The pomp, circumstance, benefits, and costs of the trillion-dollar US-Saudi Investment Summit

The Trump administration orchestrated an extraordinary welcome reception for Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS) last week. Green and white Saudi flags festooned DC lamp posts, street signs, and government buildings. The two leaders took in a military flyover that included F-35 fighter jets; bands played, and Arabian horses escorted the official motorcade. Such pomp and circumstance are reserved for America’s closest allies, a message both Saudi and American leaders were comfortable conveying.

The crown prince and the president sat for not only a working meeting but later joined a lavish black-tie dinner and appeared side-by-side the next day at a US-Saudi Investment Summit. CEOs from major companies—Nvidia, Palantir, Tesla/SpaceX, Apple, and Pfizer, among others—attended the dinner and the next day’s summit. From the summit’s podium, Trump welcomed many of the attendees by name and assured the high-profile audience that he had reviewed personally all attendees and either knew, or knew of, everyone in the room. Given his comfort with the leaders of big tech, his remarks contained an air of plausibility. American officials gleefully concluded that “America is open for business.”

As a result of the meetings, the White House heralded what it contended would be a trillion dollars’ worth of deals, augmenting by $400 billion the $600 billion announced in May when the president traveled to the Gulf region. Although experts are hard pressed to replicate the math behind this vast sum, even a portion of it amounts to an astonishing level of economic commitment.

It would be easy to focus only on the thrill of the deal that this president and those surrounding him clearly felt. But to do so would miss the central role that the US administration is giving the tech sector, and artificial intelligence in particular, not just economically but geopolitically. Focusing only on the size of the various deals struck in Washington would also obscure how they align not only with Saudi Arabia’s economic development plans but also its long-term strategy of betting on the United States. This aligning of geoeconomic and geopolitical interests is reminiscent of US-Saudi relations in the late 1970s and early 1980s, at the height of the two countries’ strategic cooperation.

But last week’s deals carry with them an array of potential risks. Little was said about whether sensitive data would be protected, how technology would be controlled, or even if Saudi Arabia’s long-standing desire for an independent nuclear fuel cycle would finally be realized. The lavishness of the two-day event was in many ways targeted at China, which may have lost its growing foothold in the Kingdom. But at what cost? It may take decades to fully calculate the answer to that question.

Saudi Arabia’s role in-America’s AI Action Plan. The deals announced at the Investment Summit begin to give shape to the administration’s “America’s AI Action Plan” announced this past July. The plan recognizes that a “new frontier of scientific discovery lies before us, defined by transformative technologies such as artificial intelligence …  [and that] breakthroughs in these fields have the potential to reshape the global balance of power.” The plan identifies the need to accelerate domestic AI innovation and infrastructure investments while also leading AI diplomacy and security abroad. Given last week’s activities, it is clear that the administration views Saudi Arabia as a key partner in advancing these interests.

The AI economy will rely on data centers as a fundamental building block. Not surprisingly then, there is a global dash underway to build and expand existing capacity. McKinsey & Company Inc. estimates that by 2030, companies will invest almost $7 trillion on data center infrastructure globally, and at this scale, AI companies are looking beyond their national borders. As the New York Times notes, AI companies are seeking partners “wherever they can find the money and the electrical power, including Europe, Asia and the Middle East.”  With AI evolving as the backbone of future economic growth and technological advance, there is a growing sense that owning, operating, and hosting global datacenters will be a key to 21st century wealth and power.

Data centers require capital, energy, and land, assets that Saudi Arabia has in abundance. Saudi Arabia is already investing $21 billion in data centers alone. Riyadh is spending even more on data-intensive industries, such as electric vehicles, advanced manufacturing, and space exploration. Last week’s agreements will continue to spur such investments.

Energy is a competitive advantage for Saudi Arabia and its neighbors. In May, the United Arab Emirates announced StargateUAE, an AI computing campus that will require five gigawatts of energy. (To provide a sense of scale, five gigawatts are enough to power all of Chicago, with energy to spare.)  Saudi Arabia wants to operate at a similar scale and has invested significantly in expanding its oil and gas production along with renewables, such as wind and solar.  Today the Kingdom is one of the fastest-growing markets for solar power. But it has long eyed nuclear power, as frequent readers of the Bulletin know well. Because of its energy demands, AI will dramatically accelerate an existing trend towards nuclear power in the Middle East that is also driven by a growing need to power desalination plants and a desire to export gas and oil rather than consume it domestically.

