OPEC's Secrets

Veils over Arab investments

Japanese holdings in the U.S. total a hefty $34 billion. The Canadians have some $30 billion in securities and other assets in the U.S. Although investment tallies for most countries are routinely made public by the U.S. Treasury, the Government insists on guarding the confidentiality of those by Saudi Arabia, Kuwait, the United Arab Emirates and other OPEC members. The Treasury will reveal only the combined totals for all 13 OPEC members, so that neither Congress nor the public knows how much any individual country has invested in the U.S. The latest figures for OPEC holdings: $34.9 lion in Government securities; $6.1 billion in corporate bonds; $8.5 billion in corporate stocks; $13.9 billion in commercial bank liabilities. All assets: $69.8

billion.

The Treasury has refused to release a country-by-country breakdown of OPEC investments in the U.S. since 1974, when then Secretary of the Treasury William Simon agreed to the request by Saudi Arabia and Kuwait for confidentiality in exchange for substantial increases in their purchases of U.S. Government securities.

But New York Democrat Benjamin Rosenthal, chairman of the House Subcommittee on Commerce, Consumer and Monetary Affairs, wants to know the extent of the investments, claiming that it could have important foreign policy and financial implications. Rosenthal last week held hearings in an attempt to get the figures. Said he: "If there are not direct threats of pullouts or cutbacks in OPEC investments, why can't the Treasury Department tell us what the investments are? If there is a threat, then perhaps our policy should be re-examined."

Last week's sessions did not answer many of Rosenthal's questions, and even raised some new ones. For example, Government documents record at least one exchange in which a representative of Kuwait, whose holdings include Baltimore's Hilton Hotel, told U.S. officials that his country might stop pumping oil if the level of Kuwait's investments were revealed.

The Treasury Department also admitted that since June 1974 the Saudis have reimbursed Washington for the salaries of 38 Treasury officials working on a joint U.S.-Saudi commission that helps the desert kingdom with some of its investment decisions.

Some challenged the Treasury Department's figures concerning the size of OPEC investments. David Mizrahi, publisher of the New York-based economic and political journal Mideast Report, maintained, without documenting his claim, that the Treasury Department has detected less than one-third of the holdings of the OPEC nations in the U.S. Many moneymen believe that large OPEC funds are funneled into the U.S. through third parties and foreign syndicates. Mizrahi's tally for just three OPEC investors: $100 billion from Saudi Arabia, $55 billion from Kuwait and $45 billion from the United Arab Emirates.

The Treasury Department defended its policy of minimal disclosure on the grounds that Arab investors would not leave their money in the U.S. if the size of their holdings became known openly. Assistant Treasury Secretary Marc Leland argued that, since OPEC's investments are usually made by the government and just a few individuals in each nation, disclosure of each OPEC country's data would reveal too much about readily identifiable investors. Said Leland: "OPEC countries are extremely sensitive about possible disclosure of their individual investments abroad."

American financiers, who often profit handsomely from channeling the investments into the U.S., claim that the Arab money poses no threat because most holdings are still relatively small. At least by the official reckoning, the OPEC investment is only about 30% as large as the $240 billion in holdings by Western European countries. Financiers add that if the Saudis or other Arabs had to go fully public in the U.S., they might take their money to Britain or Switzerland, where fewer questions would be asked. Says John West, former U.S. Ambassador to Saudi Arabia and now an investment consultant: "Confidentiality is a way of life in the Arab world, and this applies to finances and investment. It is a small price to pay for their indispensable assistance in recycling petrodollar funds." For now at least, American officials and bankers will be able to keep OPEC investments partially hidden behind a gauzy veil.

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