Dr. Adam Posen

Thank you, Carol, for having me back on Bloomberg Businessweek 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 uh i wouldn't go quite as far as your previous guest did in extolling how much iran cost diversified but they've been trying

I think the deeper integration with the U.S.

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 never been a shortage of people willing to invest in the US, or at least, with the exception of a few years in the late 70s and early 80s, not since 1900.

uh 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 game what type of conditionality especially in exchange for f-35 state-of-the-art jets

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.