The Congress' vote to adopt the Justice Against Sponsors of Terrorism Act (JASTA), which allows US citizens to sue foreign countries in domestic courts for alleged sponsorship of terrorism that has harmed the litigants, has raised questions about the extent of the implications for relations between the US and Saudi Arabia, including economic ties. It further raised questions concerning whether the Kingdom would withdraw its assets and investments from the US, especially as it is expected that the families of 9/11 victims to sue Saudi officials to demand compensation for damages caused by the attacks.

Despite that there is no official data on the volume and value of Saudi investment in the U.S, due to a blackout imposed by the U.S. Treasury Department, some estimates indicate the figure to be between $700 billion and $1 trillion.[1] This report examines outstanding features of the economic relations between both countries and presents a map of the Saudi investments in the US

Saudi Direct Investments in the US

According to the Saudi Arabian Monetary Agency (SAMA), the Kingdom's central bank, direct Saudi overseas investments amounted SAR 167.6 billion (USD44.7 billion) by the end of 2014, and SAR 237.1 billion (USD 63.1 billion) by the end of 2015.

According to a report released by the US Embassy in Riyadh on March 31st, 2016, Saudi companies invested USD 13 billion in the US, while US companies invested around USD 11 billion in the Kingdom.[2]

Already, the U.S. government continued to obstruct large foreign investments and sovereign funds to prevent the use of funds for political purposes threatening American interests, until it approved the Saudi Basic Industries Corporation (SABIC)’s acquisition of General Electric (GE) Plastics for a purchase price of USD 11.6 billion.[3]  

According to the US Bureau of Economic Analysis (BEA) at the Department of Commerce, the volume of foreign direct investments in the United States, measured on historical-cost basis and owned by Saudi ultimate beneficial owners (UBO), amounted for USD 11.541 million in 2014 then slipped to USD 11.515 million in 2015, including USD 4.3 billion of investments in manufacturing industries, USD 915 million in real estate and rental and leasing.

Source: BEA

The value of assets of U.S affiliates of Saudi UBOs stood at USD 40.1 billion, including USD 201 million spent on R&D in 2014. 

Growth of assets and sales of US-based affiliates of Saudi UBO between 2007-2014

Source: BEA

Note: Figures do not include companies or businesses in which Saudi Arabia owns less than a 10 per cent of the stake.

Regarding American companies in which Saudi entities own more than 50 per cent of their shares, the total value of assets and the net property, plant, and equipment (PP&E) estimated to be USD 26.2 billion, with 10,400 workers receiving USD 1.6 billion in wages and allowances and an average salary of USD152,800 each in 2014.

Saudi corporations have an outstanding presence in the U.S. economy. For instance, in March 2016, Saudi Aramco, the state-owned oil giant announced a deal to take full ownership of the giant oil refinery in Port Arthur, Texas, retain 26 distribution terminals, and Shell-branded gasoline stations in Florida, Louisiana and the northeastern United States. Aramco also invests in technologies, including a stake in NanoMech in Arkansas as well as part ownership of at least eight other small American companies.[4] Saudi petrochemical companies, including SABIC, also launched investments to benefit from the shale oil and gas boom in the United States.[5] Moreover, the Kingdom’s broad economic reform plan, known as Vision 2030, includes tens of large projects in which U.S. companies can take part.

Portfolio Investments

Saudi holdings of U.S. Treasury bonds peaked at USD 123.6 billion (1.5 of the total value of US Treasury bonds) in January, but the figure went down to $93 billion in August 2016, according to data released by the US Department of Treasury. Saudi Arabia is the 15th largest holder of U.S. Treasuries with holdings accounting for 24.8 per cent of the Kingdom’s foreign exchange reserves invested abroad and 16.5 per cent of USD 562.2 billion of reserve assets, according to data published by the Saudi Arabian Monetary Agency (SAMA). 

Source: the US Treasury Department

Saudi Arabia’s holdings of U.S. long-term debt securities stood at USD 147.2 billion by the end of July 2016, per data released by the U.S. Department of Treasury.

Source: the US Treasury Department

Saudi Arabia’s trade in goods with the US

Saudi Arabia’s imports from the US amount to USD 23.9 billion in 2015, according to General Authority for Statistics, where aircraft engines, spare parts, and components accounted for 13 per cent, and passenger cars, with an engine cylinder capacity exceeding 3,000 cc, for 10 per cent. Other imports include gas turbines, other vehicles, motorcycles, drilling machinery and sonars.

Saudi exports to the US were estimated at USD 21.5 billion in 2015 and included urea fertilizers and raw aluminum, but crude oil alone accounted for 92 per cent of the total exports. US crude imports from Saudi Arabia fell from 1.423 barrels per day in 2006 to an average of 1.052 million bpd in 2015, according to the U.S. Energy Information Administration (EIA).

Source: General Authority for Statistics, Kingdom of Saudi Arabia

Saudi Arabia’s trade in services with the US

The US imported USD 1.1 billion of services from Saudi Arabia in 2015, according to data published by the US Department of Commerce, while the US services exports to the Kingdom reached USD 9.9 billion in the same year, with travel and educational services at the forefront of the list.

Regarding educational services, Saudi students enrolled in US universities and colleges contributed around USD 1.7 billion to the US economy in 2014.  

59,945 Saudi students enrolled in US colleges and universities in the 2014-2015 academic year, 56,900 in 2015-2016, accounting for 6 per cent of all international students studying in the US, according to the US Department of Commerce, making the Kingdom the fourth largest source of international enrollments after China, India, and South Korea.[6] Through scholarships, the Kingdom seeks to prepare a qualified national skilled workforce.

Source: BEA

In conclusion, the US primarily relies on sales of bonds to other states as a primary source of funds to finance its budget, with Saudi Arabia being one of the buyers. Hence, if Saudi Arabia carried out its threat to sell up its U.S. assets and withdraw investments from the U.S. shortly after the enactment of JASTA, the move is expected to bring about an adverse impact on Washington, yet it would also result in a lower selling price of these assets.