Dr. Adam Posen Talks U.S.-Saudi Relationship

Summary

Podcast Summary: Bloomberg Talks

Episode: Dr. Adam Posen Talks U.S.-Saudi Relationship
Date: November 18, 2025
Host: Carol Massar (Bloomberg)
Guest: Dr. Adam Posen, President of the Peterson Institute for International Economics

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Overview

This episode features a deep dive into the evolving U.S.-Saudi relationship—with a special focus on economic ties, security arrangements, political optics, and the interplay between global and domestic policy priorities. Dr. Adam Posen offers candid insights into where this partnership stands, its real strategic value, and the consequences of blurred lines between business interests and government actions at the top levels of U.S. leadership.

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Key Discussion Points and Insights

1. The Economic and Strategic Significance of U.S.-Saudi Relations

Timestamps: 00:58–02:58

• Saudi’s Push for Economic Diversification:
  Dr. Posen notes that Crown Prince Mohammed bin Salman is shifting the kingdom away from oil dependency, seeking credible integration with the U.S. to support domestic liberalization and economic reform.

  "Mbs, the crown prince, has very definitely been seeing part of his agenda to try to transition Saudi away from over dependence on export of fossil fuels. And it's the right thing for them to do from the economic perspective." (01:08, Dr. Adam Posen)

• U.S. Perspective Is Primarily Security-Focused:
  The U.S. does not derive outsized economic benefit from Saudi investment, unlike what some believe. The value is more in the security alliance, necessitating conditionality for tech and weapons transfers.

  "For the US, I think there has to be more of the security diplomatic conditionality. Just simply getting Saudi investment in the US is not that big a gain." (02:43, Dr. Adam Posen)

2. Conditionality for Strategic Deals and the Big “Carrots”

Timestamps: 02:58–03:55

• What ‘Conditionality’ Should Look Like:
  Arms deals (such as F-35 sales) should only go forward if Saudi Arabia makes significant concessions—be it recognition of Israel, influencing Pakistan constructively, or contributing to rebuilding efforts in Gaza.

  “I would not say it necessarily needs to be tied to Israel recognition in the Abraham Accords, but it needs to be tied to something of that caliber... it has to be something substantial.” (03:07, Dr. Adam Posen)

• Seeing the Relationship as a Whole:
  These agreements are about more than one-off exchanges; they should reflect long-term partnership values with security commitments at their core.

3. Mixing Public Office and Private Business: The Optics and Dangers

Timestamps: 03:55–06:32

• Concerns over Trump Organization’s Deals:
  Carol Massar raises the issue of the Trump Organization’s ongoing business ties with Saudi partners, specifically projects like the Maldives resort, and the implications for national interest.

• Erosion of U.S. Governance Norms:
  Dr. Posen emphasizes that, regardless of denial or legal technicalities, even the perception of personal enrichment from high office corrodes established American norms.

  "We had laws and more importantly we had norms and we had expectations from the press, from the public, from the markets that the US did not deal in family enrichment." (04:43, Dr. Adam Posen)

• Historical Context and the Global Perspective:
  While such behaviors are more common elsewhere, American exceptionalism in this arena has helped underpin the nation’s global leadership and credibility.

  "We've, we've not seen anything like this, at least since Teddy Roosevelt, meaning 120 years." (05:38, Dr. Adam Posen)

4. The Importance of Scrutiny and Guardrails

Timestamps: 06:32–08:25

• Systemic Safeguards Required:
  Dr. Posen acknowledges that every administration faces these issues to some degree, but stresses the necessity for systemic scrutiny and strong rules to prevent political and economic decision-making from being driven by private interests.

  "You want to have a system in place where people expect and feel... that this is an exception, not the rule..." (06:47, Dr. Adam Posen)

• Transparency Alone Is Not Enough:
  Merely being open about conflicts does not resolve or legitimize them.

  “Transparency doesn’t necessarily negate actions. Right?” (08:20, Carol Massar)
  “Yeah. Well said.” (08:25, Dr. Adam Posen)

5. Potential Long-Term Economic Consequences of Blurred Norms

Timestamps: 08:27–10:16

• The U.S. Example Matters Globally:
  Dr. Posen warns that if the U.S.—the anchor of the rules-based world order—starts tolerating or encouraging such conflicts, other countries will follow, undermining frameworks that maintain fairness and stability.

