USA and the Kingdom of Saudi Arabia International Business Transactions

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United States of America and the Kingdom of Saudi Arabia International business transactions

Economic transactions

The economy of United States of America is currently the third largest in the world with imports and exports estimated to be worth trillions of dollars.

As such, the economy plays a critical role in determining the world trade (Dickson 116). Most of the world largest industries are found within the economy and are dependent on the world main resources. Besides, almost all the world major industries and countries supply raw materials to the American industries at the same time buy finished products to be used in the industries or consumed. The reasons explain why the American economy is one of the largest and play a critical role in determining the global economy.

Even though smaller in relation to the economy of USA, the Kingdom of Saudi Arabia (KSA) has a greater global influence particularly in terms of economic control. Generally, economy of Saudi Arabia is not large enough to influence the global economy. However, the capability of the Saudi Arabia to control oil dealings gives the country enough power to control the global economy which largely depend on oil (Jasimuddin 63).

In other words, Saudi Arabia unique position as the one of the largest oil producers enables the country to have a greater influence in the world trade. As such, the relation Saudi Arabia has with other oil producing countries not only within the Middle East but also around the globe is critical in determining the global oil prices (Porter 78).

Besides oil producing countries, Saudi Arabia relations with other countries particularly USA are built around trade, security as well as other diplomatic understandings (Jasimuddin 57). The economic relations are critical for the growth and development of Saudi Arabia economy since they involve large exchanges of products and services.

As indicated, the economy of the Kingdom of Saudi Arabia depends largely on oil and related industries for exports (Mason 437). In addition, the country exports plastics and related products, construction materials as well as products from other industries. However, the largest revenue is from oil and petrochemicals exports.

The improved revenues from oil exports have continued to strengthen Saudi financial capabilities. The financial capabilities have been critical in meeting both domestic and foreign investment needs as well as enough resources to provide for social services (Levitt 95). On the other hand, the country depends on imports from other countries particularly USA, which is the largest trading collaborate. The country imports technology, machinery and military products from USA.

Besides, the Kingdom of Saudi Arabia plays a critical role in the economy of USA. The reason is that Kingdom of Saudi Arabia is one of the major players in OPEC member countries. OPEC members are countries that produce and determine the prices of global oil (Al-Shammari 235).

Moreover, the country has huge oil reserves, which is significant in the development of the US economy. Essentially, the Kingdom of Saudi Arabia exports large volumes of oil to US whose economy largely depend on oil and natural gas majorly found in OPEC member countries. The trade links between the two countries not only depend on oil and natural gas but also products and services from other industries (Niblock and Malik 73).

Within the petroleum industry, USA manufacturing industries depend on petrochemical products imported from Kingdom of Saudi Arabia. In fact, two thirds of petroleum products produced in Kingdom of Saudi Arabia is exported to USA. Essentially, over forty percent of USA economy energy productions depend on imports of petroleum products from Kingdom of Saudi Arabia.

As mentioned, Kingdom of Saudi Arabia has significant influence on the global oil industry particularly in OPEC countries. In addition, within Middle East, Kingdom of Saudi Arabia controls the production of oil as well as related petrochemical industries (Hassanien 347). Given the fact that the country have greater control on the production of oil and petrochemical industry enables it have greater influence on the economy of other countries particularly USA (Niblock and Malik 73).

As pointed out, USA economy is larger than that of Saudi Arabia. Like most of the developed economies, there are large industries in USA that play critical role in the global trade and economy (Dumas 341). The quantities of exports to other countries are huge compared to that of Kingdom of Saudi Arabia.

The huge exports is exacerbated by huge number of countries USA is trading with. In fact, in the Middle East alone, USA is exporting to almost all countries (Vernon 193). On the hand, the USA imports are comparatively huge. Moreover, the exports from USA to Saudi Arabia are bigger in relation to what the country. Generally, in terms of global trade USA plays a critical role in terms of market for other countries goods and services as well as in terms of provision for resources (Rosenberg 112).

In relation to bilateral trade with Saudi Arabia, USA imports large volumes of oil and other petroleum products from Saudi Arabia. As indicated, the other Saudi Arabia industries depending on the USA market includes, cement, petrochemicals industry, hospitality as well as oil and natural gas (Vernon 193).

