Saudi billionaires bail.
Matthew X
profrv at nex.net.au
Tue May 11 09:10:44 PDT 1999
Dollar declines as Saudis withdraw billions from US
By Javid Hassan & Omar Al-Zobaidy
RIYADH, 22 August The US dollar yesterday fell from recent highs against
the euro and yen following a report that Saudi investors were pulling
billions of dollars out of the United States. Londons Financial Times
earlier said Saudi investors have withdrawn the funds from the United
States because of concerns their assets might be frozen. The paper quoted
Youssef Ibrahim, a senior fellow at the US-based Council on Foreign
Relations, as saying Saudis have pulled out at least $200 billion from the
United States in recent months.
A high-ranking official of the Saudi Arabian Monetary Agency confirmed that
$200 billion have been withdrawn by Saudi businessmen from the United
States. But he denied that the money has been deposited in Saudi banks.
The Financial Times quoted Ibrahim as saying the withdrawal had been fueled
by calls from some hard-liners in the United States for a freezing of
assets held by investors from Saudi Arabia. He said the outflows could pick
up in response to the legal action launched last week in the United States
against Saudi citizens and organizations, Sudan and several Gulf banks and
charities by relatives of the victims of the Sept. 11 attacks.
The suit accuses them of covertly financing the Al-Qaeda network and seeks
$1,000 to $3,000 billion in punitive damages for each of the 14 counts from
99 organizations or individuals. It also seeks $100 trillion in damages
from Sudan.
According to the Financial Times report, investors are believed to be
shifting funds out of US private equity, stocks, bonds and real estate into
European accounts. But it added that some bankers in London said the
largest established Saudi investors did not yet appear to be shifting money
out of the United States.
It quoted one unnamed banker as saying: "Im skeptical about a mass exodus.
But there was a lot of Saudi money with American banks that was not
diversified, now they (the Saudis) are spreading their wings. Perhaps 30
percent to 50 percent of the money that was with US banks is seeking
diversification."
Saudi investors have registered their concerns over the campaign of
criticism against Saudi Arabia in the United States. "It is making our
customers paranoid," said a senior banker with a US bank overseeing
billions in Saudi assets mainly in the United States.
A cross section of Saudi businessmen, investors and financial advisers
welcomed the withdrawal and said European banks could be the major
beneficiaries of this huge repatriation of funds unless the Gulf and Arab
states streamlined their own economies and created an environment conducive
to the inflow of overseas funds.
Commenting on the unprecedented step taken by Saudi investors, Bishr
Bakheet, well-known financial adviser, told Arab News that it is estimated
that Arabs had invested $1.3 trillion outside the Arab world.
"This figure is based on the analysis conducted by Merrill Lynch/Gemini
Consultancy. According to them, it is estimated that Saudis have invested
more than $700 billion in the United States."
Bakheet said that of late the US economy had been showing signs of weakness
which had been mirrored in its negative performance even prior to Sept. 11.
"It is for this reason that many institutions had started to reduce their
investments in the US market, especially after Sept. 11."
The situation, he said, was compounded by the onslaught on Arabs and
Muslims in the US in the wake of Sept. 11 which, together with the collapse
of Enron, WorldCom and other US corporations, jolted the Saudi investor
confidence.
http://www.arabnews.com/Article.asp?ID=17989
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