Disgruntled Saudis have pulled tens of billions of dollars out of the United States, signalling a deep alienation from America. One analyst said the total funds withdrawn by individual investors amount to $200 billion (€205 billion). Other bankers put the figure closer to $100 billion.
The US-Saudi alliance was put under severe strain after the September 11th attacks last year. Fifteen of the airplanes' 19 hijackers were Saudi nationals.
Accusations that Saudi Arabia's austere brand of Islam breeds terrorism and that 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. Mr 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fellow at the Council on Foreign Relations, working on a project re-examining US-Saudi relations, said Saudis had withdrawn at least $200 billion from the US in recent months. He said the move had been driven by hawkish US commentators' calls for the freezing of Saudi assets.
The trend, he added, could be expected to accelerate with last week's trillion-dollar lawsuit by relatives of the victims of September 11th, accusing 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 United States are sketchy but financial analysts believe they range between $400 billion and $600 billion. The funds are invested in private equity, the stock and bond markets and real estate. The figures include investments by the Saudi 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 Mr 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." - (Financial Times Service)
The US trade deficit barely shrank in June to a hefty $37.16 billion, but experts said news of expanding exports and imports was a good sign for the economy.
"The trade deficit may be outrageously wide, but the rise in both exports and imports points to continued economic growth both in the United States and around the world," said Naroff Economic Advisers chief economist and president, Mr Joel Naroff.
The US trade for goods and services deficit in May was a record $37.85 billion, slightly larger than first thought, the Commerce Department said.
Exports of goods and services in June climbed 1.7 per cent to $82.02 billion, outweighing a 0.5-per cent increase in imports to $119.18 billion, the government said. - (AFP)
