By: Hussein Askary, Vice-Chairman of the Belt and Road Institute in Sweden
Much concern on the one hand and glee on the other have been expressed that President Donald Trump’s much hyped deal with Saudi Arabia announced today in the Saudi capital Riyadh will derail China-Saudi and China-Arab cooperation, especially the Belt and Road Initiative. Much of these concerns are unwarranted. Even if that is hypothetically the intention of the Trump Administration, practically, it is not possible. To make a more realistic analysis, we have to split our brain into two halves: One with a zero-sum, geopolitically and ideologically structured half which says, that if the Saudis make such big deals with the U.S., what is left for China? This is a nonsensical way of thinking for many reasons:
- The deals are first trade deals for Saudi Arabia to buy American weapons over a period of four years, which the Saudi would do and have done any way. Saudi Arabia has a historical military cooperation with the U.S. and Britain. So, what is new? China has no such arms deals and security arrangements with Saudi Arabia anyway. Second the much touted US$600 billion in investments are not only Saudi investments in the U.S. but bilateral trade too, also over a period of four years (Saudi $600 billion package with US includes investments, procurement, minister says). How much of that will materialize we don’t know.
- The second more rational and less ideological half of our brain is a win-win minded one. Saudi Arabia and almost all the Arab countries have strategic cooperation agreements with China, based on jointly building the Belt and Road, industrialization, relocation of advanced industries into these countries. China can build ports, railways, airports, logistics centres and hubs, new manufacturing capabilities, green technologies, electric vehicles plants, greening the deserts, computer and telecommunications equipment plants, 5-g networks, and much more in these countries. You can read about these in my recent article How the Belt and Road is driving the Global South’s development. All these cooperation initiatives are happening and will continue because these countries need them, China can build them, and the U.S. cannot.
- The U.S. cannot build this infrastructure and manufacturing in the U.S. itself. The fate of President Bidens Build Back Better is a shining example. Saudi Arabia and the other Gulf countries are divesting from the reliance on oil exports as the sole source of income into industrialization, to avoid the oil price shocks that brough them to the brink of bankruptcy three times in the last 10 year when the oil prices collapsed to near or below US$30/barrel in 2014, 16, and 2020. The U.S. and other Western powers are good at floating hot air balloons like Build Back Better World (G-7 Alternative to The Belt and Road: All That Glitters Is Not Gold!) which is already forgotten, the EU’s Global gateway Initiative, which is a mere PowerPoint presentation, and the India-Middle East-EU Corridor which was buried under the rubble of Gaza (Why the India-Middle East-Corridor is a Fraud: A Physical-Economic Argument).
- The relationship between the Arab countries has grown so rapidly and intensively in the past few years, that these countries might surpass the EU as trade and economic partners in the coming decade. Read about this matter in my article The China-Arab Forum: Will the Arab World Surpass the EU in Significance for China?.
The United States cannot replace that.
- Besides, people have to stop regarding the Saudis and Arabs as minors who do not control their fate. Yes, they are historically too much reliant on the U.S. and Britain for their security, but the world has changed since the 1970s. The fact that the Egyptian President Abdel-Fattah Elsisi attended the Victory Day celebrations in Moscow, although Egypt has strong ties to Western powers, is evident of the independence the Arab countries are showing. Saudi Arabia and the United Arab Emirates have also kept strong ties to Russia during the war in Ukraine.
- China is a moderating major power for the region, while the U.S. is a polarising power. China’s mediation of the historic normalisation of relations between Saudi Arabia and Iran in 2023 is a major breakthrough for Chinese diplomacy. The U.S. has chosen sides in every conflict in the region and participated in many of them.
As mentioned above, these are areas that do not touch China-Saudi and China-Arab cooperation. Trump wants Saudi and Arab money to flow into the U.S. What Saudi Arabia wants from the U.S. is security guarantees, a solution to the Palestinian issues, and a green light to launch civilian nuclear programmes. Whether this will be built by American companies is a bit doubtful, due to lack of capacity. President Trump is a fan of fossil fuels, not advanced nuclear and clean technology. Almost all of the oil and gas exported by Saudi Arabia and other gulf countries goes east, mainly to China, Japan, South Korea, India, etc. The U.S. does not need this oil and gas. It needs the revenues generated by these exports. So, the market in the East Asia will remain the main destination of Saudi and other Arab oil and gas. What China may worry about is if there is pressure on the Arab countries to divest from agreements on investments made with China and the BRI. But that would be suicidal for the Arab countries.
Nothing new under the sun
I consider this deal to be business as usual. It is accompanied by much hype. It is a personal media victory for Trump, but in terms of economics, it is not such a major breakthrough. What is discussed behind closed doors is something different, but I am not in a position to comment on that. As I said the value mentioned is mostly in trade over four years with arms sales topping the list. Saudi investments will be in the U.S. itself. The U.S. has very little else to offer Saudi Arabia in terms of economic value.
In terms of foreign policy success, Trump was hoping to revive his Abrahams accords between Israel and the Arab countries, which he launched in his first term. This time he wanted Saudi Arabia to join, but the genocidal war launched by the Israelis on Gaza and the Palestinians put the breaks on that. Trump’s relationship to Netanyahu has deteriorated recently, and he is not going to pose as Israel’s lawyer this time. At least not yet, and Trump expressed that in his remarks in Riyadh (https://www.timesofisrael.com/trump-to-saudi-arabia-youll-join-abraham-accords-in-your-own-time/). And trump does not seem to be ready to recognise a Palestinian state. So, he compensated for that non-breakthrough, with the trade and investment deal.
China’s accomplishments (detailed in referenced articles above) with Saudi Arabia, the UAE, and the other Arab countries is unparalleled and cannot be rolled back, unless these countries want to commit collective suicide. The countries in the Gulf want to balance relations between east and west to get out of harm’s way and develop their societies as modern, industrial states. There is no better partner to accomplish that than China.
At the end of the day, physical economic realities will have the final say, not some ideologically trumpeted wishes.