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The $6-billion deal for Black Hawks is expected to result in about 450 jobs in Saudi Arabia

The $6-billion deal for Black Hawks is expected to result in about 450 jobs in Saudi Arabia



Riyadh looks beyond oil

US and Saudi companies signed deals worth tens of billions of dollars during a visit by US President Donald Trump, as Riyadh seeks help to develop its economy beyond oil

June 2017

In a broad-based push for economic reform and as part of that effort, Saudi Arabia signed a flurry of deals with private US companies worth tens of billions of dollars during a visit by US President Donald Trump.

The agreements and economic deals worth $280 billion were signed in Riyadh, in the presence of Saudi King Salman bin Abdulaziz Al Saud and US President Donald Trump and are expected to create over hundreds of thousands of jobs in the two countries in the next coming years.

On the military side, the US sealed a massive arms deal with Saudi Arabia, a move that solidifies its decades-long alliance with the world’s largest energy producer.

National oil firm Saudi Aramco said it signed $50 billion of agreements with US firms. Energy minister Khalid Al Falih said deals involving all companies totaled over $200 billion, many of them designed to produce things in Saudi Arabia that had previously been imported.

“We want foreign companies to look at Saudi Arabia as a platform for exports to other markets,” Al Falih told a conference attended by dozens of US executives.


FUNDS

Even as it sought US investment, Riyadh made two announcements on plans to deploy its own financial reserves for projects that would cement economic ties with the US.

The Public Investment Fund (PIF), Riyadh’s main sovereign wealth fund, and US private equity firm Blackstone said they were studying a proposal to create a $40 billion vehicle to invest in infrastructure projects, mainly in the US.

The vehicle would obtain $20 billion from the PIF and with additional debt financing, might invest in over $100 billion of infrastructure projects – a political boon to Trump, who has said he wants to rebuild crumbling US infrastructure.

Meanwhile, the world’s largest private equity fund, backed by the PIF, Japan’s Softbank Group and other investors including US firms Apple and Qualcomm, said it had raised over $93 billion to invest in technology sectors such as artificial intelligence and robotics.

Much of the Softbank Vision Fund’s money is likely to be invested in the US, helping Riyadh obtain access to technology that it could use to diversify its economy.

Top Saudi economic policy makers, including the finance minister and head of the kingdom’s main sovereign wealth fund, described investment opportunities in Saudi Arabia to the conference.

Saudi officials said they aimed to prepare new rules covering direct investment by foreign firms within 12 months.

Among the deals signed, GE said it reached $15 billion of agreements involving almost $7 billion of goods and services from GE itself. They ranged from the power and healthcare sectors to the oil and gas industry and mining.

Jacobs Engineering will form a joint venture with Aramco to manage business projects in the kingdom, and McDermott International will transfer some of its ship fabrication facilities from Dubai to a new shipbuilding complex which Aramco will build within Saudi Arabia.

 

MASSIVE ARMS DEAL

Riyadh, one of the world’s biggest military spenders, is keen to develop a domestic arms industry rather than import weapons, so several deals were in military industries.

A series of US-Saudi arms deals announced includes a pledge to assemble 150 Lockheed Martin S-70 Black Hawk utility helicopters in the kingdom.

The agreement, which is worth $350 billion over 10 years and $110 billion that will take effect immediately, was hailed by the White House as “a significant expansion of…(the) security relationship” between the two countries.

Lockheed Martin, one of the world’s largest defense contractors, said in a statement that the deal “will directly contribute to (Saudi Arabia’s) Vision 2030 by opening the door for thousands of highly skilled jobs in new economic sectors.”

The $6-billion deal for Black Hawks is expected to result in about 450 jobs in Saudi Arabia.

“We are proud to be part of this historic announcement that will strengthen the relationship between the US and Saudi Arabia,” remarked Marillyn A Hewson, the chairman, president and CEO of Lockheed Martin Corporation.

Saudi Arabia has expressed its intent to procure more than $28 billion worth of Lockheed Martin integrated air and missile defense, combat ship, tactical aircraft and rotary wing technologies and programmes, the company said.




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