27 January 2003
The Times of India
Saudis eye India, but Gujarat scares them
TIMES NEWS NETWORK
JEDDAH: With Saudi-US relations mired in distrust following 9/11 and
the freezing of bank accounts thought to be linked to terrorist
activity, an increasing number of Saudi businessmen are asking whether
their investments in the US are really secure.
When last year, the wife of the Saudi ambassador in the US was
investigated for having donated money to an individual whose relatives
might have known one of the 9/11 hijackers, the business elite here
kept their fingers crossed. "You never know, your family name shows up
on some list somewhere and, boom, all your money is the US could end
up frozen for nothing," a leading Saudi businessman said.
The stakes are enormous — for both Saudi Arabia and the US. Though
there are no firm statistics, Saudi citizens are estimated to have
parked as much as one trillion dollars in the US. The market rumour is
that $200 billion of that has been pulled out in the past year or so
but Saudi officials and businessmen insist this is highly unlikely.
"As a general rule," said Khalid al-Shelail, deputy director general
of the Saudi Arabian General Investment Authority, "we do not feel our
money there is threatened." For example, Walid bin Talal, the richest
Saudi investor, has said he is not afraid and is not considering
withdrawing any funds.
If there is a financial exodus, say officials, this is likely to be
very, very low-key. Pulling out money in an open way would itself make
the US authorities suspicious, they say.
However, two trends are discernible. Property prices here have begun
to rise as Saudi money returns home; and Saudi investors have begun
actively looking for investment opportunities outside the US,
particularly in Asia. China, Korea, Malaysia and India are considered
Last December, the first Saudi business delegation in 25 years visited
India. "We were really impressed with what we saw in Hyderabad, Delhi
and Mumbai," said Walid Fitaihi, a US-returned doctor and businessman
who is building Saudi Arabia's first paperless hospital. Fitaihi even
published a laudatory article on the Indian economy in influential
Arabic daily Okaz.
But even as they wax lyrical about the Indian IT and pharma sectors
and express keenness to do business, Saudi businessmen say they are
troubled by what happened in Gujarat.
"As businessmen, we will go where there is profit and stability," said
Ziad al-Bassam, who headed the Saudi delegation. "And so when we read
about Gujarat, this worries us. What would have happened if I had
built a factory there and it had been burned down because I am a
"You cannot separate economics and politics," said Fitaihi. "If India
wants money from here, it should simply be true to its own democracy
and treat its Muslims as equal citizens. You should use the Muslims of
India as ambassadors to help bring Arab money in for the development
of the country rather than pushing them aside."