The Trump administration has been especially active on Middle East policy this past week. It reestablished U.S. ties with Syria, continued nuclear talks with Iran, and negotiated the release of an American hostage from Gaza. President Donald Trump also gave a speech vowing that the United States would no longer intervene in the region’s domestic politics. But Trump was otherwise mostly focused on touting more than $1 trillion in new investment from the Persian Gulf countries that he visited this week—Saudi Arabia, the United Arab Emirates, and Qatar.

Can these Gulf countries become leaders in artificial intelligence technology thanks to the deals? Does Saudi Arabia’s megaproject strategy make sense? And is the U.S. fossil fuel industry under threat from Saudi Arabia?

Those are just a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look for Ones and Tooze wherever you get your podcasts. And check out Adam’s Substack newsletter.

Cameron Abadi: Qatar has offered to donate a new airplane to the Trump administration to serve as Air Force One—and for potential use by Trump after he leaves office. What sort of transaction is at work here?

Adam Tooze: Yeah, just for the record, the whole business of Air Force One is symptomatic of the state of things right now. I mean, the existing planes, which are so much the emblem of the American presidency in the world, they’re 30 years old. They need replacing—they are well beyond their usual service life. Talks about replacing them have been ongoing for 10 years or more. Trump’s first presidency already occupied itself with the issue. So there’s a real issue here. I mean, it’s not the top national priority, perhaps, but if you’re the president, it’s embarrassing to be flying around in an aircraft of this vintage.

And Trump has been in talks, actually, with the Qatari royal family—the Al Thanis, who are only too eager to help out—for some time about eyeing up one of their various flying palaces. The aircraft in question here is about 12 or 13 years old. Apparently, it’s already gone out of service as a main vehicle for the Al Thanis, so it had been palmed off on Global Jet Isle of Man, I think, a holding company, but this is the aircraft which is up for grabs. It’s valued variously at somewhere between $100 million and $400 million.

But obviously, yes, it’s a blurring of the fundamental lines between household and state, which are fundamental to the emergence of modern politics even in monarchies, let alone in republics where we have a president who is elected and rotates, and the office of state is therefore fundamentally separated from the person. But even in a constitutional monarchy, you would expect a clearer division than is exhibited here. This goes hand in hand with a bunch of other extremely personalistic deals. The Trump family is not shy about meddling in business in the Gulf. The Kushner real estate empire has strong links to various types of Gulf investors. There’s a Trump-branded golf course opening in Qatar as we speak.

But anyone who actually knows anything about Air Force One and aircraft and flying command centers and stuff will tell you that this is no deal at all, because Air Force One has to be a hardened aircraft. It has to have incredibly sophisticated communications equipment. It basically would have to be disassembled and reassembled to confirm A, that it was airworthy and up to the standards that you would want and B, that it wasn’t littered with bugs, various types of listening devices.

And so it doesn’t save any money at all. And to bring this thing into operation as a repurposed American Air Force One command center would require at least as much time as the most optimistic timelines on the Air Force Ones that are under contract. So it’s another one of those Trump spectacles, I think, which serves the purpose of ostentatiously flaunting levels of corruption, but also dysfunction at the heart of American government.

CA: The Persian Gulf region is placing an emphasis on becoming a leader of AI technology by attracting foreign tech investment in the form of data centers. But wouldn’t the real critical technology, or the actual meaningful intellectual property, still remain controlled by foreign companies? In which case, are these countries just engaging in hype about the importance of AI?

AT: I mean, the hardware technology is clearly in the hands of people like Nvidia and maybe some Chinese competitors, and the big engines are being trained by the Deepseek and the ChatGPT engineers. To that extent, they’re just in the same position as Germany, or the U.K., or, you know, the vast majority of states around the world, none of whom have the capacity to do this.

So like, why are we second guessing their projects, rather than, you know, anyone’s ambitions really to compete in this space, other than the places where this stuff originates. And in fact, even in the United States or in China, ultimately, a lot of the power resides at the corporate level and not in government hands, because it’s there that the capacities and technology are being mobilized. Ultimately, it comes down to how much they can localize and what they localize for. And the degree to which they can localize will depend on how much money they have. It’ll depend on energy supplies, which have been a big subject of discussion in the AI area. And obviously, the Gulf has perfect conditions for both renewables and fossil fuel steady energy supply. So that’s something that’s very much in their favor.

And who might their partners be? Well, what we’re seeing is that the Americans have lifted any kind of restrictions on the chips they can buy, so they appear to have leverage. We know they have strong relations with the Israeli tech sector, and we know also that the Chinese are only too keen to collaborate with them in various ways. So there’s no doubt, I think, that they can pull down on this.

