Ibrahim M. Oweiss

The world will never know just how much printer's ink has been saved since the day in March, 1973, when a speaker stepped to the podium of a conference hall near New York City and coined a word. The speaker: Ibrahim Oweiss, then as now a professor of economics at Washington's Georgetown University. The word he coined: "petrodollar."

At the time, the price of oil sold by OPEC countries had broken new ground by moving upward relatively fast over a period of a couple of years even though the traumatic explosion of price which took place at the end of 1973 was yet to come—and some of the countries were well on their way to building up substantial dollar surpluses.

"The situation was unique in history," Dr. Oweiss says. "These were third world countries, selling their commodity for dollars, and having money left over for investment. I thought there was a need for a new term to describe these particular dollars."

Others obviously agreed. Two weeks after Dr. Oweiss had used the word—at an international monetary seminar held at Columbia University's Arden House in Harriman, New York—it was picked up by a prestigious economics commentator in The New York Times. After that, it became difficult for anyone to pick up a newspaper or a magazine without coming across the haunting new word again and again.

Petrodollar Backlash

Not everyone was happy about it. One Arab finance minister believed the OPEC producers were being stereotyped, and lashed out at Dr. Oweiss angrily: "See what you have done? People are attacking us!" Says Dr. Oweiss: "I said: they would have attacked you anyway—with or without the word."

Dr. Oweiss's qualifications for making his contribution to the language of international monetary and energy affairs were well-grounded even back in 1973. He had already invented two courses at Georgetown—one on the economics of the Middle East, which was initiated in 1969, and another on energy and oil, which got started in 1972.

After the price explosion, Dr. Oweiss began tracking the growing accumulated oil surplus of the oil producers and trying to estimate how large it would get. Like so many other analysts, his projections turned out to be greater than the reality—"but I was less wrong than most," he says with a grin. The mistake of so many forecasters, he says, was that they failed to take into account that the OPEC countries would spend huge amounts of their oil revenues on developing their economies. "Even the World Bank and the International Monetary Fund substantially underestimated the extent to which they would do this, and many supposed experts didn't take this factor into account at all."

Now that the revenues are way down, as a result of the oil glut, Dr. Oweiss does not foresee any early return, if ever, to the heady days of the past—even if the Western nations pull completely out of recession. "Over the long term, there will be an increase in the price of oil, but it will be an orderly and gradual one," he says. "In the short run, though, I predict there will be further declines. The recent small cut in the price of oil is not enough to persuade consumers to open up their purses to buy more."

Dr. Oweiss is very sensitized to the psychological and political aspects of economic markets, and takes them into account when making his projections—which is one reason he believes he has been on target more often than not.

The Money Weapon

"I have never been so pessimistic about U.S. policy in the Middle East as I am now," he says. He acknowledges that the Arab "oil weapon" no longer exists under present circumstances, but believes a "petrodollar weapon" is still viable, if used carefully and gradually. "For example, if New York's Bank X gets hurt badly as a result of a drawdown of Arab deposits, it might be inclined to lobby the government in favor of a new policy," he notes. But he warns that any sudden and massive shift of Arab government funds out of U.S. securities could trigger the International Emergency Economic Powers Act and end in a counterproductive freeze of the funds—as happened during 1980 in the case of Iran. In fact it was Dr. Oweiss who in the early seventies followed up his "petrodollar" creation by being the first to refer to such Middle East investments in the U.S. as "hostage capital."

Dr. Oweiss, a citizen of Egypt, has watched the ebb and flow of Arab capital from both sides of the fence. His first job after earning his Bachelor of Commerce degree from Alexandria University was with Egypt's Ministry of Industry as an economist. In September, 1977, he was appointed Egypt's First Undersecretary of State for Economic Affairs, and after taking leave from Georgetown spent a year in New York as Chief of the Egyptian Economic Mission to the United States. Since then, he says, he has been approached a couple of times with offers of ministerial jobs in Egypt. "I would be willing, of course, to serve—but not in the ministries which were proposed to me," he adds.

Dr. Oweiss received his M.A. and Ph.D. degrees in economics at the University of Minnesota. He has held teaching positions there and at Johns Hopkins, and joined the Georgetown faculty in 1967.