http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028185908113&p=1012571727088
Saudis Withdraw Billions of Dollars From US
By Roula
Khalaf
The Financial Times
Tuesday, 20 August,
2002
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total funds withdrawn by individual investors amount to $200bn.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a project re-examining US-Saudi relations, said Saudis had withdrawn at least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 driven 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."
THE END
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