In fact, USA huge economy depends on oil and related products. Saudi Arabia provides approximately forty percent of the American demand. Moreover, the American industries also depend on petrochemical products, which are majorly imported from Saudi Arabia (Rosenberg 112).

On the other hand, the Kingdom of Saudi Arabia depends largely on military products and services produced in highly developed USA military industry. In fact, USA military industry is the most developed in the world. Many countries including the Kingdom of Saudi Arabia depend on the USA military industry to develop their defense and military capabilities. The military industry contributes hugely to the American economy (Guo 123).

The estimates are that the industry exports over twenty billion dollars to Saudi Arabia alone. Generally, like many countries, the Kingdom of Saudi depends largely on American economy for the market of its industrial products as well as for the development of its economy. Besides, the USA economy supplies both military and industrial equipment to Kingdom of Saudi.

The Saudi Arabia and US military relations and transactions

The military relations the country has with the US have resulted in the purchase of military services and equipments valued at over sixty billion dollars. Militarily, the Saudi Arabia has greater dealings with the USA (Pomeranz 89). Besides, USA has continued to sell military products and services to Saudi Arabia worth billions of dollars.

Moreover, USA has continued to use the Saudi facilities particularly military bases in exchange of military services and products. Essentially, the military transactions between the two countries have been estimated to cost billions of dollars.

The continuous military transactions between the two countries have increased the military capabilities of KSA. In most cases, the stability of the Middle East region largely depends on political stability of the Kingdom of Saudi Arabia. In addition, the increased military capabilities of the Kingdom of Saudi Arabia are critical for the stability of the region. The reason is that threatening countries such as Iran will be subdued due to the increased military capabilities of the country.

The belief held by USA is that the region’s stability depends on the military capability of the Kingdom of Saudi Arabia and explains the reason why there exist enormous military transactions between the countries (Engardio and Belton 75). Even though the Kingdom of Saudi Arabia is not powerful militarily within the region, the country plays a critical role in influencing the regional politics.

In most cases, the bilateral agreements between the USA and KSA centers on the security protection. In the recent past, the two countries have a common understanding towards the security particularly that deal with terrorism. Besides offering the hardware for security purposes, USA provides advisory services and support through the cooperation and coordination of the two-country security agencies.

The bilateral agreements on security concerns increase the military transactions of the two countries as well as the military capabilities of Saudi Arabia (Rogers 235).

Besides, advisory services and support, international military education and training purchases from various countries are estimated to over ten billion dollars. The purchases are majorly from USA and include purchases made through the USA foreign military sales program (Rouis and Steven 156). Such trainings are critical in maintaining military-to-military relations as well as increase the Saudi defense capabilities.

As indicated, Saudi defense as well as security capabilities cannot be compared to those of developed nations as well as other countries in the region including Israel. However, greater improvements have been made with both bilateral and multilateral military agreements and cooperation (Helpman 442).

Besides, the military capability of the country has also been improved due to the military trade links. The importation of military hardware and security advisory services from other countries particularly USA has contributed to greater improvement on the military capability of the country.

The military capabilities of USA enable the country to be the most powerful in the world. The military capability of the country is boosted by the advanced technological advancements, the financial capabilities as well as the developed military industry. Most countries depend on the USA military capabilities for defense and security.

In relation to Saudi Arabia, the USA military play a critical role in terms of provision of equipments support and training. Moreover, the advanced USA military and security capabilities are critical in maintaining political stability, security and peace in the region. Essentially, Saudi military largely depend on the USA military developments and advancements (Rugman and Collinson 112).

The reason is that besides protecting the American interests in the region, the USA military is also interested in increasing the defense capabilities of other countries such as Saudi Arabia and Israel to counter the threats from other countries in the region such as Iran.

Religious systems between the two countries

As indicated, Saudi Arabia is considered the center of Islamic faith. The reason is that Saudi Arabia is perceived to be the origin of Islam and most of Muslims from the region and beyond converge in the country once a year for prayers. In relation to other countries, Saudi Arabia is purely a Muslim country.

