Steve Quayle News Alerts

August 22 2002
By Roula Khalaf in London

Saudis on Thursday issued conflicting reactions to estimates that up to $200bn (£127bn) in non-government investments had been pulled out of the US in recent months.

While a senior official from the Saudi central bank confirmed the reports, citing economic reasons, a prominent Saudi prince downplayed the scale of withdrawals and said he was maintaining his US holdings.

The senior official at the Saudi Arabian Monetary Agency told Arab News, the English language daily, that the shift of vast sums out of the US had been gradual. Disinvestment was prompted by concerns among investors over the weakening US economy and financial scandals.

But Prince al-Waleed bin Talal, the billionaire Saudi financier and nephew of King Fahd, said in a telephone interview that withdrawals could not have reached massive levels.

"Some people might have withdrawn their money but my information is that it is nothing on that scale [of $200bn]," he said. "Investors would be stupid to liquidate [stocks] in the values of the last two months, when the market was at its lowest point."

The reactions followed an FT report on Wednesday that Saudi investors had pulled up to $200bn out of the US in a signal of deep alienation from America, amid rising tensions between Washington and Riyadh.

Analysts in Riyadh said the conflicting reactions might be due to a lack of precise data and suggested the Saudi royal family was keen to distance itself from any action that might affect the US.

"The royal family has a lot of money invested abroad and they don't want to be seen as fighting America on the economic front, or as people who are driving this situation," said one analyst. "But there can be no doubt that the political sentiment is pushing many investors away from the US."

Saudis appeared in agreement on only one point on Thursday - that not much of the money had found its way back to the kingdom.

Bankers in Riyadh said few domestic banks had seen significant increases in deposits. "The majority of the money was overseas because people didn't want it to be in Saudi Arabia, so they would not bring it back here," said one.

Bishr Bakheet, a financial consultant in Riyadh, said the small Saudi stock market, with a capitalisation of only $70bn, the lack of transparency and the slow pace of economic reforms would keep much of the Saudi money overseas.

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