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Yahoo
14-05-2025
- Business
- Yahoo
Israel ‘normalisation' takes backseat as Trump announces Saudi deals
Washington, DC – United States President Donald Trump says that forging formal relations between Saudi Arabia and Israel would be a 'dream', but he wants the kingdom to do it on its 'own time'. The White House on Tuesday made public a flurry of economic and defence pacts with Saudi Arabia involving hundreds of billions of dollars, but any mention of Israel was conspicuously absent from the announcements. The so-called 'normalisation' drive between Saudi Arabia and Israel dominated his predecessor, Joe Biden's, approach to the region, but the current US president is shifting focus elsewhere, analysts say. 'The Trump administration has made it clear they are willing to move forward on key agreements with Saudi Arabia without the previous condition of Saudi-Israel normalisation,' said Anna Jacobs, a non-resident fellow at the Arab Gulf States Institute, a think tank. 'This probably reflects growing frustration in the Trump administration with Israeli military action across the region, especially in Gaza.' Kristian Coates Ulrichsen, fellow for the Middle East at the Baker Institute, also said that Trump has realised that with the ongoing war in Gaza and Israel's refusal to negotiate the establishment of a Palestinian state, the 'time is not right' for a Saudi Arabia-Israeli pact despite Biden's emphasis on brokering a deal. 'I think the White House has finally acknowledged that a normalisation agreement at this time is not possible,' Coates Ulrichsen told Al Jazeera. During his first term, Trump managed to broker the Abraham Accords between Israel and several Arab countries, including the United Arab Emirates, which established formal relations with the US ally independently of the Palestinian the agreements were unsuccessful in resolving the Israeli-Palestinian conflict, as evidenced by the outbreak of the war in Gaza in October 2023. But even before the war started, Israel had been intensifying its military raids against Palestinians and expanding illegal settlements in the occupied West Bank, further dimming the prospects of a two-state solution to the conflict. Despite the agreements' apparent shortcomings, Biden made adding Saudi Arabia to the Abraham Accords a focal point of his Middle East agenda, and US officials said they worked on securing a deal up until the final days of the administration, even as the war on Gaza was raging. Biden has repeatedly claimed, without evidence, that Hamas launched its October 7 attack against Israel in 2023 to thwart an agreement between the Saudis and Israelis. Still, a day before he left office, Biden boasted that his Middle East policies created an opportunity for 'the future of normalisation and integration of Israel with all its Arab neighbours, including Saudi Arabia'. US officials and media reports said that Biden's deal, which never materialised, would have brought a security pact between Riyadh and Washington and provided US help for Saudi Arabia to establish a civil nuclear programme in exchange for normalisation with Israel. A major sticking point in that push has been the widely stated Saudi Arabian support for the 2002 Arab Peace Initiative, which conditions recognition of Israel on the establishment of a viable Palestinian state. Israeli Prime Minister Benjamin Netanyahu has categorically rejected the 'land for peace' framework, pushing instead for deals with Arab countries that bypass Palestinians. 'This Israeli government won't even provide lip service to the idea of a two-state solution, making it pretty impossible for Saudi Arabia to seriously consider moving forward with normalisation,' said Jacobs from the Arab Gulf States Institute. 'The Trump administration seems to have understood that it's off the table, at least for now.'In Riyadh, Trump announced an agreement to deepen security cooperation with Saudi Arabia. The $142bn deal will provide Saudi Arabia with 'state-of-the-art warfighting equipment and services' from US firms, the White House said. It also includes 'extensive training and support to build the capacity of the Saudi armed forces, including enhancement of Saudi service academies and military medical services', it added. While the weapons and training deals fall short of a NATO-like mutual defence pact, which may have been included as part of an accord with Israel, they take a bite from the US-backed carrots offered to the kingdom for normalisation, experts say. 'The announcements today do further deepen the links between Saudi and US security and defence interests,' Coates Ulrichsen said. Trump's visit to the region comes as Israel has promised to not just continue, but expand, its devastating war on Gaza, which has killed more than 52,900 Palestinians, according to health authorities. Khaled Elgindy, a visiting scholar at Georgetown University, noted that Riyadh has described Israeli atrocities in Gaza as a 'genocide'. 'The Saudis are not mincing their words; they are not holding back,' Elgindy told Al Jazeera. 