Even though there are other religions such as Christianity, they make insignificant percentage. Being a Muslim country, the religion plays a critical role in the daily lives of the Saudi citizens as well as in the management of public affairs (Ramady 147). In other words, the religion determines the manner in which the country is managed. The social and political policies are based on the Muslim beliefs and systems.

Moreover, the Islamic religion hugely determines the social systems. In essence, religions determine the social aspects of the Saudis. The daily activities, actions and behaviors is determined by the religious belief systems (Ramady 147).

In most cases, the social and political stability is threatened by the entire dependent on religious beliefs. Moreover, the religious sectarianisms that threaten the stability of other countries particularly the neighboring religious countries tend to spill over into Saudi Arabia. However, the Saudi governments have subdued such spillovers.

Conversely, USA is characterized by various religions. In fact, all religions in the world are represented in the USA in approximately similar percentage as that of the world. Moreover, in USA, the functions of the state are highly separated from the religious belief system. In addition, in the US society, religion though important does not play a critical role in the people’s lives.

Essentially, religion is not a determinant of the social and political systems (Ramady 152). Unlike in Saudi Arabia where daily activities, actions and behaviors are largely determined by the religious belief systems, USA is comprised of a free society where individual activities, actions and behaviors are determined by the individual conscience.

Political systems

The manner in which political system is arranged in the Kingdom of Saudi Arabia is very different from that of USA. Whereas USA is the world largest democracy, the Kingdom of Saudi Arabia is a royalty. Members of the same family are ruling the country. In fact, the political system in Saudi Arabia is different from other countries in Middle East.

Even though the current regime has allowed some space for self-expression, the decent voices or opinions are not yet tolerated. Moreover, the political systems are hugely controlled by the Islamic beliefs and customs. Besides economic influence, Saudi Arabia has a political and religious global influence. In the political front, Saudi Arabia has greater political influence in the Middle East (Ramady 167). Religiously, the country is the origin of Islamic faith.

On the other hand, American is the largest democracy in the world and has influence in most parts of the world. In fact, most of countries have adopted the American political system in their development of their economies.

The American political system is supported by the observance of individual rights, which is anchored in the American statutes (Ramady 167). In other words, the individual rights and freedoms characterize the American political system. Moreover, the political system is hugely separated from the religious belief systems and practices.

The individual rights and freedoms differentiate the American opinionated structure to the political systems in most countries. In particular, Arab countries do not guarantee individual freedom to political participation and determination of their leaders.

In other words, the democratic space that allows free participation in the political affair of the country is deficient in most countries in the Middle East. As such, the USA political system is considered highly developed in relation to other countries. The influence USA political system has over other countries is also huge in relation to that of Saudi Arabia.

Social systems

Even though there are distinctive differences between the social systems and structures of the two countries, similarities also exist. The American social system is characterized by individual freedoms and liberties. In fact, America is considered to be a free society and the attribute has contributed to rapid changes experienced in both political, economic and social fronts.

Unlike in the Saudi Arabia and other Middle East countries where individual rights and freedoms are curtailed, the American societies are free to participate in economic, political and social issues (Achoui 45). The American social systems are having a greater influence in the world.

The freedom has also allowed many citizens of various countries to migrate to USA. In contrast, migrations are not allowed in Saudi Arabia. The nationals of various countries are migrating to USA for various reasons particularly for economic opportunities such as employment and commercial activities. On the other hand, the social systems in Saudi Arabia are highly controlled by the religious belief systems and the autocratic system of governments (Achoui 45). Religion plays a critical role in the daily activities, actions and behaviors of the Saudi citizens.

Facts that influence international trade and how the international trade can be achieved

Both multinational and bilateral trades between countries are influenced by various factors. Most importantly, the differences in the produced goods and services, the availability of capital and good relations that determine trade agreements influence the international trade between countries (Rugman and Collinson 112).

A country may supply finished products or raw materials to another country in exchange for the capital in forms of finances or products. Similarly, a country may supply products to another country where the market is available. Essentially, international trade is influenced greatly by the differences in which the goods and services are produced. Moreover, for international trade to achieve its objectives, the agreed terms of trade have to be observed.

Works Cited

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