LINK: https://www.thehindu.com/opinion/lead/trump-mbs-summit-1-trillion-among-friends/article70322902.ece
Why in the News
- Exceptional amity and a reset in strategic cooperation between the United States (U.S.) and Saudi Arabia were highlighted recently following a summit between U.S. President Donald Trump and Saudi Crown Prince Mohammed bin Salman (MbS).
- This high-level engagement signaled the potential to anchor bilateral, regional, and global developments in a more consequential manner, with the summit witnessing agreements and commitments valued at approximately $1 trillion.
Background and Context: An 80-Year-Old Transactional Alliance
The bilateral alliance remains perhaps the oldest transactional deal still going strong, predating post-Second World War global architectures like the United Nations, North Atlantic Treaty Organization (NATO), and the Bretton Woods Institutions.
- Origin: The partnership was conceived as a secret “oil-for-security” strategic deal, signed on Valentine’s Day 1945 between U.S. President Franklin D. Roosevelt and King Abdul Aziz bin Abdul Rehman al-Saud on the USS Quincy in the Suez Canal Area.
- Renewal: Originally intended to last 60 years, the deal was formally renewed in 2005.
- Reset: The current arrangement is being reset thanks to the exceptional amity between President Trump and Crown Prince MbS, moving towards new domains of strategic cooperation.
Trajectory of U.S.-Saudi Ties: Strains and Diversification
While the alliance is long-standing, its trajectory has not always involved smooth sailing, with ties undergoing periods of significant strain, pushing Saudi Arabia towards diversification.
Historical Tensions
- Oil Embargo: Strains were experienced during the Ramadan War of 1973, when Saudi Arabia joined an Arab oil embargo.
- Missile Acquisition: Saudis surprised Americans in the mid-1980s by purchasing intermediate-range ballistic missiles from China, a country not even recognized by the Kingdom at the time.
- Military Supplies: Tensions arose when American military supplies were staunched during the Yemen war, affecting Saudi offensive and defensive capabilities against the Houthis.
- Khashoggi Assassination: The assassination of journalist Jamal Khashoggi in October 2018 jolted ties, leading the Biden presidency to initially keep MbS at arm’s-length.
Factors Reducing Commercial Content
- Shale Technology: The U.S. has become the world’s largest producer of crude and a significant exporter due to shale technology, reducing the commercial content of the relationship.
- Trade Balance: Decline in bilateral merchandise trade has been observed, with the balance swinging in America’s favour; the U.S. now ranks below China and India as Saudi Arabia’s trading partner.
Diversification of Ties
- China and Russia: Friction with the U.S. pushed the Saudis into diversifying their ties with China and Russia.
- Xi Jinping Visit: In December 2022, China’s President Xi Jinping visited Riyadh, holding three separate summits with the leaders of Saudi Arabia, Arab, and Muslim countries.
- Iran Reconciliation: Beijing also facilitated the resumption of diplomatic ties between Saudi Arabia and Iran.
- Gaza Conflict: U.S. support for Israel’s brutal military campaign in Gaza since late 2023 has made it difficult for Riyadh to turn a new page in bilateral ties.
- Israel Recognition: Saudis have resisted U.S. pressure to formally recognize Israel, pre-conditioning it on the creation of a pathway to Palestinian statehood.
New Contours under Trump Presidency (Trump 2.0)
A positive sea change in bilateral ties has been noted since Mr. Trump took over the U.S. presidency recently, marked by his first visit abroad of his second term to Saudi Arabia in May 2025.
Key Summit Outcomes and Commitments
- Military Equipment: An agreement to supply $142 billion worth of military equipment was secured.
- Investment Forum: Deals worth $270 billion were signed at the investment forum.
- Saudi Investments: MbS readily agreed to raise promised Saudi investments in the U.S. economy from $600 billion to $1 trillion without a fixed time frame. This amount is nearly the size of the country’s GDP and the entire corpus of the Kingdom’s Public Investment Fund (PIF).
- Strategic Defence: The groundbreaking Strategic Defence Agreement was signed, formally designating Saudi Arabia as a “major non-NATO ally” and committing the U.S. to actively assist Saudi Arabia if it came under attack.
- Technological Collaboration: Tangible progress was made towards collaboration in civil nuclear energy and the supply of state-of-the-art Artificial Intelligence (AI) chips.
Regional Impact of Robust Revival
The robust revival of U.S.-Saudi ties is bound to have a regional impact due to the Kingdom’s more assertive and visible pursuit of national interests.
- Regional Rivalries: The process has accelerated after the two-year-long Israeli military campaign that has subdued Iran, the Kingdom’s long-standing rival.
