In remarks via video conference to the World Economic Forum in Davos, Switzerland, on Thursday, US President Donald Trump said he read reports “in the papers” that Saudi Arabia plans to invest $600bn in the US economy – but said it wouldn’t be enough.
“I’ll be asking the crown prince, who’s a fantastic guy, to round it out to around one trillion. I think they’ll do that because we’ve been very good to them,” Trump said.
In fact, the Saudi Press Agency’s announcement that the kingdom would invest $600bn was based on the royal palace’s readout of a Wednesday phone call between Trump and Saudi Crown Prince Mohammed bin Salman. This is Trump’s first phone call with a foreign leader since his inauguration earlier this week.
“The crown prince affirmed the kingdom’s intention to broaden its investments and trade with the United States over the next four years, in the amount of $600bn, and potentially beyond that,” the Saudi Press Agency said.
The White House’s readout of the call relayed no such detail.
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“The two leaders discussed efforts to bring stability to the Middle East, bolster regional security, and combat terrorism. Additionally, they discussed the Kingdom of Saudi Arabia’s international economic ambitions over the next four years, as well as trade and other opportunities to increase the mutual prosperity of the United States and the Kingdom of Saudi Arabia,” the readout said.
Trump, in his remarks to Davos, also said he planned to ask Saudi Arabia to “bring down the cost of oil”, which could lead to a breakthrough that would end Russia’s war in Ukraine, given its crushing impact on energy markets.
“You got to bring it down, which, frankly, I’m surprised they didn’t do before the election. That didn’t show a lot of love by them not doing it,” Trump said. “I was a little surprised by that. If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue.”
The kingdom, he said, is “very responsible, actually, to a certain extent, for what’s taking place. Millions of lives are being lost”.
What Trump isn’t taking into account is Saudi Arabia’s need to complete mega projects like Neom, the cornerstone of Crown Prince Mohammed bin Salman’s efforts to wean the kingdom’s economy from relying on oil revenue.
Until that day, the kingdom needs petrodollars to complete projects like Neom. The International Monetary Fund estimates that Saudi Arabia needs oil prices at $96 per barrel to balance its budget, roughly $24 less than where it stands now.
Trump said in his address that as oil prices go down, he would also “demand that interest rates drop immediately, and likewise, they should be dropping all over the world. Interest rates should follow us”.
In 2017, during his first term, Trump’s first foreign visit was to Saudi Arabia. That visit is most famously remembered for the president’s participation in a traditional Saudi dance performance.
President Trump joins a sword dance in Saudi Arabia. pic.twitter.com/jFVi1HUUZc
— Al Jazeera English (@AJEnglish) May 22, 2017
On Monday, Trump said he would probably go to Saudi Arabia again for his first visit to a foreign country, but only if the price was right.
“I did it with Saudi Arabia last time because they agreed to buy $450bn dollars worth of our product. I said I’ll do it, but you have to buy American product, and they agreed to do that,” adding that he “would go there” again if the kingdom agreed to buy more.
“Well, I don’t know. If Saudi Arabia wanted to buy another 450 or 500, we’d raise it for all the inflation. I think I probably would go there.”
Neither the administration nor the kingdom has described where the incoming Saudi investments in the US would go, but a multi-week visit to the US by the crown prince in March 2018 resulted in significant buy-ins at almost all the major tech companies, including rideshare apps like Uber and Lyft.
