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The recession, moreover, has done little to halt the flow of many foreign goods into the gulf. Saudi Arabia imported $10.46 billion worth of such products as industrial machinery and farm goods during the second quarter of 1983, a 5% increase over the first quarter. In the United Arab Emirates, imports were 2% higher in the first half of this year than in the same period a year ago. Result: after years of accumulating huge surpluses, some energy-producing states are now sinking into the red. Saudi Arabia is expected to spend some $26 billion more than it takes in from abroad this year; in 1982 the Saudis had a surplus of some $2 billion.
To bridge trade gaps, the Saudis and their neighbors have been drawing down their Western bank accounts. Federal Reserve Board statistics show that Middle East oil exporters have about $11.7 billion in U.S. deposits, down some 25% from last December.
Several experts argue that the frantic pace of gulf development would have slowed even without the current recession. "We were saturated with buildings and offices," says Riyadh's Toaimi. Adds a banker whose firm has helped finance Saudi projects: "Construction will never see a boom like the one we had here in the ten years since 1973." That, in the view of many Arabs, is probably for the best. "We did not have time to think about what we were doing," concedes Yousef Shirawi, Bahrain's Minister of Development and Industry: "Perhaps this pause will be very good for us."
—By John Greenwald.
Reported by Barry Hillenbrand/Bahrain
* The six members of the Gulf Co-operation Council: Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates and Oman.