'They can't now move toward normalisation with Israel after accusing Israel of genocide. That would just be ridiculous.'After his trip to Saudi Arabia, Trump will head to Qatar and the United Arab Emirates as part of the first planned foreign trips of his presidency, since attending Pope Francis's funeral last month. Israel is not on the itinerary. For Coates Ulrichsen and others, Trump's apparent snub of Israel reflects unease in the US-Israeli alliance. 'It may be a signal that the White House sees much more value in deepening commercial and strategic relationships with the Gulf states at the moment, given that Israel remains mired in conflict,' Coates Ulrichsen told Al Jazeera. Tensions between the Trump administration and Netanyahu's government have become more apparent in recent weeks despite the US's military and diplomatic backing of Israel. Trump confirmed talks with Iran over its nuclear programme during Netanyahu's visit to the White House, despite the Israeli leader's opposition to negotiations with Tehran. Last week, the US president also declared a ceasefire with the Houthis. The deal did not demand an end to the Yemeni group's attacks against Israel. As Trump spoke in Riyadh on Tuesday, the Houthis fired another missile at Israel – part of a campaign they say aims to pressure an end to the war on Gaza. The Trump administration also worked with mediators in Qatar and Egypt to secure the release of US citizen Edan Alexander, who served in the Israeli military and was captured by Hamas during the October 7 attack on Israel. According to Israeli media reports, Israel was excluded from those from Georgetown University said the apparent tensions are more than a 'bump in the road', but their impact on the US-Israeli relationship remains to be seen. 'Trump is making clear in word and deed that US and Israeli interests are not one and the same,' he said. 'And that's very significant because Biden didn't do that.' For now, Trump remains committed to US military aid to Israel even as it intensifies its bombardment and starvation campaign in Gaza. And the US president has pushed on with his crackdown on critics of Israel at home, especially on college campuses. Still, experts say that by skipping Israel during his Middle East trip and de-prioritising normalisation, Trump is pushing forward in pursuit of his own vision for the region. On Tuesday, Trump lauded Gulf leaders whom he said are building a Middle East 'where people of different nations, religions and creeds are building cities together – not bombing each other out of existence'. That future seems at odds with what Israel appears to be seeking: asserting hegemony over the region with long-term bombing campaigns, including in Gaza, Lebanon, Syria and Yemen. 'A very strong signal is being sent that a stable, prosperous Middle East – represented, in the administration's views, by the Gulf states – is a much more desirable outcome than maybe the Israeli view of the Middle East at the moment, which is one of seemingly escalating a forever conflict,' said Coates Ulrichsen.
Yahoo
28-04-2025
- Business
- Yahoo
Saudi Arabia's Dreams of a Sustainable Economy Are Now Drowning in Oil
If you blinked, you may have missed the way Saudi Arabia's utopian economic diversification program known as Saudi Vision 2030 has been unofficially rebranded 'Vision 2034,' named for the year Saudi Arabia will host the World Cup. Greenwashing—a term for companies or organizations portraying themselves as more sustainable than they really are—is on its way out, and 'sportswashing' is in. As the price of oil plummets and the international community adjusts to American leadership that couldn't care less about climate or the environment, the 2017-era vision of an environmentally conscious new Saudi Arabia is looking like a pipe dream. Instead of promising the world it's turning into a cross between Silicon Valley and the luxury resort space station from the movie The Fifth Element, the desert kingdom seems to be looking at expanded oil production and a pivot to plastic. 'You won't see a sudden press conference in the ad where they say, well, we've made a mistake,' Kristian Coates Ulrichsen, a fellow for the Middle East at the Baker Institute told me, when I asked about the Vision 2030 goals. 'But it will be made obvious that these are being trimmed down, scaled back.' According to F. Gregory Gause, visiting fellow at the Middle East Institute, Saudi Vision 2030 was conceived as 'an effort to kickstart some changes in the economy, and I think that in that sense it's been a success. Are they going to get to the vision? No, they're not.' Ellen Wald, author of Saudi, Inc., noticed positive results from Vision 2030—mostly visible from inside the country. 'There have been some changes, particularly in the way that the ministries have functioned.' It has also gotten the Saudi population excited about the future, she said, 'especially the young population.' But if you noticed outlandish levels of hype about a green future kicking off in Saudi Arabia you weren't hallucinating. For instance, back in 2016, before he was officially crown prince of Saudi Arabia, Mohammed bin Salman said amid Vision 2030's announcement 'I think in 2020 we can live without oil.' Now it's 2025, and Saudi Arabia and other OPEC+ members are in the process of unwinding voluntary oil production cuts that have been in place since October of 2022—adding a planned 411,000 barrels per day starting in May. At first glance, Saudi Arabia's latest plan for reshaping global oil markets looks a little like economic self-harm. 