Jamal Khashoggi Controversy Loudly Exposes Trump's Limited Economic Worldview
Among other things, the current controversy surrounding the killing of U.S journalist Jamal Khashoggi highlights a perceptual roadblock in the global thinking of President Trump and his administration: The notion that in any international agreement, the sellers are the winners and the buyers are the losers. In the president’s mind, benefits from any transaction seem to be based exclusively on who cuts the check, rather than what each party gets from it.
Trump is arguing that the United States cannot afford to pass up an opportunity to sell $110 billon in arms to the Saudis, which he calls a “tremendous opportunity for our companies.”
Leave aside the moral dimension of the issue: How important is the life of an American compared to the sales of some arms? In moral terms, would passing up on justice in favor of potential arms sales be any different than U.S companies doing business with Germany during World War II?
Leave aside the practical question of whether the Saudis plan to make this large a purchase. It is unclear where the $110 billion figure comes from, or for that matter whether it is anything more than Trump’s imaginary wish list. In fact, the State Department has announced only six contracts with the Saudi military worth a total of $4 billion since Trump’s visit last year to Saudi Arabia.
Leave aside the question of whether $110 billion amounts to much in the $20 trillion U.S economy.
Focus instead for a moment on the question that exposes the big flaw in the Administration’s economic thinking: Does the arms trading relationship between the United States and Saudi Arabia principally benefit Americans or Saudis?
The truth is, the Saudis need the United States to sell them weapons and weapons systems more than the United States needs the Saudis to buy them - $110 billion or no $110 billion.
Yes, the Saudis could always turn around and buy weapons from the Russians or the Chinese. But what would happen to the weapons systems that they have already purchased from the United States? Where would the Saudis get the spare parts, technology and support they need to keep their military alive? The arms and arms systems they have already purchased and paid for over the course of many years would become stranded assets. It would take years of their time and billions of dollars to replace them.
Just by refusing to sell this supportive technology and servicing to the Saudis, the United States can firmly ground the Royal Saudi Air Force. The U.K has similar leverage. Even Canada, with its small military budget, can have the same impact on the Saudi National Guard.
The truth is, in this relationship it is the sellers - not the buyers - who hold the upper hand. Yet even though the principal beneficiaries are the buyers (the Saudis) the president argues that the sellers (the United States) must make the concessions to keep the deal alive. Shouldn’t it be the other way around?
How did we get to a place where the sale of arms and arms systems are seen as a straight mercantilist transaction? It’s a relatively recent phenomenon. In the 1980s, the United States sold Airborne Warning and Control Surveillance Systems Surveillance (AWACS) planes to Saudi Arabia, the largest U.S arms sale to a foreign country in history up to that point. But the debate at the time was not over the relatively minimal impact the sale would directly have on the U.S economy. Rather, it was over strategic questions, and seen very much from a perspective of the United States being firmly in the driver’s seat: How much technology was the United States transferring to the Saudis, not how many petro-dollars were the Saudis sending to the United States.
Go through news coverage of the debate. You will find concern about the potential impact on Israel and the Mideast balance of power, the importance of building a new regional power to help keep the Soviet Union in check on the Gulf, the security and vulnerability of the technology being transferred, and the value of the Saudis as allies. One thing that is hard to find is the amount of money the United States would receive from the Saudis and its impact on the U.S economy. Because, despite the fact it was the biggest arms transaction up to then in terms of dollars, the payment itself was not seen as important at the time, or at least was dramatically outweighed by the strategic considerations.
In the United States, at least, the debate was over what was in the deal for the sellers, not the buyers. Was it in the U.S interest to make the deal? The sellers clearly held the leverage. How have we gone from there to a place where the current administration sees the question in the opposite fashion - what the seller has to do to please the buyer?
The big shift is in the thinking of the president. President Reagan was a strategic thinker who saw arms agreements as a way to satisfy U.S interests. President Trump is a salesman who sees arms agreements as a way to make a buck. Trump is turning the United States from the indispensable nation that brokers peace and enforces stability into a sales force of arms merchants.
Unfortunately, this is part of a pattern. Whether it be weapons in Saudi Arabia or U.S troops in Europe, whether it be cars, steel, aluminum or lumber, Trump seems to measure whether the national interest is being served purely on the basis of whom is ringing up the cash register - how much the United States is selling and whether it is more than what it is buying. What we are seeing, in national and global security as well as in trade, is the hucksterization of U.S policy.
It is an 18th century mercantilist way of looking at things. Unfortunately, it can only set the United States back in the globalized 21st century world.