Saudi Arabia's role in global diplomacy
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It really seems like this week, all roads lead to Saudi Arabia. We had the summit between U.S. and Russian officials in the capital Riyadh over ending the war in Ukraine. U.S. Secretary of State Marco Rubio met with Crown Prince Mohammed bin Salman there as well.

Plus, in Miami, Saudi Arabia's sovereign wealth fund hosted an investor conference that was attended by President Donald Trump himself. The Saudis have forged a new relationship with Russia and will be a critical voice in determining what happens with Palestinian statehood. On this weekend episode of Reuters World News, we'll ask our Saudi experts why the kingdom has become this center of diplomacy.

What role is oil playing? And do Trump and MBS want the same thing? I'm your host, Jonah Green.

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My guests today come at this issue from many different angles. Maha El-Dahan is our Gulf Bureau Chief,

Don Durfee leads our U.S. foreign policy team. And Dmitry Shtennikov is our European energy and commodities editor. Welcome, everybody. Thanks for talking. Thank you. So let's start with you, Maha. You're in the Gulf and you visit Saudi Arabia often. Why are we seeing the Saudis at the center of so many diplomatic efforts? Well, I think if you look at the place the Saudis find themselves in now that the Trump administration has come in,

It's a very different place than they were with Biden. That was quite a hostile relationship at the beginning of it. Saudi Arabia was still in the throes and dealing with all the ramifications of the Jamal Khashoggi assassination in Turkey. We had a very awkward fist bump between

MBS and Biden when he finally visited the kingdom. I think it was July 2022 in Jeddah. So it was all quite tense and it took them quite a while to be able to deal with the Biden administration. Now that Trump has come in, MBS has had a good relationship with Trump the first time around.

It's a little bit of a different world that we're in, though, in 2025, in that the Saudis themselves, their positioning has changed slightly. They have a rapprochement with Iran going on. They are very much interested in having investments in the U.S., but they're also interested in China. And so I think they find themselves in a position where there

They're much friendlier with Trump, but they also have a lot of negotiating power in the region, which Trump can make use of. And of course, the number one most important thing is that they are the de facto leaders of OPEC. Yeah, so I would agree with all those things. And for the U.S., Saudi Arabia is its most important Arab partner. The relationship has been up and down, as Maha was just saying, but Trump really needs them for a number of things.

One is obviously the Gaza conflict, right? You know, in finding a long-term solution there, the Saudis are really going to be pivotal. Trump wants their help in managing the price of oil. He's asked the Saudis to work with OPEC to lower the price of oil. And then one of his, you know, long-term ambitions is to expand the Abraham Accords, right? And, you know, there's this ambition to see Saudi Arabia sign a peace deal with Israel. And

It's all complicated by the things that Trump has said about Gaza, and Saudi has said that they will not consider any such deal without a path to statehood for the Palestinians. So it's a complicated relationship, but one that the US really needs to work well. Yeah, I totally agree with everything Don and Ma has said. But also what makes Saudi Arabia very important and actually valuable for Washington is that the

Riyadh has spent the last 10 years at building and strengthening their relationship with Russia. It's kind of on the geopolitical front. It's a new thing. I mean, the US-Saudi relationship has been very strong since the 80s when Reagan launched strategic partnership, which involved a lot of weapon sales and oil. But Saudi Arabia has been...

real arch rival of Russia on the oil front and politically as well. Relations traditionally have been extremely difficult for the Soviet's anti-Islam policy and for the invasion of Afghanistan. They were terrible for many, many years. And what the Crown Prince, MBS, has strategically sort of designed with help of a few people who are very close to Putin, like the World

well-funded head, Kirill Dmitriev, they've launched this partnership after years and years of failures because there was a lot of mistrust. No one trusted anyone on the oil side. Everyone accused each other of cheating. And then all of a sudden, about 10 years ago, they formed this OPEC Plus relationship. And since then, it has been quite strong in terms of controlling the oil price. I mean, OPEC says they don't control the price, they control supply. But

Everyone knows that the ultimate goal is, of course, to make prices sort of reasonable and suit them. So Saudi is coming to the negotiation table with actually saying, look, we still have maintained relationship with Russia throughout a very, very difficult moment of the Ukrainian war. That's really when no one wanted to deal with Russia. But Saudi kind of carried on.

and is definitely benefiting now from this. And what do the Saudis want from Trump and the U.S.? I think the Saudis, you know, want a lot out of their relationship with Washington and for vying for this position of mediation on several things, whether it's Russia-Ukraine or Gaza or Iran, for that matter. Tension may arise in the fact that MBS is trying to

to change Saudi Arabia, right? He has his Vision 2030 MBS's economic transformation plan that is supposed to wean the economy off its dependence on oil and hydrocarbons. It's very ambitious. They're really trying to focus and getting a lot of big gigaprojects off the ground.