During Trump’s trip to the region in May, US Secretary of Energy Chris Wright signed a memorandum of understanding with Saudi Arabia’s energy minister on civil nuclear energy. The MOU includes safety, security, and nonproliferation programs; vocational training and workforce development; US generation III+ advanced large reactor technologies and small modular reactors; uranium exploration, mining, and milling; and safe and secure nuclear waste disposal. On Wednesday Wright issued a statement hailing a newly signed Joint Declaration on the Completion of Negotiations on Civil Nuclear Cooperation that “builds the legal foundation for a decades-long, multibillion-dollar nuclear energy partnership with the Kingdom; confirms that the United States and American companies will be the Kingdom’s civil nuclear cooperation partners of choice; and ensures that all cooperation will be conducted in a manner consistent with strong nonproliferation standards.” As always, the details in terms of scope and timing matter, and little more has been released publicly.

In particular, very little has been said about whether the framework will allow uranium enrichment. Saudi Arabia has long sought an independent fuel cycle. During the Biden administration, the possibility of a Saudi civilian nuclear program was considered as a sweetener to Saudi Arabia recognizing Israel and joining the Abraham Accords. The Trump administration has de-linked the two. Although little has been said about whether the recent agreement includes enrichment, some close observers believe it does and speculate it will be submitted to the US Congress as part of a Section 123 Agreement.

Saudi Arabia aims to play a critical role in securing and refining critical minerals, another building block of the AI ecosystem. The United States trails China in terms of both mining and refining the critical minerals needed to produce the chips and technologies that will serve as the backbone of the new AI economy, along with other defense, energy and civilian applications. According to Karl Friedhoff, a fellow at the Chicago Council on Global Affairs, “the United States is being out-invested, out-innovated, and out-educated” in mining and refining. The lack of investment shows up most notably in refining capacity, of which the US has very little. China has cornered  91 percent of the global rare earths refining capacity and is the dominant refined supplier for almost all minerals. Beyond minerals, China has invested $900 billion in AI, quantum communications, and biotech innovation over the past 10 years, three times more than the United States over the same period.

Last week, the White House released a major new US-Saudi critical minerals framework. Within the framework, it was announced that rare earths company MP Materials would partner with the Pentagon and Saudi Arabia’s flagship mining company Maaden to build a rare earths refinery in the Kingdom, to better diversify the global critical minerals supply chain. Saudi Arabia is believed to sit on the world’s fourth-largest rare earths deposits and possesses meaningful stores of other key minerals and metals, including uranium. Saudi Arabia already mines and mills its uranium, with the help of China. If Saudi Arabia could mine new stores of uranium with greater efficiency and orient toward US export, it would help the US wean itself from dependence on Russia, which until recently supplied 30 percent of US uranium imports. The Economist defined Riyadh’s ambition succinctly: “Saudi Arabia wants to be the Saudi Arabia of minerals.”

The partnership with Maaden will also allow the US access to minerals mined in countries outside the Kingdom. The Saudis are investing about $15 billion in mines globally. Some of these mines are in areas where US companies may be reluctant to invest or expand due to ongoing conflicts or oppressive regimes. Such mining agreements could thus provide a backdoor for American firms that want to avoid US rules and regulations.

Washington’s role in realizing Saudi Arabia’s Vision 2030. The promise of foreign direct investment is a two-way street. Just as Saudi riyals will flow to the United States, US dollars will be heading to Saudi Arabia, particularly in sectors that will contribute to the AI future. Mining and infrastructure have long been key components of Saudi Arabia’s development plans, but they have accelerated over the last few years as AI has taken off. The Saudis now seek to ensure that their access to energy, underground resources, and capital secures them a seat at the evolving AI/tech table.

Until recently Saudi Arabi’s development plan, Vision 2030, had been foundering economically. When Vision 2030 was announced in 2016, MBS was not yet crown prince, but its success has become tightly tied to an evaluation of his rule. When announced, the end goal was still almost 15 years away and was driven by the desire to diversify the economy away from oil and gas and toward tourism, civic culture, manufacturing, and technology. Since the announcement, some of the most touted projects, like the huge real estate and infrastructure bet made on NEOM, have run into significant problems. Weakening oil prices, the failure to attract foreign direct investment, and in many respects the audacity of the projects themselves have hampered progress.

