Saudi Arabia’s growing economic struggles have raised doubts among foreign policy experts about whether Riyadh can fulfill its sweeping monetary commitments to the United States.

During Saudi leader Mohammed bin Salman’s visit to the White House last November, the crown prince pledged to increase his country’s investments in the U.S. to nearly $1 trillion, committing funds to projects spanning artificial intelligence, energy, defense and infrastructure.

But the kingdom is now facing significant financial strain, driven by persistently low oil prices and the immense funding demands of its domestic development agenda, including Saudi Vision 2030, a major government initiative taken on a decade ago to diversify Saudi’s economy, society and culture, which has since been downsized. 

“It’s an economic challenge, and frankly, crisis is a word which works for it,” said Simon Henderson, a senior fellow at The Washington Institute for Near East Policy. “The Saudi economy requires $100 barrels of oil, and although the price of oil has gone up a bit in recent days, it’s still low and way short of $100.”

Henderson emphasized that while Saudi Arabia remains a wealthy country due to its hydrocarbon reserves, declining revenue has forced the government to scale back or cancel marquee projects. 

Among the most visible examples Henderson cited were the indefinite postponement of the 2029 Asian Winter Games, which the kingdom was set to host at a futuristic mountain resort as part of its Neom mega‑project, as well as the postponement of a major construction project in Riyadh.

“They have had some very ambitious projects which are very expensive, and there isn’t the money to fund the projects,” Henderson said. “If you’ve got plans for the economy and you can’t fulfill them and you have to cancel them, then that makes it a crisis.” 

Due to the increasing financial strain and decision to scale back major financial ventures, experts remain skeptical that Riyadh will have the capacity to live up to its major investment commitments in the U.S. 

Jonathan Ruhe, a fellow at the Jewish Institute for National Security of America, said the pledge is “in doubt,” and called the initial promise “as much performance as substance.” 

“A lot of the money Riyadh would devote to U.S. investments is instead being plowed into its ambitious Vision 2030 development projects at home,” said Ruhe. “We already see this reflected in the recent announcements that Neom and other high-prestige gigaprojects are being scaled back. Combined with persistently low oil prices, this means the kingdom is running deficits. In this crunch, borrowing to fund overseas investments becomes less likely.”

Henderson echoed those sentiments, calling Saudi’s investment pledge a “headline figure with a very strong Trump dimension to it.”

“Clearly they [Saudi Arabia] can’t do it at the moment,” said Henderson. “Everybody knew it was far-fetched and probably an exaggeration. It’s clearly not going to happen anytime soon.”

Ruhe noted that several countries in the Middle East practice what he called “checkbook diplomacy” in order to “grab headlines during major summits” and “gratify Trump’s desire to be a deal-maker.” He noted that a similar strategy has been employed by Qatar and Turkey.

In May 2025, President Donald Trump signed an agreement with Qatar for an economic exchange worth at least $1.2 trillion during his visit to the country. Four months later, Turkish Airlines completed a deal to buy 225 Boeing planes following a White House meeting between Trump and Turkish President Recep Tayyip Erdogan. 

“The actual execution is always in doubt, even if some of the investments do come through,” said Ruhe. “During Trump’s first term, Saudi Arabia announced nearly a half trillion dollars of deals and investments in the United States, but only a fraction of that ever came to fruition.

The kingdom’s economic situation, and its ability to invest nearly $1 trillion, is now less favorable than it was in Trump’s first term.” 

Experts noted that should the proposed investment fall through, it is highly unlikely to change the diplomatic relationship between Washington and Riyadh, nor would it have any consequential impact on the U.S. 

“Actual Saudi investment in things like AI and critical minerals supply chains would certainly be great for the United States, but it’s just as important for both countries to focus on advancing other aspects of the strategic partnership,” said Ruhe. “Especially regional collective defense against Iran and keeping Riyadh from becoming too close to Beijing and Moscow.”

When Israel announced the day after Christmas that it would formally recognize Somaliland, making it the first country in the world to announce formal diplomatic relations with the secessionist region in the Horn of Africa, even some of Washington’s foremost foreign policy experts were sheepishly asking the same question: What, exactly, is Somaliland? 

There was no single event that led to Israel’s choice to recognize the sovereignty of Somaliland, which announced its independence from Somalia in 1991. The territory has functioned independently for 35 years; nothing in its governance changed last year. 

What changed was Israel — and its geopolitical calculus regarding regional security threats. 

“The Houthis didn’t used to fire missiles at Israel. That’s new, and Israel’s now trying to respond to a new situation,” said David Makovsky, the Ziegler Distinguished Fellow at The Washington Institute for Near East Policy. “I have no doubt that this was driven by how to try to neutralize a threat from the Houthis that Israel takes very seriously.” 

Somaliland sits just across the Gulf of Aden from Yemen, from which the Iran-backed Houthis have fired drones and ballistic missiles at Israel following the Oct. 7 Hamas attacks in 2023. Allying with Somaliland could allow Israel to target the Yemeni militia from much closer range. Israel has also reportedly approached Somaliland about resettling Palestinians from Gaza there, although officials in the country have denied that such conversations took place. 

