American businesses will want favorable treatment from the government and perhaps some financial support from the Saudi Public Investment Fund or other funds. In exchange, they will diversify the economy and should create jobs.
It is widely expected that the crown prince will also meet the New York Stock Exchange (NYSE) to discuss a possible initial public offering of Saudi Aramco. The Aramco listing is highly desirable for any exchange, and the London Stock Exchange is also courting the company. The NYSE is about five times the size of the London exchange, so its sales pitch to Aramco will be that it offers access to the most investors with the most money.
In 1933, American oil men paid the king of Saudi Arabia for the opportunity to look for oil. Their presence and the oil they found transformed the desert Kingdom into a wealthy regional powerhouse. The two countries have been partners ever since. As in any good partnership, both sides will try to get something out of it.
Ellen R. Wald, Ph.D. is a historian and author of “Saudi, Inc.” She is a NonResident Scholar at the Arabia Foundation, a Washington think tank, and the president of Transversal Consulting. She also teaches Middle East history and policy at Jacksonville University. Twitter: @EnergzdEconomy