Exports to Mideast: Still Up

On the heels of a U.S. Commerce Department report showing that exports to the Middle East rose five percent last year—in contrast to an overall dip of nine percent in U.S. exports worldwide—Department officials are already talking bullishly about 1983.

"We are conservatively projecting further growth of five percent, or about $1 billion, in total U.S. exports to the Middle East and North Africa," a Department spokesman told The Washington Report. "The leading purchasers will be Saudi Arabia, Egypt and Algeria."

The spokesman's remarks came in the wake of the decision by the Organization of Petroleum Exporting Countries to lower its official oil price to $29 per barrel and to set new production quotas.

In 1982, it was Saudi Arabia, as usual, which was the star performer—becoming, despite lower oil revenues, the U.S.'s sixth biggest market and jumping ahead of several European countries. U.S. exports to Saudi Arabia expanded to $9.02 billion, up from 1981's level of $7.37 billion. Although the Commerce Department predicts in its report that Saudi Arabia "will have to make downward adjustments in spending for the new fiscal year" in its new budget due by mid-April, it goes on to say that "work being carried out in the $235 billion 1980-1985 Development Plan is expected to continue with only minor adjustments in 1983." U.S. officials point to opportunities for U.S. companies in large hydrocarbon, desalination and construction projects already underway.

Egypt became the second largest market for goods and services by absorbing $2.87 billion in U.S. exports, mainly in agricultural items. The sales were $716 million more than in 1981, and a handsome $1 billion over the 1980 figure. Despite their optimistic outlook for further increases in 1983, Commerce officials are advising American companies to be "increasingly aggressive" to overcome keen competition by European firms.

Another bright spot in 1982 was Algeria, which purchased $909 million in U.S. goods, compared to $717 million worth in 1981. Sales of U.S. goods to Algeria are expected to keep rising as it gets its $100 billion Five-Year Plan underway.

Alluring Market

The United Arab Emirates stands out as an especially alluring market for U.S. firms, according to the report. Exports to the U.A.E. totaled $1.1 billion last year, only slightly down from the 1981 total of $1.07 billion. For 1983, despite an outlook for possibly lower oil revenues, the Department's spokesman predicts that government spending on infrastructure will move upward, and that projects will spur demand in that country for office equipment and construction machinery. Elsewhere in the Gulf, exports to Kuwait were down slightly ($940.6 million compared to $976.4 million in 1981).

Iraq's war with Iran has depleted foreign exchange reserves and damaged what was once a bullish market for American products (see The Washington Report of May 31, 1982), as U.S. exports dipped in 1982 to $846 million, after reaching $913 million in 1981. But officials say that two new agreements approved by the U.S. Department of Agriculture—to supply Iraq with a total of $440 million in credits to purchase U.S. agricultural commodities—should help U.S. export totals to bounce back in 1983.

U.S. sales to Iran dropped from $300 million in 1981 to $122 million last year. A steep decline also took place in U.S. sales to Libya—down to $301 million in 1982 compared to $813 million the year before. The cause was the imposition of U.S. restrictions on exports to that country—with all exports except food, medicine and medical supplies requiring a validated license. The prospects for sales to both Iran and Libya during 1983 are weak.