Somaliland also sits in a strategic location south of Djibouti and to the east of Ethiopia, and its coastland is close to where the Indian Ocean and Red Sea meet, making it a prime shipping location. 

“No one can ignore the strategic location of Somaliland,” Israel’s ambassador to the United Nations, Danny Danon, told The Wall Street Journal. “The straits are a strategic point.”

Israeli Foreign Minister Gideon Sa’ar visited Hargeisa, Somaliland’s capital, on Tuesday to meet with President Abdirahman Mohamed Abdullahi. It was the first visit by a foreign minister to Somaliland in its more than three decades of existence as a self-governing entity. 

The key question is whether Jerusalem’s recognition of Somaliland will prompt similar moves by other nations. Somalia, with which Israel does not have diplomatic nations, has slammed the move. The African Union on Tuesday called for Israel to walk back its recognition, saying the move “represents an unacceptable interference in the internal affairs of a sovereign Member State of the United Nations.” 

But even as Israel faces diplomatic pushback even from allied African nations, it has created an opening for Somaliland to press its case internationally. 

The region was a separate entity from Somalia beginning in the 19th century, when it was controlled by the British — in contrast to present-day Somalia, which was previously ruled by Italy. Today Somaliland is home to 6 million people, and it has held democratic elections throughout the past two decades. 

Washington has not recognized Somaliland, and a State Department spokesperson told Jewish Insider on Tuesday that no such announcement is forthcoming. 

“The United States continues to recognize the sovereignty and territorial integrity of the Federal Republic of Somalia, which includes the territory of Somaliland,” the spokesperson said. 

But at an emergency United Nations Security Council hearing last week, Tammy Bruce, the U.S. deputy representative to the U.N., defended Israel’s right to conduct diplomacy, and she called out the body’s “persistent double standards” in treating the recognition of Somaliland as different from states that have unilaterally recognized a Palestinian state.

“The Americans are engaging with the country. How quickly they move to recognize Somaliland, I don’t know,” said Max Webb, a Horn of Africa expert who works at Israel Policy Forum. “Somaliland has been a fixture of Republican politics.” 

“Israel has the same right to conduct diplomatic relations as any other sovereign state,” said Bruce. “Earlier this year, several countries including members of this council made the unilateral decision to recognize a non-existent Palestinian state, and yet no emergency meeting was called to express this council’s outrage.” 

Even though Washington does not recognize Somaliland, the region has a small diplomatic mission in the United States. In December, the top U.S. military official overseeing the Africa Command visited Somaliland and met with Abdullahi, its president.

“The Americans are engaging with the country. How quickly they move to recognize Somaliland, I don’t know,” said Max Webb, a Horn of Africa expert who works at Israel Policy Forum. “Somaliland has been a fixture of Republican politics.” 

The conservative Heritage Foundation first called for U.S. recognition of Somaliland in 2021. Sen. Ted Cruz (R-TX) threw his support behind recognition last August, and he said in a post on X on Monday that Somaliland recognition “aligns with America’s security interests.” President Donald Trump told The New York Post in December that he wasn’t yet ready to recognize Somaliland but that he will “study” the issue. “Does anyone know what Somaliland is, really?” Trump said.

Taiwan, which is not a United Nations member state, has a representative office in Somaliland, but it has not formally recognized Somaliland as an independent state. A handful of regional powerhouses, including Ethiopia and the United Arab Emirates, also have strong economic relationships with Somaliland. They have yet to establish full diplomatic ties, although Somaliland and Ethiopia — the second most populous nation in Africa — signed a major memorandum of understanding in 2024. There are larger geopolitical factors at play: Egypt is closely aligned with Somalia, while Egypt and Ethiopia have long been at odds over an Ethiopian hydroelectric project on the Nile River. Turkey and Qatar, both of which are close to Mogadishu, condemned Israel’s actions.

Somalia is a key counterterrorism partner for the U.S., particularly as the Islamist group al-Shabab has grown and become more deadly alongside a Somali affiliate of ISIS. Some worry that U.S. recognition of Somaliland could hamper that coordination. 

“Somaliland is on the map,” said Michael Rubin, a senior fellow at the American Enterprise Institute. “People who had never heard of Somaliland a week ago are suddenly reading up on its history and understanding its arguments.”

“I’m sure there are other countries as well beyond the U.S. that worry if they recognize Somaliland, then Somalia will have a full meltdown and will cut off counterterrorism cooperation, for instance, and then al-Shabab will make even further gains,” said Joshua Meservey, a senior fellow at the Hudson Institute who has called for U.S. recognition of Somaliland. “Somalia’s dysfunction almost protects it, in a way, from Somaliland gaining wider recognition.” 

Over the past 10 days, no other states have followed Israel’s lead. But a diplomatic crisis has not emerged, at least not yet — and now, Somaliland is part of the global conversation in a serious way for the first time since it declared independence.

“Somaliland is on the map,” said Michael Rubin, a senior fellow at the American Enterprise Institute. “People who had never heard of Somaliland a week ago are suddenly reading up on its history and understanding its arguments.”