  "It means that the US is setting an example that you can get away with that and other people should get away with it. And it breaks down the regimes and the operating principles we have to deter these things." (09:12, Dr. Adam Posen)

• Concrete Harms:
  These shifts can lead to reduced investment, diminished business opportunity, wasted public funds, greater global instability and inflationary pressures, ultimately hurting everyday people.

6. Domestic Priorities versus Global Engagement

Timestamps: 10:16–13:15

• False Dichotomy Between Global and Domestic Focus:
  Posen reiterates that global engagement, when wisely conducted, ultimately supports domestic well-being.

  "If you set up a rest of the world that feels safer and less corrupt and more stable and less subject to disease and refugee flows and wars, that’s ultimately to the benefit of the average American." (11:09, Dr. Adam Posen)

• Warning on Current Domestic Trends:
  He expresses deep concerns about cutbacks to healthcare subsidies, restrictive migration policy, pressures on working women, and anti-market regulations—saying these hurt U.S. economic and human welfare.

  “The removal of health care support subsidies and access to Medicaid and to all these Obamacare related things is going to materially affect the health and well being of millions of human beings in the U.S. and that is bad economically, but it’s bad in human terms.” (11:42, Dr. Adam Posen)
  “The combination of anti migration policy, attacks on the Fed, tariffs, deal making, some of which looks corrupt, all adds to a more inflationary environment which reduces real incomes for people.” (12:46, Dr. Adam Posen)

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Notable Quotes & Memorable Moments

• On Saudi Diversification:
  “They have, and I know a lot of very serious money investors who are very excited by this. But just to say this puts them on the path." (01:41, Dr. Adam Posen)

• On U.S. Norms vs. Global Reality:
  “There are a lot of countries in the world, including Saudi, including Turkey, including China, where this kind of ties go on between the leaders, families and chosen friends and foreign policy and other governments. It’s not good, it’s not fair, it’s wasteful and distortionary, but it’s also not the end of the world.” (05:07, Dr. Adam Posen)

• On Systems and Safeguards:
  “You want to have a system of scrutiny and rules and presumptions that discourages our elected officials from being so overt about it.” (07:40, Dr. Adam Posen)

• On Domestic Policy Concerns:
  “It’s not about choosing the global versus domestic, it’s about choosing the self-interested versus the public welfare.” (13:11, Dr. Adam Posen)

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Key Segment Timestamps

• 00:58–02:58: U.S.-Saudi economic and security priorities
• 03:04–03:55: The importance of conditionality in U.S.-Saudi deals
• 03:55–06:32: Trump Organization business ties, perceptions, and American norms
• 06:32–08:25: The necessity of systemic scrutiny and true accountability
• 08:27–10:16: Global consequences of weakened governance standards
• 10:16–13:15: Weighing global versus domestic priorities in U.S. policy

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Tone and Style

• Dr. Posen is candid, historically informed, and measured, balancing warnings about real dangers with acknowledgment of global realities.
• Carol Massar’s questions push for clarity and moral relevance, probing both the perceived and practical consequences of these blurred lines.

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Final Thought

Dr. Posen’s central thesis: The evolving U.S.-Saudi relationship should be assessed for its strategic, not just economic, value and managed with scrupulous transparency and conditionality. America’s domestic policies and global example remain tied to its core credibility—and when that credibility erodes, so do both American prosperity and global stability.

Transcript

[Indiana University Narrator]

Indiana University is proving how higher education can create solutions with industry. We're working side by side with industry partners to fuel economic growth that powers a future ready workforce. Explore IU's impact at iu.edu impact.

[Carol Massar]

Bloomberg Audio Studios Podcasts Radio news All right, we're going to stay on global relationships, the economies that drive them, and turn on over to Dr. Adam Posen. He's president of the Peterson Institute for International Economics. He joins us from, I believe, the nation's capital capitol on this Tuesday. Yes, Washington, D.C. Dr. Posen, good to have you back here on Bloomberg and on Bloomberg businessweek Daily. These relationships, I first got to ask you, you know, watching the relationship, what seems to be a very close relationship between the United States and Saudi Arabia and I think about their economies, how do you see it? What's significant for you here in watching this?

