(2 of 2)
Where will the money go? The oil producers can use some—though not much—to buy out foreign holdings within their own borders. Last year Saudi Arabia paid $500 million for 25% of Aramco, the consortium that pumps and distributes Saudi oil, and last week agreement was reached for a 100% takeover by year's end. Western banks and a handful of investment banking houses have won contracts to direct petrodollars from oil-rich Arab nations to poor or heavily populated ones such as Egypt, Sudan and Yemen. But many of the poorer Arab nations will require years of "soft" (low-or no-interest) rehabilitation loans before they are prepared to absorb massive infusions of development capital.
Wall Street is well equipped to absorb the petrodollar billions. The Arabs, however, are suspicious of the fluctuating prices on stock exchanges. They prefer to lend money directly to Western companies, buy control of companies not listed on stock exchanges, participate in joint ventures with Western firms, and buy real estate. There is a limit, of course, to how much capital such activities can absorb, and the oil producers will inevitably be tempted to go for a piece of the big industrial action.