Having gone all-in on a Hillary Clinton victory ahead of the elections, Saudi Arabia has quickly pivoted in its "appreciation" of the Trump administration, and having realized that the fastest way to Trump's heart is through the US Treasury's bank account, it is preparing to invest an "unprecedented" amount of money in the US. According to Bloomberg, the Kingdom’s sovereign wealth fund will announce plans to "deploy as much as $40 billion into U.S. infrastructure." The investment will likely be unveiled as early as next week when Trump is scheduled to visit the kingdom.
While it is clear why Saudi Arabia is eager to appease Trump - after all the all important Aramco IPO is coming up, and the Saudis will be eager to open the world's biggest public offering in history to as many US accounts as possible while doing everything in their power to stay on America's good side - Bloomberg's explanation that Riyadh felt "shunned by President Barack Obama, who crafted the 2015 nuclear deal with their Shiite rival Iran" leaves a bit to be desired: after all Saudi Arabia has consistently been the best customer of the US military-industrial complex for the past decade, and to claim that it had troubled relations with the previous administration is naive at best. What is certain, however, is that Saudi Arabia would have been delighted had Hillary Clinton become president, considering the millions in "donations" the Clinton Foundation received from Saudi Arabia and its peer Gulf states over the years.
Meanwhile, the kingdom claimed a “historic turning point” in bilateral relations after President Trump met Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman in the White House earlier this year. On May 19, Trump will make his first foreign trip since taking office, visiting Saudi Arabia and Jerusalem before heading to Europe.
Or perhaps it's not Trump, but rather his son-in-law, that Saudi Arabia is most delighted with. A White House official told Bloomberg that the plans were in the works and that Trump’s son-in-law and senior adviser, Jared Kushner, had played a critical role in the discussions.
The Saudi funding may end up an anchor investment in Trump's massive $1 trillion infrastructure stimulus plan.
Trump in March offered his support for developing a new U.S.-Saudi program in energy, industry, infrastructure and technology that could be valued at more than $200 billion in direct and indirect investments within the next four years.
The president has said he intends to push for$1 trillion in U.S. infrastructure investments over the next decade, with $200 billion coming from taxpayers and the rest from the private sector.
Of course, it would be delightfully ironic if the Saudi billions end up being routed to fund new US shale technology, R&D and/or capex, in the process lowering the cost-curve of US oil producers even more...
... and further eroding Saudi market share and boosting its budget deficit.
This would not be the first time the Saudi Public Investment Fund has made substantial capital allocations abraad: last year, the PIF has funneled about $50 billion of the kingdom’s reserves into investments abroad, almost all of it into technology. It will commit as much as $45 billion to partner with SoftBank Group Corp. to set up a new $100 billion vehicle to invest in global technology. The fund also invested $3.5 billion in Uber Technologies Inc. last June. In the case of the latter, in light of the recent scandals gripping Uber, which may soon lose Europe as a market, it is possible that the Saudi's top-ticked the valuation of the car-sharing unicorn.