And they're doing it at a time when oil prices haven't been at the level that they would like to see. And there have been a lot of delays to some Saudi projects. So at a time when he's trying to focus investments inward, and the Sovereign Wealth Fund of Saudi Arabia, the Public Investment Forum, came out and said last year very clearly that

that they wanted to focus domestically and that they would do less international investments. We see their flagship event in Miami, FII Miami, where Trump spoke. As long as you invest in America, build in America and hire in America, that means that I'm fighting for you.

Basically, with his vision of, wait a minute, I want a trillion out of the Saudis. So he's going to an event where their sovereign wealth fund is and which they have traditionally hosted.

to try and see how they can get money into the kingdom. And it's made a lot of people think where there's a little bit of tension there because maybe their ultimate vision is not how much they want to put into the US, but how much they can get out of each and every investment they're making right now that would filter back

into the Vision 2030 program, which is MBS's grand economic transformation program. Yeah, I might just add to that to remind people that the relationship is really complicated between the U.S. and Saudi, including Trump and his family, right? So Donald Trump's son-in-law, Jared Kushner, has a firm into which the Saudis have invested $2 billion. Right.

And the Trump Organization has its own business plans underway in the region, including a Trump Tower in Riyadh and some real estate expansion in Abu Dhabi. So there is sort of a mixing of sort of political and personal here as well. I mean, as Maha pointed out, prestige, prestige is very, very important. I mean, what price tag do you put on prestige?

Everyone wants hugs. No one wants fist bumps. Iran, as Maha mentioned, very important. I mean, things get very quickly forgotten, but it was only, what, 2019? So six years ago that Iranian proxies have destroyed with drone attacks a big chunk of the Saudi oil industry. So Trump imposed very harsh sanctions on Iran. Iranian oil exports dropped, and Iran said, well, we...

not going to sit here without a response and responded by destroying half of Saudi oil facilities. It took some time to repair this. It was a very, very serious incident. And finally, sometimes it's not about what you get, but what you do not get.

From Trump's first term, it was obvious that he doesn't like oil prices at $80 per barrel. He absolutely dislikes when oil hits $80 per barrel and he starts scolding OPEC for the release of more oil.

For Saudi, $80 per barrel is extremely important for balancing the budget. They cannot afford less than $80 per barrel. And their vision is pretty much like, we're not going to give people unrestricted, unlimited access to oil. World is unfair. Same as if you ask for unrestricted access to US dollar liquidity.

People will say, well, on what grounds are you asking for this unrestricted access to the dollar? So the Saudi vision is like we have oil, it's our currency.

So to have their view, to understand the U.S. government view on what they want from their oil policy, how Trump views the oil policy in his second term is paramount and priceless for them. So sometimes it's even kind of intangible access to some inside U.S. knowledge. That's what they want. Dima mentioned the uptick attacks in 2019. And off of that, front and center,

on the minds of the rulers of Saudi Arabia is a comprehensive defense agreement with the US. And that's something that has been under discussion with the Biden administration. It was linked to normalization with Israel. It took a backseat when Gaza broke out. But there are a lot of question marks as where do they start now with the Trump administration? What points will they carry on with them from what was previously discussed?

Is he going to come up with a completely new drawing board? I mean, what is the conversation going to be like over that? And that agreement included a lot of things that we'd heard about from Saudi Arabia's nuclear ambitions to their ambitions in rare earths and minerals. And so it was pretty comprehensive and included a lot of things. Whether and how that will go through now is something that will be eagerly debated and watched, I think.

And so when Trump floats this plan to relocate Palestinians from Gaza, bulldoze the strip and turn it into some fancy resort, I imagine this complicates things with Riyadh. It makes it definitely more difficult. But I think the view from the Gulf, from Saudi Arabia, perhaps from the UAE, is that they see Trump's proposition and they look at it as, you know, he's he's moved the goalpost way up here.

What can we do to now give him another proposition that is palatable for the Arab world, but is also a little bit in line with his vision and can be sold to Trump as maybe partly his own idea as well? So there are a lot of conversations going on right now. King Abdullah has said that there will be an Arab plan to counter Trump.

