Arab
Losses, Victim to American Scandals, Estimated 325 Billion $
Muhammad Abdullah
Alintiqad Newspaper (Beruit)
August 20, 2002
One of the few subjects handled by the Arab and foreign press is
that related to the size of Arab Losses caused by continual American
Bankruptcy and scandals. It is obvious there are large figures for
Arab assets found within the economies of the west, America and
Europe in particular, distributed between frozen assets, bills,
shares, direct investments, and other materials related to modern
world economy. In spite of the fact that a month has passed until
now, there have been no formal statistics published concerning this
subject, and the size of the losses suffered by Arab investors has
not been revealed yet. Nevertheless, this summer it has almost become
a fixed certainty, that the American economy is no longer a secure
shelter for the emigrating Arab money, which is now under the threat
of danger within the light of what is being revealed from scandals
that shocked the greatest American companies, which caused the gasping
of the gambling investors by presenting unbelievable figures of
profit. In this case, al Intiqad newspaper focuses the
light partially and according to the available statistics, which
are informal and still at the beginning concerning losses, liable
to escalate, suffered by Arab investors.
Case file prepared by: Muhammad Abdullah
Arab collapses
With respect to the Arab region, especially that of the Cooperation
Council for the Arab States of the Gulf (GCC), which it is noticeably
the most damaged region of the world, more so than the American
economy which was struck by damage of variations, especially after
the events of September 11, and the consecutive financial and accounting
scandals. It is revealed that the Arab and Gulf economics are influenced
directly or indirectly by the American economic stagnation and the
descending value of the dollar due to tied relations between the
two sides, an issue that can be explained according to two major
parts: the first part relates to the external field of trade, while
the second relates to the field of investments.
First: External Trade
The USA is considered to be the second major partner of the Gulf
Cooperation Council after Europe with a value of more than 29 billion
dollars in the year 2000 verses 25.3 billion and 24.5 billion dollars
in the years 1998 and 1999 consecutively. According to the 1999
statistics, the USA imports from the GCC exceeded 11.7 billion dollars
representing 60.8% of the American imports coming from the Arab
countries, whereby oil represents 80%.
On the other side, the American exports to the GCC value 12.7 billion
dollars representing 70.4% of the total American exports to the
Arab countries in 1999. Based upon the previous information, the
American economic stagnation and the lowering value of the dollar
exchange, against major currencies, influence the external trade
of the Gulf Countries through the regression of Gulf exports due
to two reasons: first is the regression in the world purchase of
oil due to the world economic slowdown, where the GCC contributes
to 20% of the world oil supplies; while the second is due to the
degeneration in purchase power in the international markets based
on the Gulf exports as to the value of the dollar, of which oil
represents more than 80-90% of its total, and this is due to the
devaluation of the American dollar that exceeded 12% against the
Euro, whereas the Gulf currencies are related to the dollar except
for the Kuwaiti dinar.
At the end of 2002 the dollar will become the combined fixture
of all the Gulf currencies paving the road to reach the one united
Gulf currency by 2010; meaning, each devaluation witnessed by the
price of the dollar against other currencies will mean a similar
regression in the buying value of the imported Gulf oil that reached
107.6 billion dollars in 2001 (one must remember that the price
of the Euro has reached its highest level till the date of this
report, equaling 1.03 dollar).
Second: Investments
Due to the direct influence of the devaluation of the American
dollar and the descending prices of the American shares and regression
of some international stocks, the size of the Gulf and Arab losses
was estimated, since the beginning of 2002, until July 2002, at
325 billion dollars. The values of these losses, estimated to equal
the ratio of 23% of the size of present outside Gulf investments,
which values about 1.4 Trillion dollars, meaning 1400 billion dollars
according to the international association Merel Linch.
An estimated 200.000 people possess these investments, most of who
are present in the USA (estimated at 700 billion dollars). This
money is distributed in the form of investments, of which 40% is
in the real estates field, 35% in Bank deposits, and 15% in the
form of bills. Saudi Arabia alone possesses half of these investments.
It is expected for the losses of the GCC and Gulf businessmen to
witness an ascent over the coming period, especially with the continuation
of the American financial scandals, the opening of the files of
corruption, collapse in the trust of international deals, and in
addition the tendency of the European and Asian stocks to descend.
160 billion Saudi Losses
A Saudi financial expert estimated the size of the losses suffered
by the Saudis, at the deteriorating world stocks, at 601 billion
S.R. (160 billion dollars). In addition, the general director of
Bakheet Financial Investment Center , engineer Bushr
Bakheet, weighed these losses, from the beginning of this
year until now, at 325 billion.
The Arab association for investments valued the losses that struck
the emigrating Arab investments during 2000 and 2001 at 400 billion
dollars due to the economic stagnancy, the regression of the world
market shares, and the events of September 11.
In return, the Arab stock markets in general, though they did not
achieve great ascent, they maintained the price levels and some
were able to achieve an ascent in the price. The value of the Arab
stock markets maintained its position at 170 billion dollars during
the first semester of the present year. This value is not much less
than that of the value at the end of last year.
Return of emigrating investments:
The attraction and return of the emigrating Arab and Gulf investments
in addition to localizing the domestic investments in the region,
have become an essential factor since the events of September 11,
especially within the hostile campaign against Arabs in the western
countries, and the USA decision to freeze and confiscate many of
the Arab financial assets by reason of drying the financial source
of the so-called international networks of terror. The last of which
was a decision of monitoring all the Arab trade projects in the
USA regardless of their size, in addition to the international financial
marketing crisis that caused recent losses to investors from the
gulf. Some Arab sources indicated the return of 80 billion dollars
of Arab and Islamic money after the events of September 11, of which
20 billion dollars belong to the gulf, this is due to fear of this
money being frozen or confiscated. It is obvious that attracting
Arab emigrating capitals again can only be attained through securing
investment security, and guaranteeing competing income on the international
level, and facilitating several bureaucratic procedures that retard
flow in the right direction.
Loosing confidence in one side of the international financial market
can create a chance for the innovative Arab financial market, in
order to grow and fill the gap that would arise, whereby the Arab
financial market tends to increase the notes of currency, such as
financing the public debit via different bills with different periods
and dimensions as well.
The following stage of the various Arab countries will be based
on increasing the role of the private sector that can begin the
execution of projects related to infrastructure or projects related
to the new economic sector of techniques and other issues. All these
projects need great financing, and it would not be strange, if these
emigrating capitals, whose owners already have their doubts, as
to how successful these investments can be in the international
financial market, financed parts of it.
Regardless of the emigrating Arab capitals, there is unanimity
that they are enormous, and they seem from now as one financial
consultant in the gulf says as hostage of a bizarre historic
moment; as they are subjected to the risk of unjust freezing,
and at the same time, they cannot find an appropriate place for
them at home, especially in the Arab financial markets and the present
structures of the Arab economics.
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