The story of President Donald Trump’s two-month-old administration can be summed up in two words: Not yet.
Has some damning piece of evidence of foreign entanglement come to light that would throw open the possibility of impeachment? Not yet.
Have the economy and financial markets collapsed as many Democrat-leaning experts predicted? Not yet. In fact, there has been a Trump boom on Wall Street and in the jobs market.
Has the new president pushed through the more radical policy measures on migration, wall building and trade protection he promised at the beginning of his tenure? Mostly, not yet, though the modified ban on travel centered on some Muslim countries comes into force soon, and other protectionist steps are being prepared.
The other big “not yet” is in terms of how foreign countries and international investors see Trump’s America. Have they recoiled in horror at the extremism of his message and stopped doing business with the US? Not yet.
In fact, for some foreign partners in the Arabian Gulf region, the new presidency has acted as a spur to bigger business dealings with the US. Corporate legal sources based in Dubai, and which are at the heart of the UAE and Saudi deal flow into the US, tell me there has been a surge in investment activity since the November election. And this really took off after Trump’s inauguration in January.
Investment strike is out
It was suggested during the presidential campaign that Trump apparently has extreme views on Muslims and migration, and would be met with an investment strike by the two biggest Gulf economies, Saudi Arabia and the UAE.
Business and leisure travel across the Atlantic would dwindle to a trickle, it was said. Some believed deal-making would grind to a halt, in protest against the anti-Muslim tone of the Republican candidate and his supporters.
That feeling was reinforced by the passage of the Justice Against Sponsors of Terrorism Act (JASTA), which threatened to narrow the scope of sovereign immunity, and which raised tensions between the US and Saudi Arabia.
It was also forecast that Gulf investors would look to European and Asian stock markets, and to the real estate prospects in London and Paris rather than Manhattan.
Has any of that happened? Not yet.
Boom in deals
My legal source tells me that investment in the US has not slowed down at all. In real estate in particular, there has been a significant increase in the value of deals done in the past six months in the US, with around $17 billion of property bought by investors from Saudi Arabia, the UAE and Kuwait. This compares with around $7 billion worth of real estate investment in the EU, including Brexit-minded Britain.
“There have been no deals pulled because of Trump. In fact, the opposite is true. Families and institutional investors we advise in the Gulf region have increased their exposure to asset classes of all types in the US, especially property, financial securities and infrastructure-related projects. I can only see this increasing as further infrastructure projects are announced and measures for tax reform are introduced,” said one prominent investment lawyer in Dubai.
Some thought deals would grind to a halt amid objections to the Republican’s campaign stance. That certainly has not happened yet.
He also said there had been a “flight to safety and value” on the part of big Gulf investors, who have been put off their two traditional avenues — the Middle East and Europe — by the twin worries of low oil prices and Brexit.
“In Saudi Arabia, they are not sitting on the sidelines any more, wondering when the new economic policies will pay off. They are actively seeking yield elsewhere while they are waiting for the economy to turn, and the best place for that at the moment is Trump’s America,” the lawyer said.
‘Turning point’ in relations
In other words, Saudis and Americans still regard each other as sound business partners, regardless of any differences there may be over some aspects of foreign and immigration policies. That was clearly underlined during this week’s visit of Deputy Crown Prince Mohammed bin Salman to Washington, the first by a Gulf leader since the US presidential election. The visit was described as a “turning point in bilateral relations between the two countries.”
They discussed “huge” Saudi investments in the US, as well as the opportunities for American companies to do more business in Saudi Arabia. Saudi-US friendship has also been strengthened at the strategic level by the tough stance the US president has taken on the nuclear deal reached between Iran and the Obama administration and other Western powers, which had set off all sorts of alarm bells in the Arabian Gulf.
Whatever happens in the geopolitical world, the new investment friendship between the US and the Gulf will continue, at least as long as the “Trump boom” lasts. Some experts predict the benign effects of his economic policies have a two-year timescale, before inflationary and fiscal pressure clip his wings.
The pessimists got their economic forecasts wrong back in November, and maybe they will be proved wrong again. There is no sign so far of the Trump boom running out of steam. At least, not yet.
• Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai