Saudi Arabia is a country that is rich in oil production in the Middle East. The oil production in Saudi Arabia was first discovered by the United States. In fact, there has been a great relationship between these two countries without written agreement.
This relationship comes as a result of economic reasons. In fact, Saudi Arabia is a great ally to U.S in regard to her largest oil reserves and its strategic location. However, U.S.is also important to Saudi Arabia when it comes to provision of weapons and military training. In addition, the United States is the largest importer of oil and petrol from Saudi Arabia (Drezner 89).
Economic Relations between U.S and Saudi Arabia
Saudi Arabia has always been the largest U.S. trading counterpart in the Middle East. The International Trade Administration said that, Saudi Arabia used to export to the current United States of America 31.4 billion ranging from 22 Billion in the year 2009 a little lower than what was there initially in the year 2008 which by then was 54.8 Billion U.S. Dollars.
To an absolute considerable extent, the type of high value of trade between these two allies is dictated by U.S. imports of hydrocarbons from Saudi Arabia. Additionally, U.S. also carries out export of weapons, vehicles and important machinery to Saudi Arabia. Recently, there was a fluctuation of volume and value of goods between U.S. and Saudi Arabia oil trade.
Regardless of the good relationship that has been there between these two nations, problems like unemployment, inflation among others do exist. This is due to the fact that the two nations are not economically equal. So it is therefore very important to collect the appropriate data that regards these two allied nations (Drezner 89).
King Abdulaziz put his understanding of the United States in regard to their refusal to take part in colonization of Middle East. U.S based their ambitions in helping the Arabs to have self-determination. From these early years, these two nations have been greatly growing in terms of economic and political stability (Niblock 300).
As a result of all these, a strong business relationship developed between these two nations. Saudi Arabia-U.S commercial partnership dates back to many years ago after King Abdulaziz stepped into power by controlling the Western parts of the country.
There existed stability and security of the Red Sea port of Jeddah which greatly influenced the American businessmen to invest. These businessmen offered opportunities in business and trade to Saudi Arabian’s trading companies.
In fact, commercial and business contacts were low during King Abdulaziz who absolutely dedicated his effort in establishing the current modern kingdom of Saudi Arabia. Later on in 1933, the kingdom made a positive decision by grunting the oil to the Americans’ companies which greatly bridged the gap between these two nations to improve both economically and commercially (Drezner 89).
On the same note, this unity of these nations in terms of trade really boosted their economies. The rate of employment among the citizens had initially been very low but currently they can boast of improved opportunities in terms of development.
Due to available raw materials like crude oil, it became easier in terms of development for the two countries. In each country where the rate of unemployment is high, the economy must be predominantly low.
Some countries have no experience in ensuring that the available raw materials are well utilized and as a result, people still lack jobs. It is worth being appreciated that the relationship between these two absolutely enhanced the rate of employment among the youths and the old people (Niblock 224).
By the time Saudi Arabians embarked on the development procedures in regard to creating more industries, agricultural sector, education and healthcare, it really turned out positively for the united to carry out the necessary help to the Saudi Arabians.
The well known experts were greatly involved in building up this nation. The Saudi Arabian kingdom immensely developed in terms of infrastructure, telecommunication facilities and industrial development of the cities (Niblock 224).
It looks a little bit challenging that the United States has greatly flourished during this intimate relationship with Saudi Arabia. They currently import just a little from Saudi Arabia and exporting a lot to Saudi Arabians. So it is vivid that U.S at long last attained something great than the Saudi Arabians (Niblock 114).
This close commercial and economic partnership has on the same note resulted into quick growth in a well defined two way trade which greatly increased almost from 56.2 million in 1950 to approximately 34 billion in the year 2005.
The United States and the Saudi Arabians have been in union also in areas like telecommunications, finance, manufacturing and so much more. The table below gives a brief explanation on the two countries’ export and imports (Niblock 114).
There are also a number of organizations which have been established to help in promoting business ties between these two countries. For example, in 1974, the Saudi-US Joint Commission on Economic Cooperation was formed to help in provision of advisory measures to largely expand the business. Later in 1994, the US-Saudi Arabian Council was formed.
This council was established to provide leaders in both of these countries to have an objective at improving the knowledge and mutual understanding between them. All these organizations had aims of ensuring that a stable understanding is created among them (Bronson 209).
In every successful country the rate of inflation must be at its stable stand. This only comes when the available resources are appropriately utilized. Between 2000-2004 they mainly put their focus on economic diversification and greatly on the private sector within Saudi Arabia.
The government of Saudi Arabia definitely aimed at an amicable or average GDP growth rate of 3.16% every year. This plan resulted to 5.04% growth rate in the private sector and 4.01% for the non-oil sector. Similarly, the government also aimed at creating 817,300 new jobs for Saudi Arabians (Bronson 109).
The inflation rate in Saudi Arabia rose to a one year two months high of 5.4% in the year 2012 according to Central Department of Statistics and Information. The rental rate was even much higher than the previous years. In the year 2010, the inflation rate was average.
In fact, many countries face the challenge of inflation rate increasing rapidly due to poor planning. It is therefore necessary for every nation to plan on how to use her resources amicably for the betterment of all the citizens so that they can have where to lay their hands when the rate of inflation is not bearable, for example, catering for the employment rate and development of infrastructures within the boundaries (Bronson 99).
In summation, it is essential for the country to plan appropriately toward the available resources without negatively misusing them. Countries should also come together in ensuring that there is mutual relationship among the investors who come to help the developing countries improve economically.
Works Cited
Bronson, Rachel. Thicker Than Oil: America’s Uneasy Partnership with Saudi Arabia. New York, N.Y. [u.a.: Oxford Univ]. Press, 2006. Print.
Drezner, Daniel W. The Sanctions Paradox: Economic Statecraft and International Relations. New York: Cambridge University Press, 1999. Print.
Niblock, Tim. State, Society and Economy in Saudi Arabia. London [usw.: Croom Helm] usw., 1982. Print.