Analysts: Saudi-US Nuclear Deal Offers Strategic Gains for Both Sides

The Saudi-US agreement opens new avenues for bilateral cooperation (Internet).
The Saudi-US agreement opens new avenues for bilateral cooperation (Internet).
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Analysts: Saudi-US Nuclear Deal Offers Strategic Gains for Both Sides

The Saudi-US agreement opens new avenues for bilateral cooperation (Internet).
The Saudi-US agreement opens new avenues for bilateral cooperation (Internet).

The civil nuclear cooperation agreement between Saudi Arabia and the United States is expected to usher in a new phase of economic and technological partnership that extends well beyond the construction of nuclear reactors and electricity generation, encompassing the localization of high-value industries, the development of specialized human capital, and expanded collaboration in advanced technologies, analysts told Asharq Al-Awsat.

They argue that the agreement could serve as a catalyst for industrial and technology investment in the Kingdom, complementing Saudi Arabia's plans to diversify its energy mix and build a knowledge-based economy. Its significance, however, extends beyond economics into the strategic and geopolitical arena, as global competition over nuclear energy technologies continues to intensify.

On July 22, Saudi Energy Minister Prince Abdulaziz bin Salman and US Energy Secretary Chris Wright signed a civil nuclear cooperation agreement, commonly known as a "123 Agreement," alongside a bilateral safeguards agreement. According to the US Department of Energy, the accords establish the legal framework for a multibillion dollar partnership expected to span decades and pave the way for US companies to participate in Saudi Arabia's nuclear energy program.

Named after Section 123 of the US Atomic Energy Act, such agreements provide the legal basis for peaceful nuclear cooperation between the United States and partner countries, allowing the transfer of nuclear materials, equipment, and technology under strict conditions and safeguards.

As of July 2025, the United States had 26 such agreements in force, covering 50 countries as well as the International Atomic Energy Agency and other entities.

Investment Catalyst

Abbas Dahouk, a former military affairs adviser at the US Department of State, described the agreement as an important strategic milestone in Saudi-US relations, saying it strengthens long-term cooperation in advanced technologies and energy security.

From an economic standpoint, Dahouk told Asharq Al-Awsat that the agreement could attract billions of dollars in investment, generate highly skilled jobs, and support the objectives of Saudi Vision 2030 by helping build a diversified, knowledge-based economy.

The benefits, he said, extend far beyond electricity generation. Peaceful nuclear cooperation could accelerate applications in water desalination, healthcare, scientific research, agriculture, and advanced manufacturing, while also fostering a highly trained workforce in engineering, science, and technology.

Those applications align with Saudi Arabia's National Atomic Energy Project, which seeks to incorporate nuclear power into the country's energy mix to produce electricity, desalinated water, and thermal energy while reducing reliance on hydrocarbons for power generation. The project comprises four core pillars: large-scale nuclear power plants, small modular reactors, the nuclear fuel cycle, and the regulatory framework.

Dahouk believes the agreement lays the foundation for decades of Saudi-US cooperation across energy, technology, education, and industrial development, while supporting the localization of advanced manufacturing, precision engineering, and high-value-added industries.

He added that the development of nuclear expertise and related technologies could generate spillover benefits for emerging sectors, including space, advanced materials, artificial intelligence, and next-generation energy systems, reinforcing Saudi Arabia's ambition to become a regional center for innovation and technological advancement.

Technological Sovereignty

Dahouk also stressed that the agreement carries geopolitical implications extending well beyond its civilian objectives, coming at a time of intensifying strategic competition among the United States, China, and Russia in advanced technology and energy sectors.

He argued that the agreement's success will ultimately be judged not only by its economic and technological returns, but also by its impact on regional stability and nuclear nonproliferation.

According to Dahouk, Riyadh views uranium enrichment as a matter that goes beyond energy production, encompassing technological sovereignty, industrial development, and strategic autonomy, particularly given Saudi Arabia's domestic uranium resources and its long-term ambition to develop them.

Saudi Arabia has already incorporated uranium and thorium exploration into its National Atomic Energy Project to assess domestic reserves, expand local content, build national expertise, and potentially secure future fuel supplies for nuclear power reactors.

Regional Security

Eric H. Fang, Chief Executive Officer of Skytower Group Inc., described the agreement as a historic strategic milestone whose importance extends well beyond the development of civilian nuclear energy. He said its value also lies in strengthening regional security and establishing a long-term framework for stability, governance, and economic growth.

Fang told Asharq Al-Awsat that large-scale manufacturing and long-term investment require a stable geopolitical environment. Building a framework for peaceful nuclear cooperation based on partnership and transparency, he said, can strengthen confidence among governments, investors, and industrial sectors across the region.

Economically, Fang believes nuclear power can provide Saudi Arabia with a stable source of baseload electricity, supporting the rapid expansion of its industrial economy and advancing the objectives of Vision 2030.

