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Saudi Arabia and US Relations: A Mediating Role of Oil - Literature review Example

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The approach of this paper will be based on critically reviewing the existing literature on the topic whereas initially it is believed that the two nations were forced towards engaging in bilateral trade because of changing economic realities…
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Saudi Arabia and US Relations: A Mediating Role of Oil
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"Saudi Arabia and US Relations: A Mediating Role of Oil"

Download file to see previous pages The concept of economic rationality helped both the nations to understand and comprehend each other’s importance, as Arabia is the most significantly known oil-business partner of the US, when it comes to oil trade volume. Arabia and the US considered their relationship valuable because the former economy is supplying oil for major lubricate operations of the latter one. The trade ties between the nations are also historical in nature and therefore, both of the parties are accustomed and habitual of dealing with each other. According to modern economics, the nations have to do resource endowment in an economic area where they can attain economies of scale and resultant cost related benefits as well. The US majorly specializes in industrialization and consumer products while its abovementioned trading partner provides state of the art oil related products and services. Nevertheless, the economic situation of both the countries pushed them towards collaborating with each other. The economic interests have always played a due role of a bridge between the two precious economies of the world. The foreign policies of Saudi-Arab and America remained considerably friendly and polite towards each other from the beginning of political ties. The major credit goes to oil trade, which compelled the governments to pursue peaceful relations. The international relationships took a notable and major level of tilt when Saudi governmental departments initiated to take-over management of main oil extraction and purification operations. Currently, Saudi government is believed to be a major stakeholder in every oil related operations that are taking place locally (Smith, 2009). The above-stated change forced the US government and international companies to divert special attention towards maintaining productive relations with the Saudi government. In the past however, the American multinationals were operating in order to extract oil from the Arabian country. But, with the passage of time, when the political leadership of the country decided to increase its stake in the most important industry then, the living got tough for the American based multinationals. The American companies had to divest from the local economy of Saudi-Arabia because of rising and unbearable taxation and regulatory requirements. The Americans decided to evade other oil producing nations in the name of terrorism after ...Download file to see next pagesRead More
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