[Dr. Adam Posen]

Thank you, Carol, for having me back on Bloomberg Business Week Daily. I want to pick up on some things you discussed with your previous guest, which is there is a huge economic leaving aside the national security incentive for Saudi to behave in this way, in that mbs, the crown prince has very definitely been seeing part of his agenda to try to transition Saudi away from over dependence on export of fossil fuels. And it's the right thing for them to do from the economic perspective. And obviously Saudi for many decades has been accumulating surpluses of cash and trying to invest them. They've been trying to diversify. I wouldn't go quite as far as your previous guest did in extolling how much Iran costs diversified, but they've been trying. I think the deeper integration with the US Is a path towards that and it is a credible path towards that. That's not to say they haven't been doing a lot of good things in terms of domestic investment and on the economic front, on liberalization. They have, and I know a lot of very serious money investors who are very excited by this. But just to say this puts them on the path. For the US However, I think it's less important economically. It is more about the security relationship, or at least it should be. There's been a shortage of people willing to invest in the US or at least except without, with the exception of a few years in the late 70s and early 80s, not since 1900. And that remains the case even though things are happening to make the US A little less attractive. So for the US I think there has to be more of the security diplomatic conditionality. Just simply getting Saudi investment in the US Is not that big a gain.

[Tim]

What type of conditionality, especially in exchange for F35 states of the arjets.

[Dr. Adam Posen]

Tim, I think that's the right question. And I would not say it necessarily needs to be tied to Israel recognition in the Abraham Accords, but it needs to be tied to something of that caliber. So maybe it's something about how they're relating to Iran or something about the Saudi mutual guarantees with Pakistan, some sort of agreement on how the Saudis will influence Pakistan. Or maybe it's about the investment which the Saudis have indicated they're willing to do in rebuilding Gaza and dealing with what will be refugee issues there. All I'm saying is that it has to be something substantial. But I also think you want the F35s, of course, are a big carrot, but you also want to think of it in terms of the relationship. And this is what is key, whether it's UK or Saudi or Japan.

[Carol Massar]

Adam, you talk about relationships and I think about something that came up questioning by reporters of the President and MbS while at the White House and that is about kind of the relationship that the Trump Organization has with Saudi Arabia on business deals. And we have a story in the Bloomberg about the Trump Organization planning a luxury resort in the Maldives with a Saudi Arabian partner. It's just one case. I'm just curious. You've watched, you've talked about, you've analyzed different administrations. This kind of what seems to be a mixing melding. I know the president answered the question. He said I have nothing to do with family business. But. But how do you see this?

[Dr. Adam Posen]

No, I appreciate your asking that, Carol, and I don't want to be mean, but it doesn't matter whether the president literally in the narrow sense has nothing to do with it or not. We had laws and more importantly we had norms and we had expectations from the press, from the public, from the markets that the US did not deal in family enrichment. When you're in public office, let alone when you're the president, you must some of your viewers might remember the John Adams miniseries in which John Adams alienated both his daughter and his son in law or one of his sons and his son in law because he wouldn't advance them while he was in the White House. And what matters is this very strong perception which is obvious in Qatar, in the United Arab Emirates and Saudi. But even with the gold that was offered just the other day to the President, there is this perception that you link things. Now I don't want to overdramatize this. There are a lot of countries in the world, including Saudi, including Turkey, including China, where this kind of ties go on between the leaders, families and chosen friends and foreign policy and other governments. It's not good, it's not fair, it's wasteful and distortionary, but it's also not the end of the world. Businesses and investors can proceed, but for the US this is going back to your original question. This is a huge step change. We've, we've not seen anything like this, at least since Teddy Roosevelt, meaning 120 years.

[Carol Massar]

So just to be fair, because we certainly get feedback from our audience and to say that the President says I'm not involved though, you know, and we've had, you know, any president that walks into the White House, Republican or Democrat, you know, certainly has allegiances to industries or so on.

