The US has dealt Saudi Arabia a blow after Congress overrode a presidential veto of the controversial Justice Against Sponsors of Terrorism Act (JASTA), which would allow US citizens to sue the kingdom for involvement in the September 11, 2001 attacks, and potentially freeze its assets.
The legislation, passed by the US House of Representatives and the Senate with overwhelming majority, would erode the principle of “sovereign immunity” that has governed international relations for centuries.
Saudi foreign minister Adel al-Jubeir warned that if JASTA were passed, the kingdom’s vast “investments in the US may be withdrawn if [it] feared its assets were in jeopardy of seizure”, and that US military and economic interests in the region would be shaken.
The development contributed to growing tension in US-Saudi relations. Facing low oil prices, Saudi Arabia has been making a concerted investment push toward the US in particular, in order to mend fraying relations and diversify the kingdom’s oil-dependent economy.
This includes deputy crown prince Mohammad bin Salman’s high-profile visit to the US over the summer, where he pitched large-scale US investment opportunities in numerous sectors. His audience included government officials, Silicon Valley executives, Wall Street bankers and arms industry bosses.
The passage of JASTA may divert Saudi Arabia’s investment push elsewhere, giving China and Russia an opportunity to step in. Abdulkhaleq Abdulla, a professor of politics in the United Arab Emirates, said: “There is thinking, now more than ever, that maybe the US is not the safest place for future investment.”
However, hoping to ease tensions, Congress passed a $1.15bn arms sale to Saudi Arabia last week, only to incur Iran’s displeasure.
Mr bin Salman’s efforts to diversify Saudi Arabia’s oil-dependent economy are manifested in the ambitious national transformation plan (NTP), which prioritises inward FDI, seeking to double it over five years with a focus on mining, tourism, education, housing and health. The plan envisions $71bn of government spending, alongside a $47bn contribution from the private sector.
Aligned with Mr bin Salman’s vision, this summer Aramco announced its intention to invest $334bn over the next 10 years, and sell 5% of the company in an initial public offering. Schlumberger, General Electric and Siemens have already expressed their interest.
Alongside Mr bin Salman, the Saudi Arabic General Investment Authority (SAGIA) claims to be “improving ways to attract global companies to invest over the long term”. Ironically, according to some investors “SAGIA has a reputation for overly officious regulation”. Others fear that culturally speaking the NTP is out of sync with many Saudis who may resist change and loss of power to foreign investors.