Defense contractors were the big winners, but President Donald Trump’s first day in Saudi Arabia yielded a slew of high-profile investment deals that showcased the administration’s ability to draw support from major corporations.
Top executives who descended on Riyadh for a CEO summit timed to coincide with Trump’s visit included JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, Blackstone Group LP CEO Steve Schwarzman, and Marillyn Hewson, the CEO of Lockheed Martin Corp.
Saturday’s meeting, the “Saudi-U.S. CEO Forum,” drew the kind of corporate firepower Trump suggested he could harness when he ran for the Oval Office as a Washington outsider/business executive who would reach outside the Beltway and enlist other executives in support of the administration’s economic goals.
More than 30 CEOs of major U.S. companies were on hand for the summit, at the Four Seasons Hotel in Riyadh. Some later joined Trump and Saudi officials at the Royal Court Palace for a deal-signing ceremony. Those who spoke to reporters said they weren’t put off by drama surrounding the Trump White House. “We’re just seeing tremendous opportunity with Trump coming here,” said Steven Demetriou, CEO of Jacobs Engineering Group.
Dimon gave a thumbs-up to Trump’s deregulatory agenda in an interview with Bloomberg Television. “Most of us in business think that regulations have been holding back growth,” he said.
Arms to Infrastructure
Arms deals and intentions alone announced on Saturday totaled some $110 billion, in what would be the largest arms package in U.S. history. Meanwhile, Blackstone, the world’s biggest private equity manager, announced an agreement with Saudi Arabia’s Public Investment Fund to invest $100 billion in infrastructure projects, mainly in the U.S.
Derided by Trump at times over the cost of the F-35 fighter jet program, Lockheed seemed to have made peace with the White House. Earlier this week, the New York Times reported that Trump’s son-in-law and senior adviser Jared Kushner phoned Hewson while meeting a Saudi delegation, suggesting Lockheed lower the cost of an anti-missile system it was pitching to the Saudis.
Price cut or not, Lockheed racked up more than $28 billion in sales and intentions, the company said in a statement, covering integrated air and missile defense, combat ships, tactical aircraft and rotary wing technologies and programs.
Also on hand in Riyadh was Boeing Co. Chief Executive Officer Dennis Muilenburg. On Sunday, Boeing announced it had signed several defense and commercial agreements with Saudi Arabia. The deals included agreements for Chinook helicopters and P-8 reconnaissance aircraft based on Boeing 737 commercial planes. Boeing and SaudiGulf Airlines inked an agreement to negotiate the sale of up to 16 wide-body airplanes.
“This is a great vote of confidence by the United States in the business environment of Saudi Arabia,” Secretary of State Rex Tillerson, traveling with the president, said during a press conference.
Array of Sales
The military sales and intended deals fall broadly into five categories: border security and counterterrorism; maritime and coastal security; air force modernization; air and missile defense; and cybersecurity and communications upgrades, according to a State Department statement.
Few details were provided on specific transactions beyond what was announced earlier. Tillerson said some of the systems would help Saudi Arabia conduct more “precise and targeted” air strikes against rebel forces in Yemen.
The package “bolsters the Kingdom’s ability to provide for its own security and continue contributing to counterterrorism operations across the region, reducing the burden on U.S. military forces,” the State Department said.
It was unclear how details of the sales will be conveyed, including the submission of formal notifications to Congress and publication of memos of understanding to proceed with potential sales that normally take years to complete.
Still, “when completed, it will be the largest single arms deal in American history,” Vice Admiral Joe Rixey, head of the Pentagon’s Defense Security Cooperation Agency, said Friday from Saudi Arabia on a conference call with analysts, according to a White House transcript.
The package includes deals begun under President Barack Obama’s administration — and initial steps toward others that may take years to complete. From 2009 to 2016, the Obama administration approved $115 billion in potential sales to the Saudis.
The S-70 helicopter deal is a new direct commercial sale between Lockheed and the Saudi government that’s separate from any weapons system proposal administered by the U.S. as part of the formal Foreign Military Sales program, company spokesman Paul Jackson said in an email.
Under the umbrella of “Border Security and Counter Terrorism,” the U.S. offers capabilities such as “aerostats, tanks, artillery, counter-mortar radars, armored personnel carriers” and helicopters, the State Department said.
People familiar with the transaction told Bloomberg News this week the U.S. and Saudis also planned to sign a letter of agreement for about $500 million in what could become a $3.5 billion deal for as many as 48 CH-47 Chinook helicopters and related equipment built by Boeing. That sale was approved by the State Department and Congress in December.
Similarly, the agreement also includes a letter of agreement completing a sale approved in August for about 115 M1A2 tanks made by General Dynamics Corp., as well as munitions, and heavy equipment recovery systems, said people familiar with the deals.
Under naval and coastal security improvements, the State Department listed systems such as Lockheed Martin’s Multi-Mission Surface Combatant ship, as well as “helicopters, patrol boats, and associated weapons systems.”
The multi-mission vessels are modified versions of the Littoral Combat Ship that Lockheed is building for the U.S. Navy, and would be the first international sale of the vessel, which includes munitions such as Raytheon Co.’s Evolved Sea Sparrow air defense missile.
The State Department statement also listed Lockheed’s Patriot and Thaad anti-missile systems as intended to “help Saudi Arabia protect itself and the region from missile or other airborne attacks.”