Can the pledge of Trump spending big as a fall in oil prices?

Almost every month, another announcement is that in the deals with new Trump administration in various Gulf State of America, if there are no trillions, hundreds of billions of dollars, hundreds of billions of billions of dollars of dollars will be spent.In January, Saudi Arabia said it would increase investment with the US in the next four years and trade with the US, which would be more than $ 600 billion (€ 530 billion) in the next four years. US President Donald Trump himself suggested that the amount could be higher as $ 1 trillion (€ 884 billion). And recent reports show that the US will soon provide Saudi Arabia a weapon package of more than $ 100 billion.To not proceed, the United Arab Emirates said with announcements in March that they would spend more than $ 1.4 trillion in the US in the next 10 years. Analysts say that pledge, which will focus on artificial intelligence, energy, semiconductor and manufacturing, is one of the largest foreign investment commitments in American history.Trump is expected to discuss all those deals, in the middle of the Gulf states, Saudi Arabia, the United Arab Emirates and Qatar.But there is a problem with the Gulf states being described as a gorgeous “investment diplomacy”: the fall in oil prices.The lowest oil prices since Kovid epidemicLow oil prices present a challenge to the Middle Eastern countries that depend on oil for their national income. Although many oil producing nations are trying to diversify their national income away from hydrocarbons and diversify areas such as tourism, financial services and technology, they are still very much dependent on them.“It’s been very impressive [Saudi] Improvement over the last decade, “Tim Colon said, expert on the economies of a visiting fellow and Gulf States at the Arab Gulf States Institute in Washington. “But oil is still a heartbeat of the economy, so when the oil decreases, it creates an environment that is not as favorable when they are more.”Oil prices fell dramatically after Trump’s again, after tariff. The price for a barrel of Brent crude, an oil often used as a global benchmark, was more than just $ 74 on 2 April. After the announcement of the tariff, it fell to about $ 65 per barrel within a week and has not actually been recovered since then.Oil prices continued to fall due to the possibility of a global recession produced by irregular American policies. This week, they slipped further as OPEC+oil producing countries, organizations of petroleum export countries, as well as Russia -led colleagues agreed to pump more oil. In simple words, more oil on the market and low demand for it is equal to low prices.In the last one week, analysts have also come up with new forecasts, confirming that oil prices would be lower in 2026. These predictions face problems for oil -dependent countries to finance their national expenses. For example, to balance its planned budget in 2025, the International Monetary Fund has stated that Saudi Arabia needs oil prices around $ 91 per barrel. UAE and Qatar need them only between $ 43 to $ 45.In addition to “investment diplomacy” in the US, there are clearly other financial commitments of the wealthiest oil producers in the region.Saudi Arabia has its highly expensive vision 2030, which has a long -term plan to modernize the country and stay away from oil, to pay.Gulf states are also being asked to be committed to regional projects, such as reconstruction in Lebanon, supporting Egypt through their economic crisis and, the most expensive project, reconstruction in Gaza (there should end conflict). Saudi Arabia has also said that it will pay a new Syrian government’s $ 15 million loan to the World Bank.How will it affect the big spenders of the Gulf?“UAE and Qatar are in a different position as they will also earn the current account surplus on these oil prices,” Colon told DW. “But Saudi Arabia will not be there. So there will definitely be a pocket of pressure at the Saudi expenditure, from the agenda of domestic reform to the commitments, President is going to search for Trump.”But they do not think it will immediately affect regional commitments. “With Syria, the amount is $ 15 million, it is peanuts for Saudi Arabia and Qatar and it would be quite realistic to them,” he explained.Colon said, “Funding of more than $ 50 billion in Gaza will be different,” a huge commitment, “said Colon.” So on these oil prices, in the context of trade, investment and reconstruction in the region, in the context of trade, investment and reconstruction, some very careful decisions have to be taken where priorities lie. “In the past, Colon said, when oil prices have come down, Saudi has cut back on spending., [Saudi] Both fiscal accounts in the government’s twin deficit – how it can spend – and its current account, how to import imports, means that the fresh dollar is immediately needed, “Karen Young, a senior research scholar at the Center of Columbia University, a senior research scholar on the global energy policy, told D.W. “So if it cannot be completed with increasing export receipts, it needs to be completed domesticly with the sale of assets.,Some observers have suggested that diversification of the Gulf states may be accelerated from the oil. For example, the Trump administration will be more attractive as a manufacturing center in the Middle East, given the lower tariffs imposed on them. But the problem with those suggestions is that the Saudi diversification schemes are mainly being financed by oil money, and will be less to use.Promise President Trump?“Without the current account surplus, there is no new money to invest basically until you borrow,” Colon said. “If Saudi wants to invest in new enterprises, they will either have to borrow in the global capital markets or recover the existing investments.”There is also another factor. The last time the Trump was in the office, the Gulf states spent similar big. But they did not mostly get fruits. Experts say that these new vows should be seen in that context. For the UAE, investing $ 140 billion per year in the US in the next decade, which means that the Emirates are spending more than a quarter of their annual national income in the US. Neel Quillium, a partner of the Middle East and North Africa program at London -based Think Tank Chautham House, told Arab Gulf Business Insight last week. The pledge is more about sending a signal to the Trump administration, the Quilium said.And with a fall in oil prices, “is also less likely that these promises can be fulfilled,” Colon argued. If Saudi Arabia spends $ 600 billion in the US or invests in the next four years, it explained $ 150 billion per year, or 12% of its own annual GDP, he explained. “This is just unrealistic,” Colon concluded.