[A-List] Saudis disinvest

["bon moun" <sherrynstan@xxxxxxx>]

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 FT



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One analyst said the total funds withdrawn by individual investors amount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relations, said Saudis had withdrawn at least $200bn from the US in recent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."