One of the many deals that emerged from U.S. President Donald J. Trump’s visit to Saudi Arabia last week was the announcement of a $20 billion investment from the Saudi sovereign wealth fund, the Public Investment Fund (PIF), into Blackstone Group. Blackstone is a well-known private equity and asset management fund, started by Steve Schwarzman, an early supporter of the Trump campaign and an advisor to the administration’s Strategy and Policy Forum. Blackstone will also charge management fees for the Saudi investment in its fund; analysts estimate those fees in the range of at least 1 percent of the allocation, plus a percentage of earnings, that could easily generate $200 million for the firm.

Blackstone’s strategy in building a new fund to invest in U.S. infrastructure is meant to pool capital from investors like the Saudi PIF to create a megafund of $100 billion that could then be invested in a number of ways. One way will be to purchase debt issued by states and local municipalities that want to improve roads, bridges, airports, ports, and utilities. Another way is to partner as outright equity holders in new projects. The new Blackstone fund, and others like it, could potentially become an owner, not just passive investor, in key U.S. infrastructure projects. The Saudi government would have a stake in that ownership. This could raise questions of national security, as was evident the last time a Gulf Arab state tried to invest in owning and operating U.S. ports.

The investment in Blackstone is an allocation choice by the Saudi government fund that is not unusual; infrastructure funds are generally lower risk, long-term investments. It’s a safe bet. It may also have been a politically savvy announcement during the president’s visit to Saudi Arabia. (The Saudis also announced a $45 billion higher risk investment in a technology fund managed by Softbank, a Japanese conglomerate.) The question then is not why the Saudi government might want a safe long-term investment in the United States, but why does the United States need Saudi money?

What is new about the Blackstone plan is that the influx of capital into U.S. markets that is willing to invest in this sector is perhaps too much, too soon. The problem in U.S. infrastructure has not been lack of capital. The problem has been lack of projects. Most projects come from the local level and do not coordinate at the federal level. If a city wants a new airport, the city can raise taxes, issue a bond, or create a public-private partnership in which an outside entity may build and operate the entity, but not own the land.

The Trump administration has little control over local and state governance and spending decisions of this kind. The federal government can facilitate these investments and offer funding support incentives, but many of these fast-track efforts already exist. There is also the problem of creating local and state legislation that would allow privatization, co-ownership, or public-private partnerships of these assets; currently only 38 states, the District of Columbia, and Puerto Rico have these frameworks. In Saudi Arabia, by comparison, these legal frameworks are largely absent, as are bankruptcy proceedings for foreign direct investors. It would be hard to imagine a sister Blackstone fund seeking to invest in similar projects inside Saudi Arabia.

There is also considerable debate on how to create efficient investment in infrastructure, so that white elephant projects or bridges to nowhere do not waste valuable taxpayer and investor funds. In most cases, the local or state government would be required to guarantee the debt issued to investors, giving investors precedence in a bankruptcy or government budget crisis. Some advisors have argued the United States should create a national infrastructure bank, managed by the federal government, to facilitate these transactions and guarantee the financing.

According to Preqin, investment in U.S.-based infrastructure funds, or pooling of money ready to deploy into opportunities in this sector, is surging. Other funds include efforts by Brookfield Asset Management Inc.’s $14 billion pool started in 2016 and another begun by Global Infrastructure Partners in January with $15.8 billion ready to be deployed to U.S. projects.

Trump may be eager to demonstrate his ability to extract concessions and make deals favorable to U.S. investment needs, especially with the countries he has accused of not paying their fair share for the security umbrella the United States provides. He is likely also eager to claim progress in one of his key campaign pledges to increase infrastructure investment in the United States. However, in this instance, he may have elicited a deal that serves the interests of Saudi Arabia and the fund managers receiving the investment, but not necessarily filling a funding gap in an already deep pool of U.S.-based investor interest.

Unlisted Infrastructure Fundraising in Q1 2017 by Primary Geographic Focus