[Dr. Adam Posen]

So I agree, I agree. It's never going to absolute. And we all know the stories of people going back to Jimmy Carter's brother selling beer, that there's always relatives who try to profit on these things. But the. So again, this isn't about ascribing malevolent intent, but you want to have a system in place where people expect and feel, particularly investors, but also average citizens expect and feel that this is an exception, not the rule that you occasionally have the rogue family member, but that on the one hand, policy choices are not being driven and being perceived as driven by these things. And on the other hand, that economic choices are being made on a commercial basis. And that's why no matter how many times people of different parties and different administrations or appointments fail on this front, you want to have a system of scrutiny and rules and presumptions that discourages our elected officials from being so overt about it. I think to be fair, you know, the Trump administration and the sons of President Trump and Secretary Ludnick and the Middle east negotiator guy and all these people, you know, they're being very open. And I think that in one sense does matter, like they are with crypto. But in another sense, that doesn't solve the problem because then the perception is still people are being favored, decisions are being made on a bad basis. You have to offer gold crowns or hotel deals to make things happen.

[Carol Massar]

And transparency doesn't necessarily negate actions. Right?

[Dr. Adam Posen]

Yeah. Well said.

[Tim]

Dr. Posen, you said it's not the end of the world if we're in a situation such as this or in a society such as this.

[Dr. Adam Posen]

But it's not the end of the world.

[Tim]

But I'm wondering if there are potentially long term economic repercussions that happen in societies that don't necessarily have the same rules in place. If we can look to history or modern history to get an understanding of what the implications of that could be in the US in your view?

[Dr. Adam Posen]

Oh, I think they're enormous. I think then, because it's the US which as I've argued, Tim, has been the linchpin of the rules based, law based system of economies Since World War II, it has repercussions around the world because it means the US is not only enforcing the norms against this kind of corruption or perceived corruption or tied political choice making. It means that the US is setting an example that you can get away with that and other people should get away with it. And it breaks down the regimes and the operating principles we have to deter these things. So when I say it's not the end of the world, I don't mean to suggest it's not very harmful. It will reduce the returns on capital. It will reduce the ability of average people and normal businesses to get access to opportunities. It will divide the world. It will increase instability in investment markets. It will war, waste public money. It's bad in a lot of ways. I just merely want to be very clear that though it's unusual for the US in the last hundred plus years to behave this way, in our long ago history and in other countries around the world, this has taken place. And that there have been much smaller, much less overt examples of this by your previous U.S. administration.

[Carol Massar]

Well, and you know, just thinking about all you've just said, Dr. Posen, and then kind of squaring that with the recent government shutdown and the domestic issues that kind of came to the forefront, you know, the one in eight Americans who are on some kind of food assistance or food stamps, you know, the amount of Americans that are just struggling to put food on their table, a roof over their head, I want to bring it down then with so much focus on global issues. And some would say when you're president, you have to look beyond the US borders as well as within the US borders. But having said that, what is it that you know is maybe being ignored in your view domestically? That's really got to be addressed.

[Dr. Adam Posen]

Ken, you're asking very profound questions. I'll just say that in an enlightened administration, the reason you get involved in the rest of the world is because it ultimately is to, if you set up a rest of the world that feels safer and less corrupt and more stable and less subject to disease and refugee flows and wars, that's ultimately to the benefit of the average American and if you have open and free commerce on a rules based basis that raises American opportunities and American citizens purchasing power. So I agree with you. There's a question of how you prioritize. And this goes to the point with Saudi, I'm not sure that that should be the biggest priority of an American administration right now. It's fine. You can walk and chew gum. It can be one of the things. So when you say what's in the domestic front, I think the removal of health care support subsidies and access to Medicaid and to all these Obamacare related things is going to materially affect the health and well being of millions of human beings in the US and that is bad economically, but it's bad in human terms. I think the reduction of options through the anti migration policies, through other policies that make it so more people, mostly women in late middle age, have to stay home to be caregivers to elders and to children and disabled people is materially bad for humans and is a huge pressure on people. And I think the combination of anti migration policy attacks on the Fed, tariffs, deal making, some of which looks corrupt, all adds to a more inflationary environment which reduces real incomes for people. So there's a whole bunch of things on the domestic front, but I just want to say that it's not about choosing the global versus domestic, it's about choosing the self interested versus the public welfare.

[Carol Massar]

I think we need to leave it there. I gotta say sometimes I'm in awe of our guests and I certainly am on this Tuesday. Dr. Posen, thank you so much. Really appreciate all we could.

[Dr. Adam Posen]

Thank you for having me.

[Carol Massar]

Same here. Thank you for joining us. Dr. Adam Posen, President of the Peterson Institute for International Economics.

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