First Arab economic summit to address financial crisis:coordinator

Special Report:Global Financial Crisis

by Zhu Lei, Lin Liping and Chao Xu

CAIRO, Dec. 23 (Xinhua) -- Arab Economic, Development and Social Summit to be held in Kuwait next month would focus on the global financial crisis, infrastructure in the Arab world and social issues, coordinator general for the summit said on Tuesday.

In an exclusive interview with Xinhua at the headquarters of the Arab League (AL) in Cairo, Mervat Tellawi said, "this is the first summit to be held to discuss and address all these issues," adding "businessmen, intellectuals and civil associations with politicians and state leaders to exchange thoughts and solutions."

The Kuwait gathering scheduled for Jan. 19 and 20 would be the first for heads of state of the 22-member AL to devote to economic and social development.

Tellawi said the leaders would discuss the impacts of the global crisis on the Arab economy and map out collective steps to address the crisis.

The crisis makes both Arab individuals and governments to reconsider how to invest their funds instead of investing in international markets "which they wrongly believed were stable and secure," she said.

It has been proved that the return in the international markets is much lower than that in Arab markets, even in normal circumstances, she said. "This may be an incentive for the Arab states to invest their funds within the Arab region in particular."

Western countries were resentful of the Arab sovereign funds that buy stocks and bonds in European financial institutions, citing the Arabs seek to control or influence the financial policies of the West, according to Tellawi.

The Middle East holds the largest sovereignty funds in the world, with the United Arab Emirates boasting some 900 billion U.S. dollars of such funds, Kuwait holding 200 billion dollars and Qatar 60 billion. The Saudi Arabia established its first sovereignty fund of 5.3 billion dollars this year.

The Arab nations currently invest most of their sovereignty funds in the European and American markets, eying purchasing assets at cheap prices while the West was suffering from the sluggish economy.

Tellawi disclosed that finance ministers and central bank governors from Arab nations would meet several days prior to the summit to decide what collective steps to be taken in face of the crisis.

As for the plunging oil prices, Tellawi said low oil prices will certainly affect the budgets and development plans of Arab countries, but it will lead to the reduction of high inflation which has plagued many Arab countries, especially the oil-rich Gulf ones.

"We must work to address negative impacts and maximize the positive aspects and use them," said the former Egyptian minister of social affairs and insurance.

Oil prices has witnessed dramatic ups and downs during the past year, which fell to around 100 dollars a barrel in September and dropped below 50 dollars in November, declining by more than two-thirds since their mid-July peak.

The Kuwait summit has been in preparation for two years, the coordinator said, noting that Arab leaders agreed to hold such a summit during the annual Arab Summit in Riyadh in March 2007 as they found Arab national security has been affected by the economic and social underdevelopment.