U.S. Saudi Trade

U.S. Saudi Trade

Donald Trump appears to be reluctant to investigate the murder of Jamal Khashoggibecause of an alleged trade deal?

Donald Trump has said US investigators are looking into how Jamal Khashoggi vanished at the Saudi consulate in Istanbul, but made clear that whatever the outcome, the US would not forgo lucrative arms deals with Riyadh. The president’s announcement raised concerns of a cover-up of evidence implicating Saudi Arabia’s powerful crown prince, Mohammed bin Salman, in plans to silence the dissident journalist…Any sense that the administration might seek to impose serious consequences on Saudi Arabia was dispelled by the president. Asked at an impromptu press conference in the Oval Office whether the US would cut arms sales if the Saudi government was found to be responsible for Khashoggi’s disappearance, the president demurred, saying the US could lose its share of the huge Saudi arms market to Russia or China. In the Oval Office Trump pointed out that the disappearance took place in Turkey and that Khashoggi was not a US citizen.

He may not be a citizen but he did hold a green card and worked for the Washington Post. Credit to the Republicans in Congress for pressing on the appropriate investigation of this matter. My only comment today will be to challenge Trump’s argument that our trade with Saudi Arabia is more important than sanctioning the Saudi government for this murder likely ordered by Mohammed bin Salman. The Census Bureau reports on both our imports from Saudi Arabia and our exports to them. Over the last decade, imports have varied from less than $17 billion per year to over $55 billion. These imports are predominantly been oil of course. Exports have never reached $20 billion per year so we have run persistent and sometimes large deficits with the Saudis. In Trumpian “logic” – aren’t we losing to them? To be fair, we choose to import Saudi oil but then again, the kingdom is not the only supplier of this commodity. But Trump is telling us that we may have yuuuge exports of military goods:

I know they’re [Senators] talking about different kinds of sanctions, but they’re [Saudi Arabia] spending $110 billion on military equipment and on things that create jobs, like jobs and others for this country. I don’t like the concept of stopping an investment of $110 billion into the United States.

Of course this figure is considered “fake”. Maybe the Saudis will purchase more military goods in the future than they have in the past. But as the Census Bureau notes, their 2017 purchases were a mere $2 billion whereas the Saudis purchased over $2.7 billion in civilian aircraft and $1.6 billion in automobiles. I’m sure Boeing, Ford, and GM enjoy exporting their products wherever they can but these amounts are indeed peanuts compared to the world market for automobiles and airplanes.

Barkley Rosser adds in comments at Econospeak:

A further point on this is that s non-trivial chunk of what was announced as part of this when Trump was in KSA sword dancing with the royals were deals already in the works (if not finalized) from the Obama era (he who cannot be named in the Trump White House), and another large chunk were/are highly speculative to imaginary. It is unclear how much of that supposed $115 billion was actually new likely purchases, but most reports I have seen do not have it exceeding $20 billion, with that likely to happen over a long period of time, to the extent any of it does.

Also, quite a few observers have noted that traditionally it was not the US begging KSA to buy our military equipment but them begging the US to let them buy our equipment, with this new event possibly pushing the situation back more to its traditional nature.