'Saudi Arabia's next move could hit oil prices hard,' the title of an article on fretted earlier this month. Indeed, this increase has been depressing price predictions on a barrel of oil—hitting Saudi Arabia right in a major pain point at a time when it needs money. The IMF says that as Saudi Arabia continues to throw Vision 2030 money around, it should expect to double its budget deficit if oil price trends continue. Saudi Arabia needed oil to trade at $90 a barrel to break even, and it's been trading in the 60s instead. Wald, however, believes a focus on the break-even price of oil paints a deceptive picture. 'Saudi Arabia can tolerate prices that would cripple its neighbors,' she said, noting that Aramco, can produce oil for under $6 a barrel, as compared to fracking operations in the U.S. that are far more expensive. 'They can also access debt, and they've been very successfully doing that,' she added of Saudi operations. The nation is four-and-a-half years from the theoretical finish line for Saudi Vision 2030. Vision 2030's marquee project, the famously quixotic, hi-tech eco-oasis of NEOM—the one that's supposed to feature a 110-mile horizontal skyscraper called 'The Line'—axed its CEO last year due to setbacks and delays, and at long last named a permanent replacement earlier this week. For what it's worth, NEOM does have residents, but even the ones who seem content there appear to mostly spend their time getting shuttled and golf-carted around a shadeless collection of dorm buildings in one of the world's hottest deserts—just about the furthest possible thing from the shimmering, carbon-neutral, car-free indoor megacity that was promised. To some, Saudi Arabia's pivot seems like a calculated and deliberate recalibration. 'Most of the recent OPEC+ maneuvering is clearly, I think, based with the White House in mind,' said Coates Ulrichsen. And as of this writing the current occupant of the White House has cheap oil on his mind. 'Gas and grocery prices are WAY DOWN, just like I said they would be,' President Trump wrote Thursday on Truth Social. The previous day his Interior Department rolled out 'emergency permitting procedures' aimed at cutting red tape in the way of oil and gas extraction on federal land. And despite a busy month of travel during which he must travel to Rome for the funeral of Pope Francis—and might, he says, swing by Russia to chat with Vladimir Putin—he will definitely find time to drop by Saudi Arabia. Trump has been 'agitating for $50 oil ahead of the summer driving season in the U.S.,' Jim Krane, research fellow at Rice University's Baker Institute told me. Meanwhile, Saudi Arabia appears to be positioning itself to benefit from relatively mild Trump tariffs. According to a story this week from Digitimes Asia, Lenovo, HP, and Dell are suddenly moving forward with plans to manufacture PCs in Saudi Arabia—probably at least in part because Saudi Arabia's new U.S. tariffs are 10 percent, compared to China's 245 percent. In fairness, a manufacturing push is in keeping with some of the less flashy elements of Saudi Vision 2030. On the published list of strategic objectives for the program, 'localize promising manufacturing industries' is the second item. But despite PC manufacturers dipping their toes into Saudi Arabia with relatively minor projects, don't expect to see 'assembled in Jeddah' stamped on your iPhone anytime soon. Manufacturing titan Foxconn mulled a $9 billion plant in Saudi Arabia three years ago, but doesn't appear to have pulled the trigger. Instead, the kingdom's real potential manufacturing revolution may revolve around goods that are banal by comparison: petrochemical derivatives and plastics. The Saudi Basic Industries Corporation, which makes petrochemicals and plastics, has been, according to Coates Ulrichsen, 'one of the most successful examples of a Saudi diversification initiative.' He suggested that doubling down in this area would make more economic sense in a pinch than 'massive new experiments and creating futuristic cities.' And holding onto its plastic production revenue is clearly a priority. Late last year, 170 UN member countries held a conference in Busan, South Korea, attempting to form a binding treaty on reduction of plastic waste. According to accounts in The New York Times, the Saudi delegation slow-walked and obstructed the proceedings with unnecessary objections. No deal was made, which is certainly good news for a nation hoping to see its plastic manufacturing ramped up. 'The Saudis are making decisions based on their own self-interest, but any country does that,' said Ulrichsen. At the same time, they're quietly starting to 'acknowledge that the risk of over-promising is under-delivering.' With the likes of Cristiano Ronaldo handing your country propaganda victories by telling the world how much he loves living there, and a summer revenue spike setting you up for a short-term economic victory, who needs stories about a beautiful utopia? There are plenty of shiny objects here in the real world that can keep investors distracted from how small and sad the future has become.
