Saudi Arabia has ordered $450 billion, "$110 billion of which is a military order," producing "over a million jobs."
The death of Saudi journalist Jamal Khashoggi inside Saudi Arabia’s embassy in Istanbul has drawn attention to America’s business interests in the Middle East kingdom. President Donald Trump brought money into the picture soon after Khashoggi disappeared, and has repeated the point several times since. In an Oct. 20 exchange with reporters, Trump called Saudi Arabia’s initial arrests and firings of top officials in the case a "good first step." As for how the United States should respond, Trump offered a dose of realpolitik. "With all that being said though, we have $450 billion, $110 billion of which is a military order, but this is equipment and various things ordered from Saudi Arabia, $450 billion," Trump said. "I think it's over a million jobs. That's not helpful for us to cancel an order like that. That hurts us far more than it hurts them." The $110 billion in arms sales to the Saudis would be eye-popping enough, but this was the first time we heard the $450 billion total that included everything else. Nor has Trump said that 1 million jobs are on the line. We decided to check those points. Key takeaways Saudi Arabia has not ordered $110 billion worth of military goods and services. Saudi Arabia has not ordered $450 billion worth of goods and services across the board. Over one million jobs are not at stake. Dubious defense sales The $110 billion in military contracts emerged from Trump’s 2017 meeting with King Salman bin Abd al-Aziz Al Saud of Saudi Arabia, Crown Prince Mohamed bin Nayef of Saudi Arabia, and Deputy Crown Prince Mohamed bin Salman of Saudi Arabia. (Mohamed bin Salman is now crown prince and sits at the center of the speculation over the circumstances of Khashoggi’s death.) "President Trump and King Salman participated in the signing ceremony for almost $110 billion worth of defense capabilities," the White House announced. The press release said the arms package expanded opportunities for American companies in the region, "potentially supporting tens of thousands of new jobs in the United States." Note: Tens of thousands is a far cry from hundreds of thousands of jobs, but we’ll get back to that in a moment. The $110 billion itself is in doubt. "The $110 billion is not even remotely solid," said U.S. Naval War College professor Jonathan Caverley. "The State Department only counts $14.5 billion in implemented’ sales from this deal." And even that sum is suspect, Caverley added. The U.S. approved the sale of a $13.5 billion Terminal High Altitude Area Defense (THAAD) missile defense system. Former CIA officer Bruce Riedel at the Brookings Institution in Washington said that deal is on shaky ground. "The Saudis let pass a September deadline for the deal with Lockheed Martin," Riedel recently wrote. The Defense Security Cooperation Agency oversees foreign military sales. Not counting the THAAD contract, its summary of sales to Saudi Arabia under Trump totals a little over $2 billion. Defense analyst Rachel Stohl at the Stimson Center, a private defense policy think tank, noted that the $110 billion rolled in some old offers. "Many of those were deals negotiated under the Obama administration, and only a small fraction have been filled," Stohl said. That’s the typical pattern for these announcements: Fanfare comes first, followed by a more modest reality. "President Obama offered Saudi Arabia something like $115 billion in arms while in office, and just about half of that resulted in sales," Jennifer Spindel, an international security professor at the University of Oklahoma, told us. And even sale agreements take a long time to play out. In the past 10 years, the United States and Saudi Arabia have had $85.5 billion in sales agreements, but only $24.5 billion in actual deliveries. See Figure 1 on PolitiFact.com That time lag has major implications for jobs. A long runway for jobs Before we get into the dicey link between contracts and jobs in America, it’s important to note that some of the deals involve building things in Saudi Arabia, not the United States. Saudi Arabia’s Ministry of Commerce and Development touted partnerships in 2016 to build Black Hawk helicopters and space video surveillance satellites in the kingdom. So sales contracts don’t necessarily lead to manufacturing jobs in America. With that caveat, let’s look at the one year where we have estimates that tie jobs at home to all exports to Saudi Arabia, whether that’s planes, corn or software consultants. In 2015, the U.S. Commerce Department said exports "supported an estimated 165,000 jobs." That included both direct jobs and the knock-on effect of the money from those sales working through the economy. The same year, exports totalled $29.7 billion. Divide the jobs by the dollars and you find that for every dollar in exports, the United States gets .0000056 of a job. Which might not like sound like much, but obviously it does when you start talking about billions in sales. Now, if the $110 billion in arms sales were locked down and came in one single year, the math says they would generate more than 600,000 jobs. Here’s why that isn’t in the cards. We know the $110 billion is at best aspirational, but the other big issue is that military contracts play out over many years. The arms experts we reached said smaller ones of about $200 to $300 million typically take three to four years for completion. The bigger systems take much longer. "A decade is the ballpark in terms of minimum time between initial signing of a deal and the delivery of the capability, with money disbursed across the life of the contract," Caverley at the War College said. "It will probably take even longer given the new Saudi requirements that 50 percent of the work needs to be performed in Saudi Arabia. Saudi Arabia will have to develop a massive amount of defense industrial capability that currently does not exist in order to handle this work." Even if Saudi Arabia bought everything it said it wanted, the yearly jobs impact would be more in the range of 60,000 to 120,000. That’s not close to the hundreds of thousands Trump has talked about. The $450 billion mystery Trump said that all told, Saudi Arabia has $450 billion in orders from the United States. We asked the White House and the U.S. - Saudi Arabian Business Council for any data on this. We did not hear back. Total exports of goods and services in 2017 were $25.4 billion. See Figure 2 on PolitiFact.com Hossein Askari, a business professor at George Washington University, analyzes international trade in the Middle East. He knows of no tally of contracts to back up Trump’s assertion. "There is absolutely no such number that could support the $450 billion," Askari said. Our ruling Trump said that Saudi Arabia has ordered $450 billion from U.S. companies, including $110 billion in military contracts, representing over a million jobs. Orders on that scale don’t exist. There is no data behind the $450 billion, and the $110 billion is a blend of smaller deals in progress, old offers that have not come through, and speculative discussions that have yet to move forward. Trump’s claims about jobs ignores the long runway between signed agreements and actual delivery and payment. He treats spending that could play out over a decade as if it were spent in one year. More importantly, if the $450 billion in orders is a mirage, the 1 million jobs is equally without substance. We rate this claim Pants on Fire. See Figure 3 on PolitiFact.com
['Saudi_Arabia']