Saudis withdraw billions of dollars from US
By Roula Khalaf in London
Published: August 20 2002 21:49 | Last Updated: August 20 2002 21:49
Disgruntled Saudis have pulled tens of billions of dollars
out of the US, signalling a deep alienation from America.
One analyst said the total funds withdrawn by individual
investors amount to $200bn. Other bankers put the figure
nearer to $100bn.
The US-Saudi alliance was put under severe strain after
September 11, when 15 of the aeroplanes' 19 hijackers
were Saudi nationals.
Accusations that Saudi Arabia's austere brand of Islam breeds terrorism and its
charities finance Osama bin Laden's al-Qaeda network have been perceived in
the kingdom as attacks on Saudi society and its religion.
An analyst from the Rand Corporation said at a Pentagon briefing this month that
Saudi Arabia was the "kernel of evil", exacerbating concerns among the country's
elite that they have become demonised in the US and their money is no longer
safe there.
As part of the fight against terrorism, the US and Saudi authorities have been
monitoring the accounts of dozens of Saudi companies and individuals, a move
that alarmed Saudi merchants. Youssef Ibrahim, a senior fellow at the Council on
Foreign Relations working on a project re-examining US-Saudi relations, said
Saudis had withdrawn at least $200bn from the US in recent months. He said the
move has been drive n by hawkish US commentators' calls for the freezing of
Saudi assets.
The trend, he added, can be expected to accelerate with last week's trillion-dollar
lawsuit by relative of the victims of September 11. The lawsuit accuses several
Saudi institutions and charities and three members of the royal family, including
the defence minister, of financing terrorism.
Details of Saudi investments in the US are sketchy but financial analysts believe
they range between $400bn and $600bn. The funds are invested in private equity,
the stock and bond markets and real estate. The figures include investments by
members of the royal family.
Investors are not thought to be closing down their US accounts. Instead they are
moving money into European accounts. Bankers in London said the largest
established Saudi investors did not yet seem to be following the trend.
One said: "I'm sceptical 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 per cent to 50 per cent of the money that was
with US banks is seeking diversification."
The Saudi money shifts may have contributed to the recent downward pressure
on the dollar.
"People no longer have any confidence in the US economy or in US foreign
policy," said Bishr Bakheet, a financial consultant in Riyadh.
"And if the latest lawsuit is not thrown out in court, it will mean no more Saudi
money in the US."