US exports down in the dumps

US companies may be getting the bulk of contracts for Iraq’s reconstruction, but a report highlighting a significant drop in US exports to the region suggests tough times to come for American business in the Middle East.

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By  John Irish Published  July 3, 2003

The repercussions of American political involvement in the Middle East are beginning to take their toll on US exports after a report from the Institute for Research Middle Eastern Policy (IRMEP) —Dividends of Fear: America's US$94 Billion Arab Market Export Loss — estimated that America lost US $31 billion in exports to the Arab World between 1998 and 2002.

The report forecasted a further loss of $63 billion through to 2007, a total ten-year export loss of $94 billion.

The survey, which includes the US’ traditional allies in the region, Saudi Arabia, UAE and Egypt, concluded that the hardest hit American industries comprised civilian aircraft, agriculture, heavy transportation, as well as telecommunications and industrial equipment.

“Much of the backlash directed toward US suppliers is driven by negative sentiment about US foreign policies in the region,” said Grant Smith, research director at IRMEP. “Although the March, 2003 pullback of Coca-Cola's headquarters from Bahrain to Greece and Saudi Arabia's cancellation of over US$25 billion in regional infrastructure projects are stunning examples, the report reveals that this trend is actually much broader and deeper," he added.

According to the analysis, the US share of world merchandise exports to the Arab Middle East declined from 18% in 1997 to 13% in 2001.

While the United States took the initiative in rewarding contracts for the reconstruction of post-war Iraq, Middle East Arabs have increasingly become disillusioned by the US’ regional foreign policy, which has in turn resulted in a growing boycott of American goods.

Additionally, Arab businessmen are increasingly avoiding the American market due to harsher visa regulations for Middle Eastern visitors since the events of 9/11.

Despite this, many industrialists are still predicting that the current anti-US sentiment will eventually fizzle away. Jihad Feghali, CEO of Nutris, which represented 140 companies in Iraq before the war told Arabian Business that although the sentiment on the street was anti-American, in the business world things were different.

“I think the capital and business has no sentiment or feeling. In the end people will go back to their most important issue, which is: what is the most cost effective product?” said Feghali “For example, I haven’t seen in Syria, Jordan or the Emirates people saying that because of the French position [during the conflict in Iraq] people are going to buy more French.”

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