AI provides a much-needed new focus. By redirecting resources away from some of the struggling mega-projects outlined in Vision 2030, the Saudi leadership is betting that it can use its land, energy, and minerals to become an AI hyper-scaler. Happily for Riyadh, this realignment in their economic activity overlaps directly with the Trump administration’s interests.

These overlapping interests strengthen the US-Saudi relationship to levels not seen since the late 1970s and early 1980s, when similar economic and geopolitical interests bound DC and Riyadh together more tightly than most casual observers realized.

The risks of last week’s mega deals. The two sides have done a good job outlining the considerable promise of their newly signed agreements. The risks, however, are legion. It remains to be seen, for example, how sensitive data will be secured. When StargateUAE was announced in May, concerns were raised about the Emirates’ ability to keep Chinese interests at bay. Similar concerns exist in any future Saudi efforts, given the ties Riyadh has been building with Beijing. Very little has been discussed about the export controls that will be put in place to ensure that China doesn’t access sensitive US data and technologies.

The safety protocols announced in the framework for the new civilian nuclear deal also remain opaque. The US Energy Secretary has championed the development of Saudi nuclear power within a global arms control and nonproliferation framework. His assertions seem promising. But the Trump administration has been skeptical—if not downright dismissive—of such regulations, and global governance structures generally. The United Arab Emirates’ 123 Agreement with the United States—the so-called “gold standard” for ensuring that civilian nuclear power programs aren’t used as a bridge to produce nuclear weapons—provides an example for how the Saudis could structure their own civilian nuclear power plans. But much remains to be seen about what, if anything, the two sides discussed when they agreed “that all cooperation will be conducted in a manner consistent with strong nonproliferation standards.”

Human rights challenges will also continue to plague the US-Saudi relationship. Despite the administration’s best efforts to downplay the gruesome murder of Jamal Khashoggi, a respected Saudi journalist who worked for the Washington Post and whose murder has been traced back to the crown prince, it remained front and center as a stand-in for ongoing human rights concerns within Saudi Arabia. The current AI deals could make matters worse, both in terms of the huge amount of energy that these efforts will redirect away from local populations and because of the kinds of mining arrangements that Saudi Arabia may undertake. Mining is a dirty business, and the United States has in the past been reluctant to engage with certain oppressive regimes. Leaving aside the Kingdom’s own human rights challenges, the new US-Saudi agreement could provide US companies with indirect access to minerals in countries ruled by brutal leaders.

This week’s meetings between senior Saudi and American leaders elevated the art of the deal. It put on display the huge economic benefits that were available to business leaders from both countries and built partnerships that could endure for decades. These economic agreements did not take place in a vacuum. They were reached within a strategic context that both US Republicans and Democrats have identified as important to America’s future role in the world. The race for who will lead what JP Morgan calls the “New Energy Security Age” is underway. The United States will need allies to retain a leadership role. Saudi Arabia aims to secure a spot as a trusted partner in a way that advances its own long-term economic and political goals. Washington clearly views the desert kingdom as an important partner. It is noteworthy that the president elevated its status to a non-NATO ally during dinner at the White House.

The speed with which the administration has moved is clearly being shaped by the tech leaders with whom the president has surrounded himself. Many have spent considerable time thinking about how to restructure the political and economic ecosystem to advance US leadership in tech-related fields. Some have even thought through how to manage the huge risks that will accompany such restructuring. The White House’s Strategy for AI acknowledges or at least pays lip service to the need for caution by affirming the need for strong nonproliferation standards, supply chain safeguards, and protections from foreign influence. Until we hear more from the administration about how it plans to achieve these goals, it is appropriate to question how regulation will keep pace with technological advancement.

The president has noted the need for regulation, but he is not a good ambassador for it. More will need to come from those in the tech sector to whom he listens, and from those who have other channels of influence. For Saudi Arabia, it seems that MBS and those around him have pivoted at just the right moment to attract the US administration’s attention. The alignment of interests is considerable. There is a lot of money to be made. But will the agreements keep us safe, and if so, how? Those questions remain unanswered.