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JEDDAH, Saudi Arabia: US Treasury Secretary Timothy Geithner urged Gulf countries on Tuesday to invest in his country and praised their domestic investments for helping push the world economy back to growth.
Addressing a group of Saudi businessmen in the Red Sea port city of Jeddah, he stressed that the security issues which blocked the investment by Dubai Ports World into US ports three years ago had been addressed.
"Since the controversy surrounding the Dubai Ports deal in early 2006, our government has put into place a series of reforms designed to safeguard national security, while providing more clarity, predictability and transparency to investors," he said.
"These reforms have not infringed on our open investment policy," he said. "We are committed to maintaining the openness of our economy.
Since the Dubai Ports deal was defeated by concerns that it could leave the US vulnerable to terror attacks, Geithner said, publicly announced direct investment in the United States from the Gulf has topped 25 billion dollars.
That included the 11-billion-dollar purchase of GE Plastics by the Saudi petrochemicals giant, Saudi Basic Industries Corporation.
While urging more outward investment from the oil-rich Gulf countries, he also praised their domestic spending for helping buffer the region and world from the impact of global financial turmoil.
"I think the world has yet to fully appreciate the scale of ambition and investment we are seeing in the (Saudi) kingdom and the Gulf region to lay the foundation for future growth," he said at the Jeddah Chamber of Commerce and Industry before meetings with his Saudi counterparts and King Abdullah.
On Wednesday, he secretary is scheduled to meet with United Arab Emirates officials and the heads of two of the UAE's main public investment funds in Abu Dhabi.
The Jeddah visit underscores the importance of Saudi Arabia as the leading global oil exporter as well as holder of about 400 billion dollars in foreign reserves, most of it believed in dollar-denominated assets.
Because the country is so dependent on oil and gas exports - also denominated in dollars - economists do not believe Riyadh is considering any radical changes to its dollar holdings.
But the Saudi government has been selling off foreign assets in recent months to fund its massive investment programme aimed at keeping the economy growing.
Saudi foreign assets have dropped from a peak of 443.2 billion dollars last November to 395.2 billion dollars at the end of May.
And across the six countries of the Gulf Cooperation Council, foreign holdings have fallen around 300 billion dollars, which likely has contributed to the dollar's weakness.
Geithner praised the Saudi government's aggressive 400-billion-dollar, five-year plan of huge infrastructure, industrial and education projects, as well as what he called "appropriately aggressive monetary and financial sector actions" by Riyadh.
"The economic policies put in place here, in the kingdom, and in the region ... have helped arrest the crisis, slowing the pace of decline in economic growth, pulling global financial system back from the edge of failure," he said.
Geithner stressed a turnaround was in the works in the United States and worldwide.
"For the first time in several quarters, the IMF and a range of private analysts are starting to revise up their forecasts for growth in the second half of this year and next. Global trade is just starting to expand again."
"Although this strategy has been successful so far in reducing catastrophic risk, we need to keep economic growth the focus of policy."
Geithner was expected to discuss other key bilateral issues with King Abdullah when they met on Tuesday, including lining up US and Saudi pressure on Iran to dissuade it from developing nuclear weapons, and cooperation to block financing for terrorism.
"We have a common security interest," he said. "I believe we have much more in common than we are different." - AFP/de
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