The U.S. and Saudi Arabia signed a $600 billion investment agreement on Monday which was referred to as a “strategic economic partnership”.
The deal, which was revealed during President Trump’s tour of the Gulf, includes a $142 billion defence package that will allow Saudi Arabia to acquire cutting-edge American-made equipment and services.
The agreement also includes investments in critical minerals, aerospace, technology, AI, and energy with the goal of accelerating U.S. economic growth.
But according to some reports, the total value of completed deals might be closer to $283 billion, which is less than the $600 billion that Saudi Crown Prince Mohammed bin Salman had promised.
State media in Saudi Arabia and the White House have hailed the deal as a landmark move to deepen bilateral relations.
$600 billion U.S.-Saudi Arabia deal to generate jobs in AI, energy, technology, aerospace
Significant economic, geopolitical, and social ramifications accompany the $600 billion U.S.-Saudi Arabia investment deal, which was signed on Tuesday.
It also highlights disparities in perception and impact. The agreement is expected to generate thousands of jobs in the United States, specifically in the fields of energy, technology, aerospace, AI, and defence.
Boeing and Lockheed Martin are among the companies involved in the $142 billion defence package alone, which supports American innovation and manufacturing.
Saudi Arabia’s Vision 2030 seeks to diversify its economy, which is reliant on oil. Its global economic competitiveness is increased through investments in critical minerals, technology, and artificial intelligence.
The agreement may strengthen U.S.-Saudi cooperation and stabilise energy markets, but it may also increase competition with China and other global powers in the fields of technology and artificial intelligence.
Geopolitical dimension to the $600 billion U.S.-Saudi Arabia deal
By signing the deal, the United States reaffirms its position as Saudi Arabia’s main strategic ally and challenges China’s expanding Middle Eastern influence.
It highlights Saudi Arabia’s importance as a U.S. ally in the fight against Iran. The huge arms deal might intensify hostilities with Iran and its allies, which could lead to a Gulf arms race. Because Saudi Arabia is pushing for a Palestinian state, it might also have an impact on U.S. relations with Israel.
Under the Trump administration, the deal represents a U.S. shift back towards the Middle East, possibly at the expense of Asia-Pacific or Europe.
By providing Saudi Arabia with cutting-edge American weapons, such as fighter jets, missile defence systems, and cybersecurity tools, the $142 billion defence package improves its deterrent capabilities.
Through securing access to key bases and intelligence sharing, the agreement guarantees the United States military’s long-term presence and influence in the Gulf.
There are moral concerns regarding U.S. support for Saudi Arabia due to its human rights record, which includes its involvement in Yemen and internal repression.
The agreement, according to critics, puts profit ahead of values. Global climate goals may be jeopardised by Saudi Arabia’s significant reliance on fossil fuels and the environmental costs of producing weapons, even though the agreement includes clean energy initiatives.
Progress in economic diplomacy
The agreement is seen by the Trump administration and its supporters as a success in economic diplomacy that counters China and Iran while bolstering American industry. They prioritise national security and job creation.
The agreement was criticised by progressive Democrats and human rights activists for strengthening Saudi Arabia’s autocratic government.
They contend that doing so runs the risk of drawing the United States into Middle Eastern conflicts and ignores Saudi Arabia’s violations of human rights, including the war in Yemen and the crackdown on journalists.
Drawing attention to Saudi Arabia’s use of American weapons in Yemen, some lawmakers may attempt to review or block certain provisions of the arms deal under the Arms Export Control Act.
Nonetheless, opposition may be curbed by Trump’s veto power and Republican backing. According to polls (e.g., Pew Research, 2024), opinions on U.S.-Saudi relations are divided.
While many Americans support economic agreements that generate employment, they are cautious about arming countries with dubious human rights records.
Although public opinion, which is difficult to measure due to censorship, may be sceptical of foreign influence or the pace of reforms under Vision 2030, Saudi state media portrays the agreement as a triumph for modernisation.
While competitors like China and Russia may view the agreement as a challenge to their regional aspirations, U.S. allies like the United Kingdom and the United Arab Emirates may laud it for stabilising the Gulf. The arms agreement has already been denounced by Iran as destabilising.
The agreement may marginalise their own economic ties with Saudi Arabia, according to some nations in the Global South that see it as bolstering American supremacy.
Moral concerns are pitted against economic pragmatism in the deal. Supporters contend that the advantages in terms of economy and security outweigh moral concerns, while detractors caution that disregarding Saudi Arabia’s human rights record creates a risky precedent.
Only $283 billion in deals finalised
There are concerns about whether the entire $600 billion will be realised because reports indicate that only $283 billion in deals have been finalised.
Based on how Saudi Arabia uses its new capabilities, the arms deal could either escalate conflicts or deter Iran. A public backlash or congressional resistance could restrict the deal’s reach, particularly if it is linked to Yemen or human rights issues.
Although the U.S.-Saudi $600 billion investment deal is a risky move with significant geopolitical and economic advantages, it widens gaps in morality, human rights, and regional stability.
It bolsters the U.S.-Saudi alliance and opposes adversaries, but it also runs the risk of drawing the United States into Middle Eastern conflicts and alienating both domestic and foreign critics. Negotiating these differences and fulfilling the deal’s lofty goals are essential to its success.