From $1 trillion in spending to the F-35, US and Saudi commitments still not agreed

U.S. President Donald Trump has touted Saudi Arabia’s $1 trillion investment commitment to the U.S. and the potential sale of U.S. fighter jets to Riyadh, but experts say there remain questions about whether such a deal will materialize.

President Trump rolled out the red carpet for Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman, as he arrived in Washington on Tuesday for talks ranging from national security to the civil nuclear partnership. The two leaders signed a defense cooperation agreement and discussed the possible sale of US-made F-35 fighter jets to Saudi Arabia.

Mohammed bin Salman’s (popularly known as MBS) visit to the United States was not without controversy, as it was his first visit to the United States since the murder of Saudi critic and journalist Jamal Khashoggi in 2018.

U.S. intelligence agencies determined that the crown prince had approved the operation that led to Mr. Khashoggi’s death at the Saudi consulate in Istanbul, but Riyadh denied any involvement in the killing.

Undeterred by global outrage over Khashoggi’s death and question marks over Saudi Arabia’s recovery and invitation to the White House, Trump and MBS said they had “worked out a series of landmark agreements that deepen the U.S.-Saudi strategic partnership.”

The White House said in a statement that this includes Saudi Arabia’s pledge in May to increase its $600 billion investment in the United States to $1 trillion. The White House said the upsurge reflects “deepening confidence in and momentum in the United States under President Trump’s leadership.”

However, no further details have been released about the timeline for that multi-trillion dollar investment.

$1 trillion in investment would be equivalent to Saudi Arabia’s annual economic output in 2023 ($1.07 trillion), and economists question whether that level of investment will or could materialize anytime soon.

Paul Donovan, chief economist at GBS Global Wealth Management, said on Wednesday: “These kinds of pledges are becoming the norm in international affairs, even when there is no enforcement mechanism at all, as is the case with the EU (committing to investing in the US as part of a trade deal).”

“To put Saudi Arabia’s pledge into context, it is equivalent to almost one year of Saudi Arabia’s GDP (gross domestic product). Therefore, this pledge may not be kept in the short term,” he warned.

In addition to the investment pledge, President Trump and MBS also discussed selling F-35 jets to Saudi Arabia, which is reportedly considering buying up to 48 stealth fighters in a multibillion-dollar deal.

The White House announced that the president “approved a major defense sales package, including future F-35 deliveries, that strengthens the U.S. defense industrial base and ensures that Saudi Arabia continues to purchase American-made products.” However, details such as the number of machines to be sold and the timing of supply have not been disclosed.

Such a sale could be controversial among U.S. lawmakers who have traditionally been sympathetic to and loyal to Israel, America’s main and longtime ally in the Middle East.

Israel is currently the only country in the Middle East with F-35s, and selling such advanced stealth technology to Saudi Arabia would be considered risky and could change military and power dynamics in the volatile region. Meanwhile, the Israel Defense Forces is reportedly unhappy with the prospects of an F-35 contract with Saudi Arabia, warning that it would jeopardize Israel’s air superiority in the region.

Trump dismissed those concerns, telling reporters in the Oval Office on Tuesday, “We’re selling the F-35,” but alluded to Israel’s displeasure, saying, “This (Saudi Arabia) is a great ally, and Israel is a great ally.”

“I understand they would like to get a downsized plane, but as far as I’m concerned, I think both are at the level they should be, top-of-the-line planes,” he added.

Analysts say giving Saudi Arabia the F-35 and normalizing relations with Israel before signing the Abraham Accords would be too much of a quid pro quo for Riyadh.

“Saudi Arabia is a key security partner of the United States, and enhanced bilateral defense cooperation can advance our shared interests and support efforts to build a regional security architecture that more effectively deters and defeats aggression,” Bradley Bowman, senior director at the Foundation for Defense of Democracies, said in an analysis.

“But before providing Riyadh with F-35s, Washington should address concerns about Riyadh’s relationship with China and demand that Saudi Arabia first normalize relations with Israel in accordance with the Israeli Qualitative Military Superiority Act.”

Analysts said deep-seated disagreements over a two-state solution could give the White House reason to hold back on supplying Saudi Arabia with F-35s.

“It’s one thing to announce a big deal, it’s one thing to announce that Saudi Arabia will allow the purchase of this advanced F-35 stealth fighter, but it’s another thing to actually see the aircraft land and take off on a Saudi runway,” Paul Musgrave, an associate professor of government at Georgetown University in Qatar, told CNBC on Wednesday.

“And between here and there, there are a lot of details. And when you start getting into the details of who is transferring what technology at what point, I think it’s fair to say that Congress, which is a little bit friendlier to Israel than it is to Saudi Arabia, is going to give some input.”

“I’m not saying this deal won’t happen. Of course, Israel is also suffering a reversal of official status, but there’s probably a pretty long way between where we are and where we’ll get to,” he told CNBC’s “Squawk Box Europe.”