US Treasury Secretary Timothy Geithner looked yesterday to allay Gulf nations' concerns over the US economy's strength, offering assurances about the safety of their investments while on a high profile trip to the region.
Geithner, in his first official visit to the Middle East, told Saudi business leaders in Jeddah that President Barack Obama's administration was committed to preserving the openness of the US economy. He said the US realised it had "a special responsibility to play" when it came to protecting the dollar's value.
Geithner, who was expected to hold talks with King Abdullah and his top financial advisers later yesterday, said the meetings aimed to highlight the importance of the two countries co-operating to resolve the global economic crisis.
The meetings aimed to build on Obama's trip there and served to underscore his "commitment to strengthening our relationship; to review progress in our co-ordinated strategy to restore global growth; to examine the risks and challenges still ahead of us; and to move the Group of 20 reform agenda forward", said Geithner.
Geithner's comments reflected the growing financial clout of the region.
Saudi Arabia, the Arab world's largest economy and Opec's de facto leader, recycles significant petrodollars into US treasury bonds. And government investment funds in the United Arab Emirates (UAE) - Geithner's second Arab stop - have poured billions into US banks and other companies.
As a group, the Gulf Co-operation Council - made up of Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain and Oman - is now the US's second biggest creditor after China.
Oil-fed cash surpluses have helped cushion many of the Gulf nations from the worst of the global economic meltdown, with governments adopting a range of stimulus measures to try to prevent the kind of bankruptcies that have reverberated in the US.
Geithner, speaking at the Jeddah Chamber of Commerce, said the global recession was receding, but that repair and recovery was "going to take considerably more time".
He laid out a four-point strategy that he said was essential for economic recovery. It included stabilising and repairing the US financial system, helping offset the dramatic contraction in demand, working with the major economies of the world on a co-ordinated programme of macroeconomic stimulus and financial stabilisation and focusing on the future by building a stronger and more productive economy.
Geithner said that since the controversy surrounding the Dubai Ports World deal in early 2006, the US had put into place a series of reforms designed to safeguard national security, while providing more clarity, predictability and transparency to investors.
Public outcry over the deal blocked the efforts of the ports manager to manage six of the largest ports in the US.
"These reforms have not infringed on our open investment policy," he said.
Tarik Yousef, dean of the Harvard-affiliated Dubai School of Government, said the US viewed the region as an important source of funding and as a balancing force in the world's financial system.
"A reinforcing message about their role in the global economy is an important message to convey," he said.
"This is a visit to reassure traditional allies who have invested in the US economy to maintain their confidence in the dollar, in their investments and in the leadership of the US in the world economy. That would seem to be a priority," Yousef added. - AP