By now, President Donald Trump’s bromance with Mohammed bin Salman of Saudi Arabia is well documented. The platitudes and chummy photo-ops. The billions of dollars in U.S. arms sales. And, of course, the willingness to brush aside evidence implicating the crown prince in the murder of journalist Jamal Khashoggi.
But what’s gone largely unnoticed is just how enthusiastic the kingdom has been in snapping up America’s debt.
After aggressively culling its holdings of U.S. government debt for most of 2016, Saudi Arabia has amassed an even larger position since Trump’s election in November that year. Based on the latest reported figures, the nation nearly doubled its ownership of Treasuries to $177 billion. No major foreign creditor has ramped up its lending to the U.S. faster.
Coincidence? Perhaps. After all, you could probably marshal any number of plausible explanations for the timing of the oil-exporting nation’s buildup that don’t involve some political quid pro quo. Rising petrodollar revenue. Risk aversion. A shift out of negative-yielding bonds. And considering how big the U.S. deficit has grown because of Trump’s tax cuts, the amounts involved won’t move the needle all that much when it comes to America’s financing needs.
Whatever the case may be, however, this much is clear: as Trump continues to defend Prince Mohammed in the face of growing criticism on a whole host of issues, from the Saudi-led war in Yemen to his alleged role in the gruesome killing of Khashoggi, the kingdom has everything to gain from appearing to lend financial support to its most important ally — even if it isn’t intentional. That’s particularly true after talk surfaced in May that China, the largest foreign creditor to the U.S., might be considering the unlikely move of dumping its Treasuries to punish Trump over his trade war. (Though at the Group of 20 summit in Osaka, the two countries declared a truce, at least for now.)