Trump's plan. What that plan will look like, we don't know, but we know that Saudi Arabia is spearheading it. It's mainly an Egyptian proposal. So they are also front and center to that plan and how they will shape and sell that plan to the Trump administration. So it's difficult and it's going to be a difficult negotiation, but I mean, I don't think it will stand in the way of the relationship evidenced by the fact that we have President Trump showing up

at FII Miami, a sharp, sharp contrast to what things were like under Biden. In terms of the risk to the Saudi-U.S. relationship from Gaza, I think it's in the interests of both countries to resolve that. And as Maha was saying, I think they'll find a way past that. It's important to remember that Trump does come out with some of these ideas, these proposals that evolve over time. It's always hard to tell where his line is and whether he's really being serious or not.

You know, he has repeated the Gaza plan of removing the Palestinians several times now, so it does sound like he's pretty serious about it. But, you know, we'll have to see how that plays out. I think the fact that he has gone to this investment conference is one sign that, you know, among other things, he wants to do some relationship repair, which

which is, again, a recognition of just how important this relationship is for the U.S. What exactly is the PIF and how does that work? I mean, the Sovereign Wealth Fund, PIF, has had a wide reach, right? We've heard about them in sports, Live Golf, for example, deal. They were investors in SoftBank. It's a nearly trillion dollar sovereign wealth fund, so it's quite big. They need to show for themselves

for themselves, what they want to show for themselves basically is that they can make good investments and they can make these investments grow and they can finance a lot of the Vision 2030 programs inside Saudi because they are profitable as a sovereign wealth fund. The thing is the PIF is still not entirely dependent from oil money. It's not even close to being completely independent from oil money. So

how successful they have been so far in moving away from that internally. Not a great success at the moment, but there is a lot of oil money in it, of course. And so they have the power to invest. I think it's important to understand that, yes, Saudi's revenues are huge thanks to oil prices trading around $75, $80 per barrel, but they have a large budget deficit. Their revenues are not enough to cover all their spending. So essentially, I mean...

They're not paying their mortgage. So when you're not paying the mortgage, it's not the time to go and buy a lot of jewelry around the world. And yes, I mean, the U.S. has a huge budget deficit, but the U.S. can print money. Saudi cannot print money. And my point is, yes, there's going to be some important investments such as the Saudis, like the World Cup investment, for example. But there will be some prestige, big tickets.

But in terms of like driving global investments, I think they will be focusing first and foremost on the projects inside the country rather than going on a shopping spree around the world. So, Maha, what is happening inside the country? What is life like for ordinary Saudis? And do they feel that MBS has delivered on his promise of reform?

I mean, when MBS became crown prince and he is the de facto leader of Saudi Arabia, he had like really big ideas socially, economically. I would say that the Saudi Arabia you visit today is radically, radically different than what it was like maybe 10 years ago in terms of social changes. He is really transforming the country.

I used to have to wear abaya and cover my hair. Whenever I visited Saudi Arabia, I no longer have to do that. Women can drive. There's movie theaters. He has one of his advisors in charge of an entertainment authority. And now we have the Riyadh season with Arab celebrities, international celebrities making their way to Saudi Arabia, Afghanistan.

At various times of the year, they have celebrity endorsements. It's a radically different country. Now, a lot of the young Saudis are very happy with those changes. You're living in a country where you can go out freely, where there are parties. And so that has really changed. But I think what we have to remember is also Saudi Arabia, in a lot of people's minds who've never visited or maybe don't know too much about the country, is a rich Gulf country,

with a lot of money where everyone is living really well. That's not entirely true. Saudi Arabia is a big country

with a large population, unlike, for example, its neighbor, the UAE, where the population is quite small. And there is poverty in Saudi Arabia. And so in terms of the standards of living for average Saudis, there are issues still. And the most popular topic of conversation that you will have with any Uber driver when you get in are that things are becoming more expensive and that life is becoming more difficult.

So there is a big question mark about how much his vision 2030 is filtering down to all segments of society in terms of the economy. But I would say in terms of society, there are very big changes, which the majority of people really like. There is, of course, a segment of the population which will be unhappy with these changes, you know, more conservative, shocked to see parties and cinemas and whatnot. Yeah.

Thanks, everybody, for talking today. I really appreciate it. Thank you. Thank you. It was a pleasure. Thank you. Thank you.

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Thanks again to Dimitri, Maha, and Don for their time and expertise. Reuters World News is produced by Gail Issa, David Spencer, Sharon Reich-Garson, Kim Vanell, Christopher Wall-Jasper, and me, Jonah Green. Our senior producers are Tara Oaks and Carmel Crimmins. Our executive producer is Lila DeKretzer. Sound design and music composition by Josh Sommer.

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