- Syria and Sudan: MbS has persuaded Mr. Trump to drop sanctions against Syria’s new regime and has asked for stronger American intervention to end the Sudanese civil war.
- Nuclear Talks Facilitation: Even the Iranian President has sought MbS facilitation of the resumption of nuclear talks with Washington.
- Empowerment of MbS: Robust endorsement by the White House would further empower MbS as an indispensable, long-term U.S. interlocutor as the region’s geopolitical architecture gets reconfigured.
Global Coordination on Oil
Although oil has largely disappeared as the driver for bilateral economic synergy, subterranean bilateral coordination is visible to ensure oil market stability.
- Shared Interest: Both Saudis and Americans want the oil price to be at a moderate, sustainable level.
- Market Dominance: Washington intends to continue its dominance of the global oil market, as demonstrated by recent U.S. sanctions against two Russian oil majors.
- Supply Management: Concerted American actions on sanctions against Iran, Venezuela, and Russian oil majors can help stem the emerging supply-side oil glut, shore up the price, and create market space for higher exports by both Saudi Arabia and the U.S.
- Pax Americana: Reinforced ties with Saudi Arabia would stave off recent encroachments by China and Russia on U.S. turf and complement its regional Pax Americana.
Implications for India: Strategic and Economic Considerations
The Washington Summit has several significant implications for India, impacting defense, connectivity, and economic diversification efforts.
- Defence Concerns: It may provide access to advanced U.S. military equipment for Pakistan, with which Riyadh concluded a strategic mutual defence agreement in September 2025, apparently with U.S. approval.
- Oil Market Stability: While India prefers low prices, moderation and stability in the oil market may still be preferable as India navigates for alternative sources to Russian supplies.
- Economic Opportunities: Soaring Saudi ambitions for its post-oil Vision-2030, such as AI data centres, may create economic opportunities for India.
- Strategic Space: Curbing China’s foray into Saudi Arabia may open the door wider for India.
- Regional Connectivity: Emerging modus vivendi with Israel may facilitate work on the India-Middle East-Europe Economic Corridor (IMEC), which transits through Saudi Arabia.
- Policy Indication: White House’s differential treatment of MbS shows that its single-minded pursuit of economic transactions continues to trump previous qualms, which may light India’s pathway to an economic peace with the Americans.
Way Forward for India: Deepening Strategic and Economic Ties
To leverage the changing geopolitical and economic landscape in the Middle East and safeguard its national interests, India must adopt a detailed, multi-pronged strategy.
Economic and Technological Alignment
- CEPA Prioritization: India needs to prioritize entering into a Comprehensive Economic Partnership Agreement (CEPA) with Saudi Arabia to secure preferential market access, enhance trade diversification, and attract Saudi investments into key Indian sectors.
- Vision-2030 Synergy: Active engagement is required to align India’s technological and human capital strengths with Saudi Arabia’s Vision-2030 megaprojects and initiatives, particularly in emerging areas like AI, data centres, renewable energy, and advanced manufacturing.
- PIF Channeling: Dedicated efforts must be made to attract a greater portion of the Saudi Public Investment Fund (PIF)‘s increased $1 trillion investment commitment towards India’s infrastructure, technology, and startup ecosystems.
Geopolitical and Connectivity Initiatives
- IMEC Acceleration: Strategic focus must be placed on the timely realization and implementation of the India-Middle East-Europe Economic Corridor (IMEC), utilizing the improving Saudi-U.S. alignment to mitigate geopolitical risks and establish a resilient, multimodal trade and connectivity route that strengthens India’s link to Europe and counterbalances regional dominance by other powers.
- Security Dialogue: Enhanced high-level security and counter-terrorism dialogue is necessary to address concerns arising from the Saudi-Pakistan Strategic Mutual Defence Agreement and to ensure that new regional defence alignments do not adversely impact India’s strategic interests.
Conclusion
- The evident MbS-Trump bonhomie signals a U.S. reclaiming of primacy in Riyadh, shifting the bilateral focus to technology, massive investment, and security commitments.
- This reset, however, also propels Saudi Arabia toward greater sovereign autonomy and engagement with multiple global players.
- For India, this dynamic environment presents both strategic challenges and enormous opportunities that must be navigated through proactive diplomacy, economic alignment, and the acceleration of critical connectivity projects like IMEC.
UPSC MAINS PYQs
- The question of India’s Energy Security constitutes the most important part of India’s economic progress. Analyse India’s energy policy cooperation with West Asian Countries. (2017)