He said the agreement could create opportunities to localize high-value industries, including nuclear engineering, advanced materials, precision manufacturing, robotics, digital control systems, and specialized construction, alongside applications in healthcare, agriculture, water desalination, and scientific research.

From Medicine to Space

Fang noted that the peaceful applications of nuclear technology extend far beyond electricity generation to include medical diagnostics, cancer treatment using radioisotopes, food preservation, water desalination, agricultural innovation, industrial inspection, materials science, and advanced research.

He expects the expansion of these activities to foster a highly skilled workforce and support the creation of new industrial ecosystems within the Kingdom, while broadening Saudi-US cooperation in research and development, workforce training, and industrial localization.

According to Fang, this industrial base could also provide a platform for collaboration in precision manufacturing, aviation, space, artificial intelligence, advanced energy systems, and next-generation infrastructure, sectors that he believes will define global economic competitiveness in the decades ahead.

Economic and Geopolitical Equation

Fang argued that the strategic value of the agreement should not be measured solely by its immediate outcomes, but by its ability to establish long-term institutional cooperation that promotes stability while encouraging investment flows and industrial development across the region.

A stable Middle East, supported by strong strategic cooperation between the United States and Saudi Arabia, will encourage greater international investment and accelerate industrial development, according to Fang.



France Lowers Growth Forecast, Will Miss Deficit Target

French Minister for Economy, Finance, and Industrial, Energy and Digital Sovereignty Roland Lescure gestures as he speaks during a press conference to update the governments growth and fiscal deficit forecasts for the 2027 budget, at the Bercy Economy and Finance Ministry in Paris, France, September 11, 2026. REUTERS/Stephanie Lecocq
French Minister for Economy, Finance, and Industrial, Energy and Digital Sovereignty Roland Lescure gestures as he speaks during a press conference to update the governments growth and fiscal deficit forecasts for the 2027 budget, at the Bercy Economy and Finance Ministry in Paris, France, September 11, 2026. REUTERS/Stephanie Lecocq
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France Lowers Growth Forecast, Will Miss Deficit Target

French Minister for Economy, Finance, and Industrial, Energy and Digital Sovereignty Roland Lescure gestures as he speaks during a press conference to update the governments growth and fiscal deficit forecasts for the 2027 budget, at the Bercy Economy and Finance Ministry in Paris, France, September 11, 2026. REUTERS/Stephanie Lecocq
French Minister for Economy, Finance, and Industrial, Energy and Digital Sovereignty Roland Lescure gestures as he speaks during a press conference to update the governments growth and fiscal deficit forecasts for the 2027 budget, at the Bercy Economy and Finance Ministry in Paris, France, September 11, 2026. REUTERS/Stephanie Lecocq

France's economy will grow less than expected this year and the government will miss its budget deficit target, Finance Minister Roland Lescure said on Friday.

The downgraded outlook complicates the government's task of getting its 2027 budget passed in the coming months in a deeply divided parliament, where parties have hardened their positions before an April-May two-round presidential election.

Lescure told journalists he was lowering the government's 2026 economic growth forecast to 0.5% from 0.7% previously, but stuck with a ⁠projection of 1.0% ⁠for next year.

"This year has been marked by extreme crises involving four different types of shocks," Lescure told reporters, according to Reuters.

Slower growth will make it more difficult for the government to trim its fiscal budget deficit as planned to 5.0% of economic output this year.

"The ⁠reality is that the budget was built on a 5% assumption. And the reality is that, today, 5% is no longer an option," Lescure said.

The minister did not give a new deficit target.

The economic fallout from the war in the Middle East and summer heatwaves and drought that hit agriculture output have dragged down growth and put the government's fiscal targets out of reach.

"I think it is reasonable to say that economic ⁠uncertainty has ⁠never been greater than it is today," Lescure said. "We are operating under tight budgetary constraints; there is no more fat to trim."

Further complicating the picture, French borrowing rates have surged in recent weeks as investors have identified France as one of the weaker links in a global bond selloff due to its weak public finances and serial slippage on its deficit-reduction plans.

Lescure stressed that France had no difficulties in issuing debt, but acknowledged that it now cost more.


ECB Policymakers Open Door to More Rate Hikes on Energy Risk

The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
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ECB Policymakers Open Door to More Rate Hikes on Energy Risk

The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo

Two European Central Bank policymakers opened the door on Friday to further interest rate increases if a war-fueled rise in energy prices continues and pushes up other prices in the euro zone.

The ECB raised borrowing costs on Thursday for the second time this year and sources told Reuters policymakers expect further policy tightening in the months ahead, with a move possible as early ⁠as October.

The central ⁠bankers of Germany and Estonia acknowledged this prospect on Friday although they both stressed any move would depend on how oil and gas prices develop.

Bundesbank President Joachim Nagel said the ECB might need to raise rates to a level that mildly curbs the economy.

