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How the Khashoggi murder could affect the intertwined US-Saudi economies

Journalist Jamal Khashoggi's murder has thrust U.S.-Saudi relations into the spotlight. President Trump asserts that Saudi business is too significant for the U.S. to jeopardize. But is it? And how did the economies of the two countries become so intertwined? Nick Schifrin speaks with Rachel Bronson, author of “Thicker Than Oil,” and the Center for International Policy’s William Hartung for more.

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  • Judy Woodruff:

    We return to the murder of Jamal Khashoggi and the roiled relations between the United States and Saudi Arabia.

    Those ties are longstanding and important to both nations. They're also lucrative.

    But, as Nick Schifrin reports, those financial ties are also now under great strain.

  • Nick Schifrin:

    When the president and his wife made Saudi Arabia their first foreign visit, the royal court treated Trump as a royal, providing a lavish welcome and a garish introduction to a grand and golden ballroom, where Saudi King Salman bestowed one of the kingdom's highest civilian honors, and described the U.S. and Saudi relationship as tied by shared interests and military cooperation.

    And President Trump danced to the same drum, describing a strategic alliance, thanks to a lucrative arms deal he called a windfall.

  • President Donald Trump:

    Hundreds of billions of dollars of investments into the United States, and jobs, jobs, jobs.

  • Nick Schifrin:

    President Trump has defended that arms deal, despite questions over how to respond to journalist Jamal Khashoggi's murder, and despite ever-growing claims of economic impact.

  • President Donald Trump:

    We're talking about over 40,000 jobs in the United States.

    You know, you're talking about 500,000 jobs.

    That was $110 billion. You know, you're talking about over a million jobs.

    I don't want to lose a million jobs. I don't want to lose $110 billion in terms of investment. But it's really $450 billion if you include other than military.

  • William Hartung:

    It's sort of the mother of exaggerations, even by Donald Trump's standards.

  • Nick Schifrin:

    William Hartung is the director of the Arms and Security Project at the Center for International Policy. He says the real dollar figure for the Trump administration is $14.5 billion, including for M-1 tanks, Chinook helicopters, and artillery. But even those are only signed offer and acceptance letters, not contracts.

    Most of the $110 billion number comes from deals negotiated by previous administrations, including for F-15s and modern American naval ships, and a $13.5 billion missile defense system order hasn't actually been placed.

  • William Hartung:

    So many of the deals are speculative, and often things are put on the table that don't happen.

  • Nick Schifrin:

    As for the claims about creating jobs?

  • William Hartung:

    I think his jobs claims are absurd, to put it mildly. Military procurement is the least effective way to create jobs. Some of those jobs will actually be in Saudi Arabia assembling U.S. equipment.

  • Nick Schifrin:

    But even if the arms sales and jobs numbers aren't as high as the president claims, that doesn't mean Saudi Arabia has less influence. And that influence was by design, and started more than 40 years ago, when a president hosted a king.

  • Rachel Bronson:

    Back in the '70s, under Nixon and then Ford, the U.S. and Saudis worked together to integrate their two economies to ensure that each was mutually dependent on the other, and really the Saudis on the United States.

  • Nick Schifrin:

    Rachel Bronson is the author of "Thicker Than Oil: America's Uneasy Partnership with Saudi Arabia."

    She says, ever since National Security Adviser Henry Kissinger went to Riyadh in 1975, the U.S. has kept its doors to Saudi investment, and eventually that road has led to Washington. From 2016 to 2017, public filings show Saudi payments to lobbyists almost quadrupled, from $7 million to $27 million.

    And prominent think tanks have accepted millions of Saudi dollars, helping guarantee shared interests

    Today, the U.S. has made Saudi Arabia the center of its Middle East strategy, with a new Combating Extremism Center in Riyadh, joint efforts to combat Iran and its use of regional proxies such as Hezbollah, and to gain support for a hypothetical Israeli-Palestinian peace process.

  • Rachel Bronson:

    Those geopolitical realities are the basis for these economic ties. The Saudis don't need our money. They have money. What they want is American business leaders and cultural leaders coming to the kingdom. They want American leaders to, in a sense, welcome them into the community of nations.

  • Nick Schifrin:

    That led to Mohammed bin Salman's 2017 American road show, coffee with Michael Bloomberg, chitchat with Facebook's Mark Zuckerberg, a walk with Google co-founder Sergey Brin.

    MBS, as he's known, has poured investments into companies like Uber, and is now start-up companies' largest source of capital.

  • Sam Blatteis:

    He was hailed behind closed doors as almost a combination of Abraham Lincoln and Elon Musk.

  • Nick Schifrin:

    Sam Blatteis was Google's Persian Gulf policy director, and now advises technology companies. He says Khashoggi's murder damaged Mohammed bin Salman's reputation for some companies.

  • Sam Blatteis:

    There's a whole universe of American tech companies where business is essentially business as usual.

  • Nick Schifrin:

    He says Saudi money is too large to disappear, and defense cooperation will continue.

    But, be that as it may, Rachel Bronson says the historic Saudi investment machine has taken a hit.

  • Rachel Bronson:

    They want to be associated with the blue-chip, big-name companies. And those are the very companies that are beginning to back away — or that are backing away at this moment. And, yes, they have really — they are going to pay a price for that.

  • Nick Schifrin:

    And despite all previous criticism of Saudi Arabia, that price, this time, would be paid for the death of one man.

    For the "PBS NewsHour," I'm Nick Schifrin

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