Interview, Fireside Chat
Why does Trump admire Saudi Arabia?
- Saudi Arabia is transitioning from a petro-state to a modern, globalized economy, a process described as slow but initiated since 2016, with hundreds of billions of dollars spent and the Sovereign Wealth Fund backing over 100 companies across various sectors.
- The budget for giga projects was expected to reach approximately 900 billion dollars, though massive spending is causing economic overheating, driving up costs, and potentially discouraging private sector participation while failing to impress many foreign investors.
- Despite more than a decade of diversification efforts, the economy remains "quite stubbornly oily," a situation compounded by falling oil prices and mounting fiscal strain, leading to concerns that the oil revenue will not last indefinitely.
- Leadership intends to engage in dealmaking and peacemaking, specifically with Iran and regarding the Gaza war, potentially coinciding with a visit by Donald Trump, while the Kingdom has previously hosted US talks on peace in Ukraine.
- Significant geopolitical risks include instability from the ongoing war in Yemen, described as disastrous, and the Middle East conflict, which threatens to inflame local sentiment, reduce tourism, and decrease customers for commercial products.
- There are expectations for immediate economic activity, including the return of major tourism and entertainment events such as a Guns N' Roses concert in the coming days, despite fears of social backlash regarding women's rights and the general disconnect between social changes and economic prosperity.
- The regime maintains control as an autocracy under a crown prince who does not tolerate dissent, with a risk that deteriorating livelihoods and a lack of enjoyed prosperity could dissipate public goodwill, potentially triggering government crackdowns if unrest emerges.