Jobs and Saudi arms sales: The real story

Since World War II, U.S. dependence on oil has led every American president to cut quiet deals with one of our major sources, Saudi Arabia, to keep the flow coming. The key deal sweetener has been arms sales, billions of dollars’ worth of sophisticated U.S. weapons to the kingdom year after year. Periodically these deals erupt into public consciousness and become controversial. But never more so than now.

In recent years, American consciences have had to contend with stories of the Saudis killing innocent civilians in Yemen with American-made precision strike weapons. In 2018, for example, a Lockheed Martin-made bomb hit a Yemeni school bus, dealing death to 40 children. Such stories have sometimes made it to the front pages. Stories about the millions more suffering from the war’s ongoing famine usually don’t.

But now the linkage of oil and war is hitting home. The Saudis’ (and OPEC’s) decision to cut production is not good news for Americans heading to the gas pump. It is good news for Russia in its struggle to finance its war in Ukraine and weaken the resolve of Ukraine’s supporters. 

In response, Sen. Robert Menendez (D-N.J.), announced that he was putting a hold on U.S. arms sales to Saudi Arabia. While his position as chair of the Senate Foreign Relations Committee gives him a great deal of power to do this, making it stick will almost certainly require presidential approval.

So far, it isn’t coming. The Biden administration’s near-term response is focusing on using the U.S. strategic oil reserve to make up some of the difference. And its longer-term response involves trying to make up for lost time in creating an economy running on clean domestic energy sources rather than oil from the likes of Saudi Arabia.

A NPR reporter put her finger on one reason the administration hasn’t yet embraced cutting the flow of arms to Saudi Arabia: “[T]hose [sales] represent a lot of American jobs.”

So here we are, with our foreign policy choices hamstrung by our failure to cut that tie between oil and arms sales.   

The cutting task requires putting the connection between arms sales and jobs in perspective. It is true that U.S. weapons, including those going to foreign markets, sustain a lot of jobs, but the number is often overstated. The Trump administration got in the habit of inflating the number of jobs tied to Saudi arms sales by a factor of 10 or 20 times. 

Beyond Trump’s wanton habits of exaggeration, arms sales job estimates often ignore the side deals that frequently accompany them: requirements that the recipient country manufacture parts of the system or secure offsetting U.S. investments in that country’s economy.    

Moreover studies have repeatedly shown that far more jobs would be created from federal investment in things other than weaponry: 40 percent more from spending on infrastructure or clean energy, for example, and nearly 100 percent more from education spending.

In my visits to defense-dependent locations around the country for my new book, I frequently found that economic dependency on weapons manufacturing was a far less reliable strategy for community prosperity than we’ve been led to expect. For example, while Forbes magazine routinely puts Los Alamos County, home of a key piece of our nuclear weapons complex, on its top ten list for per-capita income, the adjoining county, Rio Arriba, hovers near the bottom of the income scale nationwide. Beyond such anecdotal evidence, I compared the top 60 most defense-dependent locations in the country with their poverty rates. My finding: Nearly half of the communities awash in military money had poverty rates at or above the national average.

For too long our foreign policy has been under the thumb of the Saudis’ oil and their wars. Getting out from under will require putting inflated claims about jobs and arms sales in their place.

Miriam Pemberton is a research fellow at the Institute for Policy Studies. Her new book is “Six Stops on the National Security Tour: Rethinking Warfare Economies” (Routledge, 2022).