US exports to Saudi Arabia fall again

US exports to Saudi Arabia dropped 25.6% in the first nine months of 2002 over the same period last year.

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By  Massoud Derhally Published  January 5, 2003

|~||~||~|The most recent figures from the US Census Bureau of the Foreign Trade Division show US exports to the kingdom dropping to US $3.4 billion at the end of September this year, from US $4.648 billion in the first three months of 2001.

Compared to the first nine months of 1992, US exports to the kingdom are down 37% in 2002. Saudi exports to the US for the first three quarters of 2002 were US $9.12 billion, down 16.5% on the previous year and 14.5% from 2000.

“Rightly or wrongly, the figure speaks for itself. My opinion counts nothing compared to the figures,” says Bisher Bakheet, managing director of Bakheet Financial Advisors. “…It is the boycott issue with the continued US support [for] the extremist Israeli policy in the Palestinian occupied land. The trend, according to US Census Bureau figures of what Saudi Arabia imports from the US, has been in decline for the past 4 years. It is difficult to see a u-turn at this point.” Bakheet.

The decline, Bakheet points out, comes despite the fact that US imports are cheaper than European products because of exchange rates. “If the dollar becomes stronger or weaker vis-à-vis the European currency or the Yen, people will tend to buy from a cheaper source,” he says. “The Euro is stronger than the dollar by 10-15% on average this year, which means European products are more expensive to buy than US products.”

If Bakheet is right, American businesses are still being hit by a grass roots boycott that began with the start of the Palestinian intifada in September 2000, and gathered momentum as a result of a deterioration in US-Saudi relations, Israeli incursions into Palestinian territories and the war rhetoric regarding Iraq. While some might say it is hard to say there is a direct correlation between the current decline in US-Saudi trade and the grassroots boycott, others believe it is part of the equation.

“Of course — it’s all about the boycott,” a senior member of the Al Saud royal family told Arabian Business. “But I see no involvement on behalf of the government. We don’t have a ban on American products, except for products that conflict with the Sharia but that has been there for years and I don’t see an increase in tariffs or restrictions on American products. But I see people who do not go to McDonald’s or Subway but instead to Saudi equivalents like Kudoo,” says the prince. “Then you have the Iranian ZamZam Cola, a substitute for American pop, named after holy water in Mecca, which is hitting markets in the Gulf and arousing interest in other markets.”

The boycott is manifesting itself in other ways too. In November, a man tried to burn down a McDonald’s restaurant in the city of Al Kharj, south of the capital Riyadh, but managed only to inflict minor damage.

Businesses in other parts of the Arab and Muslim world have also suffered. Buildings housing American fast food chains were attacked in Lebanon, Bahrain and Indonesia. At times the damage has also come in the form of market rumours that a company has shut down part of its operations in the region in response to poor market conditions.

When McDonald’s Corporation issued a press release in November regarding restructuring and closing some of its operations in some countries, McDonald’s in Jordan was rumoured to be one country where the company was cutting back. Not true, say representatives of the Jordanian operation.

“We have not and are not planning to close any of our seven stores in Jordan,” says Nadia Al Dary, marketing and PR spokesperson for McDonald’s Jordan. “There is an ongoing project in the downtown area by the municipality and once that is complete in three years time we will reopen our store. Have we been affected by the boycott? I think you need to put things in perspective. Real estate is suffering, airlines are suffering, other sectors are as well and so you can’t say that we are suffering only from a boycott. Jordan is between Israel and Iraq and yes people are worried, and they are not spending but this is normal given the circumstances.”

Will things on the US-Saudi front get worse? Will the boycott put a serious dent in businesses? Maybe, says the Saudi prince, adding that you have to put things in context.

“Today, you have people who when they go to the US are fingerprinted and I don’t know if this is acceptable. Also, for instance, I am strongly opposed to Saddam Hussein, as I know most Saudis are, but that does not mean that you come from outside and put in place a leader of your choice. Your interest is in oil — stick to it. Support the opposition, but don’t meddle in internal affairs.”||**||

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