"I will not exclude that we have to ⁠go into the mild restrictive territory, but as I said, it's very much dependent on how the energy prices evolve, how the price picture is evolving over the course of maybe the next month," he told CNBC in an interview, according to Reuters.

The euro zone central bank increased its key rate from 2.25% to 2.50%, bringing it to the upper end of its estimated neutral range, which neither stimulates nor slows down the economy.

Money markets have started pricing in at least another three ECB rate hikes over the next ⁠year.

Ülo Kaasik, ⁠Estonia's central bank governor, said such expectations were "understandable" given the latest increase in fuel prices and the risk that food would also become more expensive.

"Recent developments in energy markets, for example, indicate the possibility that the price increase for gas and fuels will be much larger and last longer than expected in the forecast," he said in a blog post.

Slovenia's central bank governor Primož Dolenc also warned in a blog post about "rising energy and electricity costs in the autumn and winter months".

The ECB on Thursday slightly increased its projections for growth and inflation but these did not capture the latest energy price moves.


Dollar Holds Gains, Yen Slips as Middle East Energy Shock Deepens

14 January 2020, Iraq, Baghdad: US dollar banknotes are pictured at a currency exchange service provider. (dpa)
14 January 2020, Iraq, Baghdad: US dollar banknotes are pictured at a currency exchange service provider. (dpa)
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Dollar Holds Gains, Yen Slips as Middle East Energy Shock Deepens

14 January 2020, Iraq, Baghdad: US dollar banknotes are pictured at a currency exchange service provider. (dpa)
14 January 2020, Iraq, Baghdad: US dollar banknotes are pictured at a currency exchange service provider. (dpa)

The dollar held near its highest levels of the past week in Asian trading on Friday as renewed fears of energy supply disruptions in the Middle East pushed up bond yields and oil prices.

The US dollar index, which measures the greenback's strength against a basket of six currencies, was trading flat at 99.084, after strengthening to its highest level since September 7 during the previous session. The rise followed the release of data showing US producer prices increased 0.4% in August, meeting market expectations as energy prices rebounded during the month.

"The safe-haven US dollar gained on risk-aversion flows, helped by higher energy prices that have lifted the chance of a Fed hike next week to 70%," said ‌Tony Sycamore, market ‌analyst at IG in Sydney.

Energy prices snapped a five-day gaining streak, with Brent crude ‌futures ⁠down 0.6% at $106.99 ⁠a barrel in Asian trade.

But both major benchmarks remained above the $100 mark earlier this week, with WTI futures surging across the threshold on Thursday for the first time since May 21.

Against the yen, the US dollar was down 0.2% at 154.105 yen and on track for its second consecutive week of declines, while the euro slipped 0.2% to 178.99 yen after the European Central Bank hiked interest rates on Thursday for the second time this year.

The Japanese currency regained ⁠some strength after data released on Friday showed wholesale inflation rose 7.6% in August ‌from a year earlier, bolstering the case for a rate ‌hike this month.

The Bank of Japan is set to raise interest rates next week, most likely by 25 basis points, and ‌may signal faster future tightening if price pressures heighten risks of an inflation overshoot, four sources familiar with ‌its thinking told Reuters.

The kiwi dollar was up 0.5% at $0.5827, retracing a selloff on Thursday that has put the currency on track for its third week of declines. New Zealand's 10-year government bond yields rose by 15.5 basis points to 5.06% on Friday, extending the biggest two-day jump in borrowing costs since last year's "Liberation Day" selloff.

"New Zealand seems to have been hit harder ‌than most in the latest leg of the bond market sell-off," said Thomas Mathews, head of markets for Asia Pacific at Capital Economics in Wellington.

The Australian dollar ⁠was up 0.2% at $0.7167.

Both ⁠the euro and the British pound were level against the dollar at $1.1609 and $1.3503, respectively.

PRESSURE BUILDS ON FEDERAL RESERVE

Markets are awaiting the release of US CPI later on Friday, one of the last major economic data points released before the Federal Reserve meets next week.

Fed funds futures are pricing an implied 71.1% probability of a 25-basis-point hike at the US central bank's next two-day meeting ending on September 16, compared with a 61.2% chance in the previous trading session, according to the CME Group's FedWatch tool.

Fixed-income markets remained uneasy after the US Treasury Department tripled the size of its long-dated bond repurchase, with a gauge of bond volatility rising to its highest level in a month. The yield on US 10-year government bonds was up 1.5 basis points at 4.957%.

"10-year US Treasury yields are within striking distance of 5%, as the markets have reassessed the Fed's path higher while term premium is appropriately hovering near pre-GFC levels," Barclays analysts wrote. "We remain of the view that bonds are not cheap yet and catalysts for a rally do not appear imminent."

In cryptocurrencies, bitcoin was down 0.2% at $77,094.41 while ether was 0.1% lower at $2,457.96.