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Aramco was initially developed with the help of US investors in 1933. A significant part of the economic development of Saudi Arabia in the earlier years was due to US investments in Aramco, now Saudi Aramco. US companies also have been involved in banking, finance, military contracting, consulting, accounting, engineering, infrastructure, logistics, transport, and other important parts of the Saudi economy.
A few of the many U.S firms in Saudi Arabia include Fluor, Ford, GE, Halliburton, Exxon, Marathon, Chevron, and Proctor and Gamble. Many U.S. chain restaurants can be found in Saudi Arabia, such as Starbucks, IHOP, and McDonalds. The US and Saudi Arabia have signed a Trade and Investment Framework Agreement.
Saudi Arabia has been investing the US companies for a long time. Motiva Enterprise, developed out of a Saudi Aramco joint with US companies, runs the largest refinery in North America in Port Arthur, Texas, distribution terminals, and gas stations. Saudi Aramco also has some superior research institutions in the US. It also has Saudi Refining, Inc., Aramco Performance Materials, and other subsidiaries in the US.
U.S companies with Saudi investments over the years include some of the most well-known, such as Disney, Chase, and Walmart. Much Saudi investment in the US is in portfolio investments, not FDI. Portfolio investment does not have the sense of permanence that FDI does. The strongest investment relations are built on the ground, not on the computer screen.
Saudi Arabia is a key place for US foreign direct investment in the Middle East, but it is far from largest host of US FDI. Saudi FDI into the US could be much more. A lot more FDI could be built from both sides.
US trade with Saudi Arabia declined in the last decade or so. As China, India and others have developed their export markets the US has lost some markets to them. Saudi Arabia’s pivot to Asia was part of these trade changes.
A significant part of the drop in US imports from Saudi Arabia was in oil. As the US fracking revolution took hold US imports of oil from Saudi Arabia dropped considerably. It is interesting that oil imports from Saudi Arabia are back into the negotiations given how US fracking significantly dropped US needs for imported Saudi oil.
Saudi Arabia is a significant holder in US Treasury bills with about 115 billion dollars. But Japan and China together hold about 2.3 trillion dollars in US Treasury bills. Many EU countries hold a lot more in US Treasury bills than Saudi Arabia.
The US could develop more FDI in the following sectors in Saudi Arabia: defense, energy, power, healthcare, IT, waste management, water, tourism, and agriculture. Major projects coming out of Vision 2030, the Saudi Green Initiative, and other projects in the country could lend opportunity to US companies and investors.
An important part of US-Saudi economic relations involves training and education. Many Saudi students, military officers, other officials, businesspeople, and more have been educated and trained in the US.
US-Saudi Economic relations have had their rough patches. Continuing investments and efforts from both sides are proof of the durability and resilience of US-Saudi economic Relations even during the tensest moments.
The world is an increasingly tense place with systematic risk on the upswing. Both Saudi Arabia and the US need good and long-term partners, including each other.