There is a significant gap between the economic and fiscal capabilities of the Gulf countries and these huge numbers they have committed to; Saudi Arabia's GDP is just slightly above one trillion dollars, and Qatar's GDP is only a little over two hundred billion dollars, while fluctuations in oil prices may further threaten the realization of these commitments.
Trump's trip to the Middle East is filled with dazzling figures, with Saudi Arabia and Qatar taking turns to promise investments in the USA amounting to trillions of dollars, but whether these astronomical investment commitments can ultimately be fulfilled is worth pondering.
Trump's Middle East trip lasts four days, with his first stop in Saudi Arabia. According to the White House press release, Saudi Crown Prince Salman initially promised to add an investment of 600 billion dollars to the USA over four years, but Trump claimed this figure could reach 1 trillion dollars. The Crown Prince also stated that Saudi Arabia would strive to promote total investments in the USA to reach 1 trillion dollars.
At the Saudi-USA Investment Summit, Trump proudly stated, "Look at those former presidents, they sometimes couldn't pull in a trillion dollars for years, while we basically achieved it in two months."
In Qatar, Trump received an even larger package. The White House announcement stated that the agreement Trump signed in Qatar aims to facilitate an "economic exchange" worth at least 1.2 trillion dollars, including a 200 billion dollars L from Qatar Airways for the purchase of 160 commercial aircraft from Boeing.
However, are these figures really worth their weight in gold and silver, or are they just sensational headlines meant to please Trump?
A closer look at the details reveals a significant gap between the economic and fiscal capacities of the Gulf countries and the promised huge numbers. Saudi Arabia's GDP is only slightly above one trillion dollars, while Qatar's GDP is just over 200 billion dollars, and fluctuations in oil prices may further threaten the realization of these commitments.
The economic realities behind the exorbitant promises.
Trump's trip to the Middle East has seemingly turned into a numbers game. As the visit progresses, the amounts promised become increasingly astonishing, but there are evident economic realities contradicting these figures.
Public data shows that Saudi Arabia's GDP is just over 1 trillion dollars, making its economy even smaller than that of the Netherlands. In terms of per capita income, Saudi Arabia is comparable to Portugal. The 1 trillion dollar investment claimed by Trump is almost equivalent to the entire GDP of Saudi Arabia, raising questions about the feasibility of this figure.
Furthermore, Qatar's GDP is only over 200 billion dollars, making the figure of "1.2 trillion dollars" appear even more unrealistic.
Moreover, the fluctuations in oil prices are eroding the financial foundation of these countries.
The International Monetary Fund estimates that the oil price at which Saudi Arabia maintains fiscal balance is $96 per barrel. This means that only if oil prices stay at this level can Saudi Arabia sustain its comprehensive welfare system and control political dissatisfaction.
However, the current Crude Oil Product price is approximately $60, which puts Saudi Arabia in a situation of fiscal stress and necessitates the implementation of austerity measures. If oil prices fall to $50 or lower, Saudi Arabia will face a prolonged crisis, ultimately threatening the viability of its economic model.
What do the three Gulf countries want?
Under Trump's trade-style foreign policy, these Gulf countries have many chips to offer, and they also have their own clear objectives.
For Saudi Arabia, their primary pursuit is 'security, security, and security'. Saudi Arabia and other Gulf countries are seeking a security commitment from the USA for Gulf stability. Last year, the USA and Saudi Arabia nearly finalized a landmark defense and trade agreement, but negotiations stalled as Saudi Arabia insisted that Israel should commit to paving the way for Palestinian statehood.
In addition, Saudi Arabia is seeking cooperation with the USA in developing a civilian nuclear program, but the insistence on domestic uranium enrichment has raised concerns in the USA and Israel regarding nuclear Weapons diffusion. The White House's support for Saudi nuclear plans may allow USA companies to win lucrative contracts.
The UAE sees investment as the core strategy for deepening relations with the USA. As one of the richest countries in the world per capita, the UAE has committed to invest hundreds of billions of dollars in the USA. In March of this year, the UAE announced a 10-year $1.4 trillion investment plan, focusing on AI, Semiconductors, manufacturing, and Energy.
Anwar Gargash, the diplomatic advisor to the President of the UAE, stated: "The UAE sees a once-in-a-lifetime opportunity to make significant contributions in the fields of AI and advanced technology." However, achieving the goal of becoming a global leader in AI by 2031 is difficult without the support of advanced microchips from the USA.
Qatar has the most formal security cooperation relationship with the USA, hosting the largest US military base in the Middle East. As a country skilled in "mediation diplomacy," Qatar has actively intervened in various hot issues from the Gaza conflict to the peace negotiations in Afghanistan in recent years, striving to enhance its geopolitical value in Washington as a "key mediator."
Hassan al-Hasan from the International Institute for Strategic Studies stated: "Gulf countries view mediation as a tool to gain influence and prestige, and they have successfully leveraged this role to become indispensable partners in Trump's political agenda."
Editor/danial
