In the year since the devastating September 11 terror attacks on the United States, the Arab world has experienced a significant drop in capital inflows, mainly in the form of foreign direct investments (FDI) and tourism receipts, concludes a report recently released by the Arab Monetary Fund (AMF).
Over the past year, income from tourism has been nearly cut in half and new foreign investments dropped as much as 40 percent in some Arab states, estimated Abdel Moneim Sa'id, head of the Al-Ahram Center for Political and Strategic Studies in Cairo.
Other instability factors, notably the ongoing Israeli-Palestinian conflict and the threat of a US-led military strike against Iraq, also carry grave economic implications for the region. In the post-September 11 world, Middle East-based companies are finding the cost of borrowing ever rising, due to a perceived higher risk factor.
The plunge, which has brought the risk of recession to the region, is attributed to “growing fears of dealing with several Arab countries," AMF chief Jassem Al-Manai told Arab central bank governors who met in Manama on Saturday, September 7. Negative press has scared investors away from coming to work in the region, he added.
Suspicion is still running high among Western investors. According to a draft United Nations report, over $112 million in assets suspected as belonging to Al-Qaeda have been frozen throughout the world since September 11, 2001. Nonetheless, the international organization’s report estimates that Osama Bin Laden’s terror network still manages to obtain an annual income of at least $16 million, mainly from private donations, reported the Time.
With Washington blacklisting countries suspected of tolerating the inflow of terrorist funds, some of the accused, among them the six Gulf Cooperation Council (GCC) members, have moved over the past year to issue anti money-laundering laws and tighten financial regulations.
Nonetheless, the financial systems of Arab countries still lack the regulatory measures that would enable them to successfully scrutinize capital movement and check the inflow of terrorist funds, the Arab monetary officials acknowledged in Manama. "It can be said that Arab countries need to do more to counter money laundering and illegal transfers but we've also done a lot to block this," Al-Manai stated. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
