Disgruntled Saudi Investors Pull Billions Of Dollars From The US

by Carla Johnson, Investors Offshore.com

22 August 2002

Saudi investors are becoming increasingly alienated by the attitude of the United States, and have withdrawn billions of dollars worth of investments as a consequence, according to a Financial Times report published on Tuesday.

The FT revealed that following remarks made by a Rand Corporation analyst at a Pentagon briefing last month, when Saudi Arabia was refered to as a 'kernel of evil', between $100 billion and $200 billion in private investment was withdrawn from the United States.

It is expected that the lawsuit recently launched by the survivors and families of the victims of the September 11 attacks against several Saudi institutions and charities, and three members of the Royal family will greatly exacerbate fears that Saudi Arabia is being demonised by the US.

According to the FT report, investors are not, in most cases, severing all ties with America, but are moving their assets into European accounts. Commenting on the growing trend, one London banker told the Financial Times that:

'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.'

However, finance professionals in the Gulf region are a little less cautious in their reading of the situation:

'People no longer have any confidence in the US economy or in US foreign policy,' Bishr Bakheet, a financial consultant in Riyadh told the newspaper this week. 'And if the latest lawsuit is not thrown out in court, it will mean no more Saudi money in the US.'

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