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I War By Other Means
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q peeially Egypt, are waging a peace offensive abroad but
e at the hum time retaining a wmr stance at hom« in order
□ all the batter to keep both option* open. Thera is no quea-
g tion but that the confrontation states and the PLO want
for
with Israel aa a sovereign Jewish State..
y
peace
Israel’s neighbors and the PLO are either in political or
economic trouble.
The key, however, to the Arab peace offensive — both
by the confrontation states and some of the oil-rich coun
tries — in relation to brad and in terms of inter-Arab
rivalries is one of economics. The search for foreign
( markets for investing petro-dollars and the search for
foreign investments in their own economies is stymied
by s continuing war atmosphere. Neither the outward
flow of investment capital nor the attraction of foreign
e» investments is possible as long as the economies are
geared for war and national budgets are tied up in
3 military overkill. Nor are investment flows in and out of
* these countries feasible as long ss instability and uncer
tainty prevail
In addition, the Arabs are beginning to realise that
they cannot maintain a top-heavy military establish
ment without a highly developed economic base. Deve
loping and supporting such an establishment is very
much like
bask factor i
that the new
willing to ooi
Mideast mili
lined by
of the perspective out-
Jimmy Carter that the focus
must be on. America’s domestic needs.
In short, the oil-rich states are now in the same posi
tion as. the Western nations: invest or die. Their
economies are literally choking to death with an excess
of petrodollars that cannotbe siphoned off by buying
sprees of mansions, yachts and automobiles. These
dollars must find profitable investment markets. The
confrontation states must reorganise their tattered
economise and cannot hope to do So without foreign
loans and investments. For this they heed stable
economic and political systems that do hot threaten
foreign investors with either economic chaos or
revolutions.
* * *
Promises Of New Markets
Two events especially, in the pact several weeks, con
firm the economic basis for the peace offensive. One was
the Arab-European business cooperation symposium at
Montreux, Switzerland last month. The other .
visit last week to Paris by Lawrence R. Klein/
Carter’s closest economic advisors.
The Montreux conference, attended by 1600 bank
presidents, bankers, manufacturers, consultants and
traders from 40 countries, was organised by the Euro
pean Management Forum and sponsored by 100 West
European and Middle East hanks. David Baird, repor
ting on this conference for the Belgium-based bi-weekly
magazine, “To The Point International” noted that
“cooperation was the keynote” of the meeting
This was illustrated by the variety of schemes put
forward, including the creation of a technological
development bank, owned and financed by national! and
governments of developing countries with surplus finan
cial resources; a Euro-Arab investment company, shares
to be held by the Organisation of Petroleum Exporting
Countries and the European Economic Community, and
a committee open to all enterprises intereeted in Arab-
European business which could help broaden business
prospects, v/?, ' • '■*
Eager To Aid Sagging Economies
Baird noted, “with So much money floating around —
investable surpluses from the oil states is expected to be
more than f4& billion this year everyone had an in
terest in making the event a sufecees.” In addition to this
investable surplus, the European countries are eager to
get some of this to help bolster their own sagging
economies, knock Japan out of the competitive market
.and hopefully enhance their own competitive stance in
the Arab world against the encroachment of American
investments. •).
Bur hum Dgjani of Jordan, secretary general of the
Unioajqf Arab Chambers ofCommerce, made it dear in
an interview with the Belgian magazine when he stated:
“I would say thatthe Arab is less suspicious of the Euro
pean than ever before... It is with the Americans that
we have a problem, because here we have a complicated
situation (economically and politically)... But I think
the Europeans stand a very good chance of winning the
confidence of the Arabs.”
From the European point of view, Lord Selsdon, ad
visor to Britain’s Midland Bank, summed up the problem
of the continent by stating “there is a growing realisa
tion by the Arabe that, without proper cooperation with
the West, particularly Europe, they will‘not be
successful... Unless we can find the right platform for
cooperation our own economies will suffer and probably
the world economies as a whole.”
Klein, whose visit to Paris coincided with an impor
tant meeting of the Organisation for Economic Coopera
tion and Development, at which 24 member nations from
Europe, North America and developed Asia were dealing
with prospects for 1977, noted that the U.S. had to “take
a leadership role” in the struggle to improve economic
morny. Ibis was undoutedly a cue to Eu
tiers that the U. B. is opt about to tie up
resources in foreign military ventures which help the
economies of arms manufacturers but drain the total
economic structure of profitable ventures international
ly, since war materiel is niether investable capital nor a
long-range investable market.
New Moves To Isolate Israel >
To develop s resurgence of trade on the part of the U.S.
and West Europe in a virtually untapped Arab market
and the concomitant need of the Arabs to find an invest
ment market is the overriding need.Saudi Arabia, for
example, plana to vend $2.7 billion in the next five yean
for telecommunications alone. Tender* for a huge
microwave system have been invited from 11 companies,
five of them outride Europe, Saadi Arabia, therefore,
cannot afford to tie up its capital in military budgets for
other Arab states.
In addition, Chase Manhattan is.negotiating a 1250
million loan to the Egyptian government to be shared by
a number of Western banks, including Chase. This is
bound to call through unless there is a revamping of
Egypt’s economy that would guarantee new tax advan
tages, the reps nation of capital at the same rate it is
brought in and the liberalisation of other economic
policies. Egypt cannot do this if it is geared for war. A
task fbree of the American side of the Egypt-United
States Joint Business Council, formed last year to
promote U.S. investment in Egypt, might begin looking
elsewhere in the Mideast for market possibilities.
Meanwhile, a number of East European governments
are seeking to borrow hard currency from the oil
producing states in the Mid east to buy advanced
technology/Rumania, for example, is negotiating a large
loan witiy Kuwait and. Yugoslavia earlier succeeded in
obtainin^cregiits from Kuwait.
The peace offensive, therefore, has a dual objective: to
entice trade and investment and to provide the political
veneer tor the Europeans and Americans to turn off to
Israel. That is why it is essential for the Arabe to make
Israel appear aa a nation devoted to war and therefore a
non-profitable market; a country which can only force
American business enterprises and government to
fritter away its financial resources in non-productive
fields.
So while the Arabs talk of peace they are algo devising
new ways to further isolate Iaraei from the international
economic community. Having fought what now appears
to be a losing battle mi the boycott front, the Arabs are
embarking on a course of'economic solidarity with the
corporate giants of West Europe and Amsriea.1Iie
Arabs, stockpiled with armaments in readiness against
Israel, can now afford to talk of peace. But they are in
effect conducting war by the other means.
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