Trump’s historic arms deal is likely a jobs creator – in Saudi Arabia

In keeping with his campaign promise to put “America first,” President Donald Trump framed a massive $110 billion arms deal signed with Saudi Arabia over the weekend as a historic agreement that would result in “jobs, jobs, jobs.”

“That was a tremendous day,” he said. “Hundreds of billions of dollars of investments into the United States and jobs, jobs, jobs.”

Industry analysts agree – if you’re talking about Saudi jobs.

The new agreements foresee a massive influx of defense technology and job training into the country, and that, analysts say, will result in hundreds of new, high-skilled positions – in Saudi Arabia. The analysts even foresee the day when the Saudi arms manufacturing could compete with U.S. defense industries.

“It is ironic that this is happening under a president who has pledged to put America first yet is presiding over the export of jobs to Saudi Arabia beyond anything that has come before,” said William Hartung, director of the Arms and Security Project at the Center for International Policy, a liberal Washington research center.

It could be years before the real impact is known, since the deals still have to be finalized and be approved by Congress. Most of the deals in the package are non-binding letters of intent and memorandums of understanding, not firm agreements, and the number of them that materialize is likely to look very different.

The White House pushed hard for the deal, which is part of a 10-year, $350 billion agreement, so it would finalized in time for a grand announcement during the president’s first foreign trip to Saudi Arabia.

But the tone of the official White House statement was more muted and speculative than Trump’s pronouncement in Saudi Arabia, using the word “potentially” to describe the creation of new jobs in the United States.

“The Trump administration was certainly trying to make this sound like a great deal, and set this up for a big announcement (since) he prides himself on being a dealmaker,” said Jeff Abramson, a Washington-based expert on the arms trade. “But generally the job numbers announced with these arms deals are overinflated and hard to assess . . . the industry overestimates the knock-on effect on jobs.”

“There’s a big contrast between the claims and what is likely to be the reality,” added Hartung. “Companies still get paid, so they may not care as much if they’re overpromising on the jobs.”

In the largest deal in the package, Saudi Arabia “has expressed its intent” to procure more than $28 billion worth of Lockheed Martin integrated air and missile defense systems, combat ships and tactical aircraft programs. The company said the deal will “support more than 18,000 highly skilled jobs in the U.S. and thousands of jobs in Saudi Arabia” over the next 30 years – a vague number that could mean anything, according to analysts.

[READ MORE: Trump hails huge Saudi arms deal as a jobs producer]

In contrast, the agreement includes a pledge to assemble 150 Lockheed Martin Black Hawk helicopters in Saudi Arabia, a $6 billion deal that will create new 450 jobs in Saudi Arabia.

Another, non-military deal, was between the Saudi oil giant Aramco and General Electric, which in its announcement touted the “250 high-tech Saudi jobs” it would generate, and the expected demand for an additional 500 to follow.

Exaggerating the economic impact of deals is not unusual. But what sets this deal apart is the amount of technology that the Saudis received as part of the agreement, the analysts said. The transfer of that American know-how will result in more jobs in Saudi Arabia over time, in keeping with the kingdom’s plan to move its economy away from its reliance on oil production by 2030.

“The range of technology offered and the number of cooperative projects involving assembly of U.S.-supplied systems in Saudi Arabia is greater than in the past,” Hartung said.

Hartung said developing a local ability to manufacture weapons systems is “a long process” but that “eventually” the Saudis could become competitors of U.S. defense manufacturers.

“That’s the danger of this approach,” Hartung said. “It would seem that over time it’s a bad deal in terms of U.S. jobs.”

$110 billion The value of the U.S. arms deal with Saudi Arabia, which includes missiles, fighter jets, combat ships and missile defense systems as well as energy technology, job training and communications equipment.

Saudi Arabia has the third-largest defense budget in the world, and as it looks to build up its military industries it has set a goal of being able to produce 50 percent of its own arms. The technology transfer aspect, which is usually inserted to sweeten the deal, fits into their strategy.

The U.S. should look beyond the short-term economic boon for its defense companies and be cautious about the long-term implications of such a deal, Abramson said.

“If the deal includes building the Saudi defense industry over time, we will lose the leverage that we have over defense arrangement,” he said. “This way of building the relationship has many ways to back fire over time, instead of bringing Saudis more in line with the U.S. approach.”

When it comes to foreign policy, the Trump administration has said that the United States won’t be in the business of telling countries what to do anymore. But without careful calculation, the U.S. could risk losing its leverage.

“Not only won’t we be telling them what to do, but we won’t be able to convince them what to do,” Abramson said.

Lockeed Martin, Raytheon and Boeing did not return requests for comment on how many U.S. jobs would be sustained or created by the deal.

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But analysts also were skeptical about job creation possibilities in the United States from the deal. Military spending is the least effective way to create jobs, according to a 2014 study by the Watson Institute at Brown University. Spending money on defense creates fewer jobs than the same amount of money would have if invested in other sectors, it found.

“Quite frankly, (the White House) was essentially putting together a press release,” said Anthony Cordesman, a longtime Pentagon adviser and defense analyst at the Center for Strategic and International Studies in Washington. “It doesn’t mean that over 10 years you’re actually going to see that amount of money spent.”

While the Trump administration emphasized the economic benefits of the deal, the package was intended to reinforce Saudi Arabia’s defenses to counter threats from Iran. It was intended to counter Riyadh’s sense of betrayal at the Obama administration’s landmark nuclear deal with Iran, Saudi Arabia’s nemesis.

Last September, the Obama administration also approved a $115 billion arms deal with Saudi Arabia. But it halted parts of it, including the sale precision-guided munitions, because of concerns that the kingdom’s was indiscriminately bombing civilians in Yemen. The Trump administration’s deal puts those arms back on the table.

U.N. investigators say that Saudi forces have killed twice as many civilians as other forces in Yemen. Air strikes by the Saudi-led coalition are responsible for two thirds of the 3,200 civilians who have died in Yemen, according to the U.N.

“Coalition aircraft have bombed crowded markets and funerals, maimed countless children, and attacked a boat filled with refugees, often using US-made weapons in unlawful attacks,” Andrea Prasow, deputy Washington director at Human Rights Watch, said in a statement. “If the Trump administration wants to curtail U.S. support for abuses in the Muslim world, it should immediately end arms sales to Saudi Arabia and demand credible investigations of alleged laws-of-war violations.”


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