| By A Staff Writer | 30-08-2002 Print friendly format | Email to Friend
The Financial Times reported last week that Saudi investors have been exiting the U.S. market, saying that $200 billion has been withdrawn in reaction to the increasing anti-Saudi sentiment in the U.S. of late.
According to the Financial Times report, the level of Saudi investment in the U.S. was estimated at $400-600 billion.
However, several Saudi officials denied the accuracy of such information, reaffirming that the ties between the U.S. and Saudi Arabia have not been affected despite the media campaign targeting the Kingdom.
The following is a review of the Arab press's discussion of this incident and its implications. Regardless of the amount that Saudi investors have repatriated after the U.S. media's hostile campaign against their country, this step is a positive one, says Al-Jazirah (Saudi Arabia) in its editorial comment.
Whether the amount was $200 billion, or $100 billion, or even less, this is a step in the right direction. Apart from the U.S. hostility towards Saudi Arabia, investing capital in one's homeland is a right decision that benefits not only the country but also the investors, adds Al-Jazirah.
If businessmen invested abroad earlier because they did not find enough channels in Saudi Arabia, this is not the case now as the Kingdom has many sectors that require massive investment.
Moreover, the incentives for investment in Saudi Arabia are attractive, as capital invested can generate good profits at low or no risk, says Al-Jazirah.
On the other hand, there is high risk in investment abroad of capital from Islamic countries in general and Saudi Arabia in particular, especially after the September 11 attacks as the funds of many innocent individuals and organisations were frozen and confiscated, adds Al-Jazirah.
Political burden
Furthermore, investing billions in other countries is a political burden on the investors' homeland as the countries in which the capital is invested use such investments as a card to pressurise the homeland of the investors.
But in spite of this, businessmen continue to invest abroad, despite the fact that their homeland needs their capital for development and although it has been proven that they risk losing such capital, concludes Al-Jazirah.
Suddenly, the strategic importance of Saudi investment abroad has become an issue. Indeed, the movement of capital out of the U.S. has become an international economic event. This incident makes us question where were these investments before and why they did not have an impact internationally, especially in the U.S., and why couldn't they support Saudi Arabia's strategic interests, says Al-Riyadh in its editorial comment.
There are two reasons why the Saudi investment did not have an impact on the international markets earlier. The first is that the institutions that manage the national capital did not have a futuristic strategic view that allows them to provide alternatives for national investment.
For this reason, businessmen are moving their money to other countries after the U.S. markets have become a source of threat to their capital. Consequently, the economy of Saudi Arabia didn't benefit from such amounts of money, adds Al-Riyadh.
Indeed, the absence of a strategic view makes Saudi Arabia lose political and economical weight in the international community. In fact, the struggle of countries during this century is related to energy and capital. Yet the country has very weak tools and mechanisms for this struggle even though it is rich in capital and energy, says Al-Riyadh.
The second reason is that for many years the country has relied on foreign experts to provide consultancy services for national businessmen regarding investment and movement of capital. Because these experts have relations with international companies, they directed the national capital abroad.
Accordingly, these brokers and middlemen have hindered Saudi Arabia from wielding political and economical clout internationally, adds Al-Riyadh.
If Saudi Arabia wants its investment to have a significant influence and to help in defending national interests, it should develop its own mechanisms that are effective in the international markets.
Indeed, the current political events and the changes made to restructure the region are just a response to the economic interests of these countries. Accordingly, if Saudi Arabia did not have a futuristic view in the past, it is important to change that now so as not to repeat previous mistakes, concludes Al-Riyadh.
There are good reasons for Arab businessmen and Arab governments to put an end to their investments in American financial and commercial organisations, writes Ahmad Amourabi in Al-Bayan (UAE).
Apart from the report published in Financial Times, a Saudi expert in financial consultancy has published an article in a Saudi newspaper urging Saudi businessmen to withdraw their capital invested in the U.S.
The Saudi expert linked his call to the fact that the families of the September 11 victims have filed a case against individuals and organisations, claiming compensation for the attack. He then pointed out that if the U.S. courts accepted the case, then the Saudi capital invested there will be subject to confiscation or freezing, adds Amourabi.
Although the risk of confiscation and freezing is sufficient for these businessmen to take a step to protect their capitals, there are additional reasons for taking such a step. These include the fact that the economic environment in the U.S. has shown great instability, especially with the recession in all sectors of the economy.
Moreover, the security procedures that the U.S. carried out in response to the September 11 attacks have increased the fears of businessmen and as such contributed to the existing recession, says Amourabi.
Another reason is the deception and fraud committed by giant organisations such as "Enron" and "Worldcom". It has been proved that these companies submitted false values in the financial markets so as to promote their stocks, adds Amourabi.
The risk is that most of the Arab investments are speculations made in the financial markets. So such corruption will definitely have a negative impact on these investments. In addition, the decline of the U.S. dollar will lead to the decrease of the real value of deposits in U.S. banks, says Amourabi.
However, the greatest risk to Arab investments is the hostile, anti-Arab sentiments in the U.S. at both the national and governmental level. Arab investment in the U.S. amounts to $1,300 billion, and withdrawing these amounts will lead to the collapse of the financial markets, concludes Amourabi.
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