Saudi Arabia Pledges to Invest AUD 53 Billion in US Infrastructure

Saudi Arabia Pledges to Invest AUD 53 Billion in US Infrastructure

May 25, 2017

Relations between the U.S and Saudi Arabia takes a positive turn after President Trump kick started his tour of the Middle East with his first official visit arriving in Saudi Arabia in May 2017. The Saudi Arabia Sovereign Wealth Fund will be investing in President Trump’s infrastructure plan to a tune of AUD 53 billion, of which half the money will be contributed by Blackstone, the US-based real estate-focused private equity giant.

By Jagdish Kumar

Saudi Arabia demonstrated its hospitable eagerness to reset relations with the Trump administration during President Trump’s visit to the Kingdom on 20 May 2017; U.S.-Saudi relations faltered after former President Barack Obama brokered a historic nuclear deal with Iran in 2015, Saudi Arabia’s chief regional rival.

The Trump Administration has proposed to invest AUD 1.33 trillion on infrastructure across the country, of which AUD 267 billion will be funded by taxpayers and the balance will be funded by the private sector.

Saudi Arabia has also pledged to allocate AUD 1 billion to invest in a U.S. shale research and development program with the aim to lower the cost-curve of U.S. based oil production. This investment is perceived to be one way the Saudi Government can tap into shale gas markets globally.

Saudi Energy Minister Khalid Al-Falih told CNBC in March 2017 that the Kingdom believes funding U.S. infrastructure now in particular is an attractive investment.

“The infrastructure program of President Trump and his administration is something that we’re interested in because it broadens our portfolio and it opens a new channel for secure, low-risk, yet healthy return on investments that we seek,” says Al-Falih.

In an official statement, the White House says that “the United States – Saudi program undertaken by joint U.S.-Saudi working groups would invest in energy, industry, infrastructure and technology. The program would potentially be worth AUD200 billion in direct and indirect investment in the next four years”.

During President Trump’s visit to the Kingdom, Trump also signed an AUD 146 billion Defence deal with Saudi Arabia.

Under this deal, the U.S. will provide THAAD missile Defence systems; modernise Saudi Arabia’s cyber Defence and airborne intelligence-gathering, as well provide technology and services to secure its borders.

U.S. based Lockheed Martin will assemble 150, S-70 Black Hawk helicopters along with four combat ships; Boeing will sell Chinook helicopters, maritime surveillance aircrafts, along with 737 commercial airplanes to Saudi Arabia.

During the eight-year tenure of the Obama administration, the U.S. sold AUD 157 billion worth of Defence equipment to Saudi Arabia. However, due to the Yemen bombing by Saudi Arabia, military cooperation with the Kingdom slowed down due to alleged indiscriminate bombing of civilians.

Saudi Arabia has recently ramped up its investments abroad. In 2016, Saudi invested AUD 66 billion in various technology-based companies globally.

The Kingdom committed AUD 60 billion alone to Soft Bank’s AUD 133 billion technology fund to be invested in technology sectors world-wide.

The Saudi Public Investment Fund also recently invested AUD 4.67 billion in Uber Technologies Inc.

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