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Capital flight from Gulf caused by arms buys, foreign work force

Special to World Tribune.com
MIDDLE EAST NEWSLINE
Monday, August 18, 2003

ABU DHABI Gulf Cooperation Council states are seeing a massive flight of capital amid continued arms purchases and transfers by the region's huge expatriate work force.

Gulf analysts and reports said Saudi Arabia has been hurt the most by the flight of capital from the Gulf region. They said more than 60 percent of the cash transfers from the six GCC states stems from the Saudi kingdom.

The Abu Dhabi-based Arab Monetary Fund reported that cash transfers by expatriates totaled $24.6 billion in 2002. The group said the level of capital flight will not be reduced in 2003.

In all, the flight of capital from the six GCC states exceeded $240 billion over the last decade. The biggest outflow came from Saudi Arabia, which lost $152.8 billion, followed by the United Arab Emirates, with $36.9 billion.

Analysts said the large weapons purchases by most of the GCC states have exacerbated the balance of payments in the region. Kuwait, Saudi Arabia and the UAE have been the largest weapons purchasers among the GCC members over the last three years.

GCC states have not imposed any measures to halt the flight of capital, analysts said. They said GCC states have not limited the amount of money that can be sent to countries outside of the region.

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