CA: Mohammed bin Salman (MBS), the crown prince of Saudi Arabia, has had very ambitious plans for the Saudi economy, including the creation of a fantastical new city in the desert called Neom. And at the same time, it seems like the Saudi budget is already straining. Is the economic agenda being revealed to be fundamentally irrational?

AT: Yeah, I’ve been doing some scaling here to just kind of get a grip on how crazily ambitious this project is. Because we kind of have this general sense that the Arab oil states are immensely rich, which they clearly are, but what is the scale? If we start with Qatar—population roughly 3 million, rough estimate of GDP, $213 billion. So that’s an awful lot of GDP for a very small number of people. The United Arab Emirates—Abu Dhabi, Dubai—10 million people, $500 billion. Still a huge amount of GDP for a modest population. Saudi Arabia, population 33 million, GDP $1 trillion.

So Saudi Arabia is in a different league in terms of the overall size of its economy, but it’s also in a difficult league in term of the size of its population. This is a substantial medium-sized state, like on the kind of Poland kind of size, right? Much bigger than Portugal, not quite so big as Spain. But they’ve got some people to feed out of the $1 trillion that they’re generating.

And with this $1 trillion GDP, a $1.5 trillion investment project in a far off location that is, at this point, not at the center of the Saudi economy—which is all further down the coast around Mecca, Medina, Jeddah, and then inland around Riyadh, right—the Neom project, which is MBS’s baby, is very radical and just unlikely, I think, to take off on the scale that he desires.

And so, unsurprisingly, I think progress has been modest. They’ve been scaled down. They were looking for 1.5 million people living there by 2030. They’re now looking at more like 300,000. Reports are little a vague about how much progress has been made. This doesn’t look as though it’s going to rapidly establish itself as a megasite for economic activity in Saudi Arabia. As large as that economy is, it’s not going to be steered quite suddenly into this really remote corner, this new geography by a measure like this, even with the willpower and the political force of an MBS behind it.

CA: Is there some overlooked aspect of rivalry in the U.S.-Saudi relationship when it comes to oil production? It looks like Saudi Arabia is actually increasing oil production right now, which is lowering the price of oil consequently—and in some ways, that’s putting strain on the U.S. oil industry. Is that a concerted strategy of weakening the United States—and does Trump himself appreciate this aspect of the relationship with Saudi Arabia?

AT: Yeah, it really is a mess. Trump wants several different things, which don’t really go together. He wants what’s called energy dominance, which I think basically means for the Americans to be major exporters of oil and gas. He also likes to promise things to the oil industry in the United States. So he likes to promise that they’ll be profitable and, you know, all the nasty sustainability green regulation will be removed and they’ll be at the heart of whatever future America imagines for itself.

But he also wants low oil prices for U.S. consumers. And there’s an obvious contradiction here in the conflict between producers and consumers. You can’t really have it both ways. You can find a comfortable compromise between the two at which oil prices are OK for the industry and not too painful for consumers. But in principle, there’s a conflict here, added to which then there were all the external players in the oil market. The fact of the matter is the oil markets is too big for any one producer to easily control it. And the Saudis have been trying. They’ve been trying to get OPEC, OPEC+, including the Russians, to restrict production so as to hold prices at a comfortable level.

The Saudis can make money on the oil at virtually any reasonable price. They can make money on oil in very, very low prices. The problem for them is budgetary. In other words, they need the revenue flow to maintain their ample spending. It isn’t the profitability of the oil production, as such, that’s the issue. So they’ve been trying to produce restriction, and it hasn’t been working. And even within OPEC, they’ve had massive cheating, defection.

And so Saudi Arabia lost patience and has decided to punish the norm-breakers by just increasing production, or at least threatening to increase production, producing a fall in prices, hurting everyone and basically showing that Saudi can take this pain for longer than anyone else. The oil price has correspondingly fallen from around $80 to roughly $55 at its lowest point. It subsequently rebounded a bit, but we’re now in the $60 to $70 range. This is good for U.S. consumers, but bad for U.S. producers.

Trump kind of showed his hand by going out on Truth Social immediately and, you know, boasting that oil prices were at way lower levels than they were actually at, as though this was some success for him. It’s a mess, right? So there’s a kind of incoherence here, but you’d have to say it’s always been a mess right?

This isn’t a mess peculiar to the Trump administration. This is a balancing act that we saw compounded, you know, in the case of the Biden administration by the added hypocrisy of them also professing to be all about the green transition. But when push came to shove and oil prices rose, members of the Biden administration denounced the American fracking industry for effectively being un-American because they were sticking to profit guidelines and not increasing fracking production when oil prices rose, and at the same time touted themselves as the fathers and mothers of the IRA, the Inflation Reduction Act and America’s green energy transition.

So this incoherence is endemic in American energy policy. It’s endemic to any society that is both a producer and a major consumer at the same time. It’s always going to be a problem.