Yahoo
02-04-2025
- Business
- Yahoo
Tax credits supporting innovation are about to expire. Texas should extend them
Strong economies are built on investment, and innovation helps drive that investment. Innovation makes workers more productive and leads to new businesses that pay taxes and create jobs. But while the Lone Star State is renowned for its strong economy, investment in Texas research and development (R&D) remains distressingly low. That limits the growth of future-shaping companies and employers before they can even get started. With the Texas Legislature now in session, it's vital that legislators take on this issue by extending — and enhancing — the state's innovation investment. One way to do this is through R&D tax credits, which reward companies that invest in Texas R&D by reducing their tax burden. Texas offered this economic development incentive from 2000 to 2007, then shut it down for seven years. A smaller program started again in 2014, but it will end in 2026 unless the Legislature extends it. Senate Bill 2206, filed by state Sens. Paul Bettencourt and Joan Huffman, both Republicans from Houston, and HB 4393, by state Rep. Charlie Geren, R-Fort Worth, would extend the program and adjust it so it is easier to administer. Yet even if this important legislation passes, our state's R&D tax credit program will badly trail what is available in other states. Currently, Texas spends less on R&D relative to its population and state output than peer states do. Our state's tentativeness is surprising, given the clear benefits of R&D tax credits. A study by Rice University's Baker Institute found that a strong R&D tax credit program could boost Texas' economy significantly — increasing the state's economic output by $1.3 billion in five years, $2.4 billion in 10 years, and $4.4 billion in 20 years, and consumer spending by $246 million in five years and $2 billion in 20 years. Texans would reap the benefits as well. The Baker Institute study shows that R&D tax credits could create nearly 114,000 jobs in the first 10 years. With an average salary of $75,000, that adds up to more than $8.5 billion in wages. Overall, the study estimates that the total benefits from R&D tax credits would be $14.6 billion after 10 years and $62 billion after 20 years. By contrast, states that don't invest in R&D see slower economic growth and lower standards of living. While other incentives like property tax breaks are more common, R&D tax credits benefit a wider range of businesses. These investments also pay for themselves. The Baker Institute study examined a moderately sized R&D tax credit program that would cost $661.4 million in 2025 — and found that it would grow the Texas economy enough to cover this cost. So, the question isn't whether Texas can afford to extend the R&D tax credit; it's whether Texas can afford not to. Economic growth is the most important part of a healthy economy. It produces opportunity and improves living standards in each successive generation. R&D tax credits help deliver that healthy growth. They also allow smaller, non-established businesses to gain a foothold and compete in the marketplace. As those smaller firms succeed, they create new opportunities for others. And, with a healthy ecosystem of innovation investment, there are always new, cutting-edge companies coming into the pipeline. Texans rightly celebrate our state's economic success over the past several decades. Innovation-focused programs, especially R&D tax credits, can ensure that success continues for future generations. Extending the current program would help. Expanding it — especially to the point that it's competitive with other states — would ensure that the state will thrive in the future as much as it has in the past. John W. Diamond directs the Center for Tax and Budget Policy at Rice University's Baker Institute; he was the lead author on the study of the economic effects of R&D tax incentives in Texas. Jennifer Rabb is president of the Texas Taxpayers and Research Association, which represents many of the state's biggest employers. This article originally appeared on Austin American-Statesman: R&D tax credits fuel innovation. Texas should extend them | Opinion
Axios
04-03-2025
- Business
- Axios
Trade war escalation: San Antonio faces big blow from Trump's tariffs
