An artist’s collage juxtaposes the real-life conditions Palestinian workers face in the occupied West Bank with Scarlett Johansson’s role as SodaStream spokesmodel. (Courtesy Electronic Intifada)
Outside the U.S. Embassy in Amman, Jordan, activists demonstrate against U.S. Secretary of State John Kerry and his peace proposal, Jan. 29, 2014. (Khalil Mazraawi/AFP/Getty Images)
A Jewish settler (unseen at left) places the Israeli flag on a road sign as Israeli troops encircle Palestinian villagers protesting the army’s cutting branches off olive trees on a road leading to the illegal Jewish settlement of Tekoa, south of Bethlehe
Dr. Eyad El Serraj at a 1993 press conference in East Jerusalem denouncing Israel’s use of torture. (Ruben Bittermann/Photofile)
U.N. and Arab League envoy for Syria Lakhdar Brahimi (l) and U.N. Secretary-General Ban Ki-moon at the Jan. 22 press conference closing the Geneva II peace talks on Syria. (Philippe Desmazes/AFP/Getty Images)
Washington Report on Middle East Affairs, December 13, 1982, Page 3
Trade and Finance
U.S. Records Surplus With Mideast
In many respects, U.S. trade with the Middle East remains a bright spot, as worldwide recession and the strength of the dollar (making U.S. goods more expensive abroad) have combined to produce what is expected to be a record merchandise trade deficit—perhaps $42 billion—for the U.S. by the end of this year.
In September alone, when the U.S. recorded a $4.2 billion trade deficit with the rest of the world, it showed a $3 billion surplus with the area covered by the Commerce Department's "Office of the Near East" (the Arab states, Israel and Iran). That was the first such surplus recorded with that area since 1973; the figure for all of 1982 is expected to be $5 billion.
Much of this surplus can be attributed to expanding exports: the Middle East now takes about 10 percent of all U.S. exports compared with some 7 percent a few years ago and officials from Commerce Secretary Malcolm Baldrige on down are noting that the region is really the only growth market for U.S. exports in the world.
However, the favorable U.S. trade position with the Middle East also results, of course, from the decline in what the U.S. has been spending on oil supplies from the region since 1979-80. That was when the "second oil shock"—the price run-ups and shortages which followed the Iranian revolution—led to a sharp reduction in American oil consumption—a trend since perpetuated by the recession as much as by fuel conservation.
In 1981, the U.S. spent $14.4 billion on oil imports from its main supplier, Saudi Arabia; through the end of September this year, the figure was just over $6 billion. Comparable figures for imports from the United Arab Emirates were $2 billion in all of 1981 and $1.8 billion in the first three quarters of this year. Overall, U.S. imports from the Arab world, with a value of $11.4 billion in the first nine months of 1982, were just under half what they were ($21.9 billion) in the same period of 1981 and about one-third what they were in all of 1980.
At the same time, the U. S. has steadily expanded its exports to its main Middle East markets in real terms from year to year. In 1981, the value of U.S. exports to the Arab world jumped by more than 50 percent over 1980. Significantly, that growth rate was down to just 101/2 percent in the first nine months of this year, as the Arab oil exporters began to curtail spending on imports in line with their reduced earnings from oil due to the surplus supply conditions and steady price levels prevailing in the world oil market. For example, U.S. exports to the UAE, Kuwait and Qatar so far this year are running at, or just above, last year's level in real terms.
The Saudi Dynamo
Saudi Arabia, as usual, remains the real dynamo of the region, accounting for nearly half of the U.S.'s Middle East imports and exports alike. Here, U.S. exports are growing at a healthy rate of more than 20 percent a year.
However, as Secretary Baldrige noted on the eve of his departure at the head of a trade and investment mission to Saudi Arabia and Algeria, there is cause for some concern here. too. "We're just about holding our own in the Saudi market," Baldrige told reporters. "Our market share has actually declined somewhat in recent years"—from about 26 percent in 1975 to some 21 percent today, Commerce Department sources say.
In Algeria, the other country which Baldrige and his mission of 34 businessmen visited, the U.S. has only about a 7 percent share of a $10 billion-a-year market. Commerce Department sources are now not so sure that the U.S. will attain the anticipated $1 billion-a-year level of exports to Algeria this year.
Another problem area is Iraq, which has greatly cut back its purchases in order to concentrate resources on the war with Iran. As far as the non oil-producers among America's Middle East trade partners are concerned, sales to several of them—Jordan, Morocco, Tunisia and North Yemen included—are down this year from last.
One area of continued success for U.S. exporters is Egypt, which bought over $2 billion worth of U.S. goods in the first nine months of this year-more than in all of 1981. Many of these sales are supported by the huge U.S. aid program there.
These mixed results in what is still something of a boom market reflect the problems which confront U.S. trade globally: stiff competition from European and Japanese exporters in Third World markets; the continued strength of the dollar against other currencies; and the effect of government rules and regulations governing trade, which exporters say make their lives difficult.
Baldrige says his department—through trade missions, investment treaties and the appointment of new "commercial counselors" to key Arab capitals—is trying to help U.S. exporters to find new Middle East business. "We decided last year that we should work in much closer cooperation with our own commercial interests and those of our Middle East and African allies and trading partners," Baldrige told reporters. "Our government presence on commercial matters has been very weak in the past in that whole part of the world. We want to open up two-way trade and be able to help develop the American presence.”