by Dr. Ibrahim A. Al-Mutrif
The year 1931 witnessed the consolidation of the economic relations between Saudi Arabia and the US, with the finding of oil, and with the awarding of oil exploration rights by King Abdulaziz to the US Standard Oil Company. The year 1932, on the other hand, is considered a very important year in the relations between the two countries, as it witnessed two important events, the unification of the Kingdom, and the setting up of temporary diplomatic and commercial relations between the two countries.
The oil exploration agreement referred to above have led to an increase in the number of American companies operating in the Kingdom, including the Standard Oil Company, which joined Mobil, Exxon and Texaco to form the Oil Company known today, as Saudi Aramco.
Presently, the United States and Saudi Arabia enjoy a very strong bilateral economic relation. The Kingdom is one of the United States’ largest trading partners in the Middle East, a partnership that is heavily supported by common interests. In fact, the US is one of the top partners of the Kingdom, ever since bilateral relations between the two friendly countries were established, over eight generations ago.
Regarding the private sector, American companies have a long and productive history of operating in Saudi Arabia, contributing to its social and economic development. They represent a broad range of sectors, from energy and defense, to healthcare, information technology, consulting, as well as other business lines.
On the investment side, it is important to note that the Kingdom has made significant investments in the United States. Investments in American companies included Uber, Lyft, Apple, eBay, Twitter, Motorola, Citigroup, News Corporation, Time Warner and more.
As a matter of fact, the Wall Street Journal (WSJ) reported on this past eighth of January that there is a potential deal for new Saudi investment in the US energy sector. According to the WSJ, who is citing unnamed source, said Saudi Arabia is reportedly eyeing an investment in the U.S. liquefied natural gas, in what would mark a “sea change in the energy flows between the U.S. and Saudi Arabia”.
American multinationals involvement in the development of Saudi Aramco has been there since the company’s inception. In May 2017, the company signed agreements with eleven major U.S. oil and gas companies, paving the way for enhancing its business synergy with the US, grow strategically and diversify as well as attract investments from its U.S. counterparts, to strengthen and achieve its standing as the world’s leading energy company.
Among the agreements-Joint Ventures signed were with: GE, Jacobs Engineering, Halliburton, Nabors, National Oilwell Varco, Rowan, McDermott, Honeywell, Schlumberger, Weatherford and Emerson.
In addition to that and right after the news on the listing of Saudi Aramco, the company has invited banks, including the two American financial services giants, Citi and Goldman Sachs, for meetings on the subject.
According to reports on KSA’s economy in today’s world, issued by the Davos Summit, the Heritage Foundation, the Global Competitiveness Index, the Cornell University Global Innovation Index, the Economic Freedom Index, the Best Countries to Start a Career Index and the Global Influence Index, the Kingdom is the: (1) 2nd globally in oil reserves, production and exports; (2) 4th in natural gas reserves and 10th in producing it; (3) largest petrochemical producer in the Arab region; (4) one of the largest 20 economies in the world and largest Arab economy and one of the largest economies in MENA by GDP; (5) 7th in the Arab region and 78th globally in the Economic Freedom Index; (6) 25th globally on the Global Competitiveness Index; (7) 1st in the Arab region and 43rd globally on the Global Innovation Index; (8) 12th on the Global Influence Index and 10th in the Best Countries to Start a Career Index, and finally (9) 1st in the Arab region, and 29th globally in openness to world economy, initiatives, quality of life, and citizenship.
We need to recognize and appreciate the fact that both Saudi Arabia and the United States have a longstanding relationship that has deepened along the past eight decades. That Saudi Arabia is the largest stable economy in the Middle East, characterized by active membership in the G20 and the WTO. More importantly, Saudi Arabia is moving away from being the gas station of the world to a knowledge-based economy.
Commenting on the Saudi-American economic relations, the US Trade Representative said, “the Saudi and American leaderships are committed to improve trade and investment integration, with an ongoing dialogue between commerce, industry and business communities in both countries, to help increase trade and investment and improve the economic integration process”.
In conclusion, I strongly believe that the Saudi and American leaderships are committed, and that they will ensure the two nation’s economic ties are being developed and broadened, to reflect future realities, opportunities and priorities.
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