Why does Trump admire Saudi Arabia?

Geopolitical Shift and Stabilization

• Saudi Arabia has transitioned from a regional "menace" to a constructive, stabilizing force focused on de-escalation and peace.
• The kingdom is counseling the Houthis to de-escalate and has engaged with the new government in Syria.
• Saudi Arabia paid off Syria's debts to the World Bank and promised further investment pending the lifting of U.S. sanctions.
• Riyadh is positioning itself to mediate peacemaking talks with Iran and potentially end the war in Gaza.
• The kingdom hosted talks between the U.S., Ukraine, and Russia regarding peace in Ukraine.
• This foreign policy pivot is driven by Crown Prince Mohammed bin Salman's (MBS) domestic need to secure stability for his economic transformation.
• Instability in the Middle East threatens local Saudi consumers, tourists, and the viability of new domestic industries.

Domestic Social Liberalization

• Women were largely excluded from the labor market 20 years ago; they now can drive, travel freely without a male guardian, and work or live anywhere.
• The religious police (vice squad) have been disbanded and are no longer enforcing public morality.
• Cinemas and concerts are now legal and widely available, including screenings of Hollywood films and international concerts (e.g., Guns N' Roses in Riyadh).
• Social changes occurred rapidly with minimal backlash, garnering significant goodwill from the population, particularly the youth.
• Approximately two-thirds of the local population is under the age of 35.
• Despite these reforms, Saudi Arabia remains an autocracy where dissent is not tolerated by MBS.

Economic Transformation and Challenges

• Since 2016, the government has spent hundreds of billions of dollars to diversify the economy away from oil dependence.
• The Sovereign Wealth Fund has backed over 100 companies across various sectors, including electric vehicles and semiconductors.
• Massive "giga projects" are underway, most notably Neom, a futuristic city concept stretching 170 kilometers.
• The estimated budget for these giga projects is approximately $900 billion, which roughly equals the kingdom's current annual GDP.
• More than a decade into the initiative, the economy remains "stubbornly oily" and has not yet successfully diversified.
• High spending on giga projects is causing economic overheating, driving up costs and potentially discouraging private sector participation.
• Foreign investors have shown limited enthusiasm for the current agenda.
• Falling oil prices are mounting fiscal strain on the transformation program.

Risks and Future Outlook

• MBS's political capital relies heavily on the successful delivery of economic prosperity to match social freedoms.
• Failure to achieve economic transformation risks dissipating public goodwill and could trigger unrest.
• There is a risk that economic failure could force the government to crack down on dissent, reversing social liberalization gains.
• The success of the economic model depends on sustaining foreign investment and managing the fiscal gap left by declining oil revenues.