Texas stands to take the hardest hit of any state under the Trump tariffs on Mexico, Canada and China, leaving businesses and consumers bracing for higher prices and economic fallout. Why it matters: If foreign goods cost 25% more, someone has to absorb the difference — either businesses or consumers. Some estimates suggest the new tariffs could cost the average U.S. household $830 a year — and that's before factoring in likely retaliatory tariffs. State of play: President Trump triggered a global trade war yesterday by slapping 25% tariffs on exports from Canada and Mexico and 20% on China. The tariffs on imported goods could cost the Texas economy an estimated $47 billion, per economic research firm Trade Partnership Worldwide. The big picture: The tariffs will affect big-ticket items like cars and machinery, but also consumer staples, including groceries and beer. The impact will be especially sharp on goods that are harder to produce domestically, including agricultural products. Threat level: Because Texas is deeply integrated with supply chains — from Mexico, in particular — the state will more heavily feel the strain, Tony Payan, the director of the Center for the U.S. and Mexico at the Baker Institute, tells Axios. "Because Texas is the origin, destination or transit point of two-thirds of binational trade, clearly, Texas will be more affected than other states that are not as integrated," he says. The other side: Trump campaigned on using tariffs to revive domestic industries. Zoom in: Texas-based automotive giants Toyota in San Antonio and General Motors in Arlington face mounting pressure. Mayor Ron Nirenberg joined Arlington Mayor Jim Ross in warning that rising production costs could lead to higher car prices, weakened demand and potential job losses in both cities.
Axios
04-03-2025
- Business
- Axios
Trade war escalation: Texas to face the biggest blow from Trump's tariffs
Texas stands to take the hardest hit of any state under the Trump tariffs on Mexico, Canada and China, leaving businesses and consumers bracing for higher prices and economic fallout. Why it matters: If foreign goods cost 25% more, someone has to absorb the difference — either businesses or consumers. Some estimates suggest the new tariffs could cost the average U.S. household $830 a year — and that's before factoring in likely retaliatory tariffs from Canada, China and Mexico. State of play: Trump triggered a global trade war with the biggest U.S. trade partners on Tuesday by slapping 25% tariffs on exports from Canada and Mexico and 20% on China. The tariffs on imported goods could cost the Texas economy an estimated $47 billion, per economic research firm Trade Partnership Worldwide. The big picture: The tariffs will affect big-ticket items like cars and machinery, but also consumer staples — everything from groceries to beer and oats. The impact will be especially sharp on goods that are harder to produce domestically, including agricultural products. Threat level: Because Texas is deeply integrated with supply chains — from Mexico, in particular — the state will more heavily feel the strain, Tony Payan, the director of the Center for the U.S. and Mexico at the Baker Institute, tells Axios. "Because Texas is the origin, destination or transit point of two-thirds of binational trade, clearly, Texas will be more affected than other states that are not as integrated," he says. What they're saying: "Texas values the strong economic partnerships we have built with Mexico and Canada, our two largest trading partners," Justin Yancy, president of the Texas Business Leadership Council said in a statement. "The imposition of these tariffs on our neighboring countries will disrupt supply chains, increase costs for businesses and families and create unnecessary barriers to economic cooperation," Yancy added. Glenn Hamer, president and CEO of the Texas Association of Business, told Texas Public Radio that his organization is very concerned tariffs will "harm what has been record employment in the state of Texas." "And I'll also say we're concerned for the consumer," Hamer added. Case in point: Texas-based automotive giants General Motors in Arlington and Toyota in San Antonio face mounting pressure. Arlington Mayor Jim Ross and San Antonio Mayor Ron Nirenberg warn that rising production costs could lead to higher car prices, weakened demand and potential job losses in their cities. Zoom in: China is Houston's top trade partner, followed by Mexico, with $31.8 billion and $28.7 billion, respectively, in trade value in 2023, according to the Greater Houston Partnership. If Mexico retaliates with its own tariffs, Houston's oil and gas industry — which supplies oil to Mexico — will take a hit, Payan says. What we're watching: How the cards fall, how businesses respond, which countries retaliate and how it'll impact Americans wallets.
