DUBAI - A boycott of U.S. goods by Saudis angered by Washington's Middle East policies has led to a sharp fall in U.S. exports to Saudi Arabia, diplomats and economists said on Thursday.

The fact is that the impact of the boycott is very significant...Yes, we are concerned.

Charley Kestenbaum U.S. embassy's commercial officer

Official U.S. figures show exports plunged 33 percent to $2.8 billion between September, the month that suicide-bombers, most of them Saudis, attacked U.S. cities, and March.

In the first quarter of 2002, exports fell 43 percent to $986 million from $1.74 billion a year earlier.

Many Saudi consumers have shifted to European and Japanese products, encouraged by campaigners wearing Palestinian checkered headscarves who have distributed leaflets at mosques, schools and shopping malls, residents said.

They urge Saudis to boycott U.S. household items, vehicles, food and beverages, fast-food restaurants and tobacco in protest at Washington's perceived pro-Israel bias and anti-Saudi campaigns by some U.S. senators and media following the September 11 attacks.

"The reason (for the drop in exports) is definitely political. The boycott of made in U.S.A. products is a major contributor to this sharp drop," said Bisher Bakheet, managing director of Bakheet Financial Advisors.

Oil power Saudi Arabia is the biggest energy supplier to the United States, with two-way trade estimated at $20 billion.

Saudi exports to the United States also fell 36 percent to $2.44 billion during the first quarter year-on-year from $3.83 billion, but economists attributed the drop to lower oil prices and output curbs in line with OPEC efforts to defend revenues.

Diplomats said although U.S. exports accounted for only a fraction of its global trade, the steep decline appeared to show the depth of anti-U.S. sentiment in the conservative Muslim kingdom, which is a staunch supporter of the Palestinians.

BOYCOTT WORRYING

The U.S. embassy in Riyadh said Saudis shunning American products was worrying. But it cited other factors, including the appreciation of the dollar and shrinking defense contracts from U.S. firms, the kingdom's biggest arms suppliers.

"The fact is that the impact of the boycott is very significant...Yes, we are concerned. But exactly how big this impact is very hard to determine without a detailed study," said Charley Kestenbaum, the U.S. embassy's commercial officer.

"Many U.S. businessmen have put off travel plans to Saudi Arabia since September 11 and some projects have been shelved or canceled," Kestenbaum told Reuters by telephone from Riyadh.

He said U.S. firms delivered civilian and military aircraft, worth $777 million in 2000, down from $5 billion in 1998.

"Does that mean they are boycotting American aircraft? No. There is no government boycott. There is a popular boycott."

Kestenbaum expected total exports to shrink around 20 percent in 2002 from $5.97 billion in 2001 when they fell six percent drop from the year before. Besides aircraft, Saudi imports machinery, food products, furniture and vehicles.

The anti-U.S. campaign, launched after a Palestinian uprising erupted in September 2000, has intensified since a large-scale Israeli offensive on the West Bank in March.

"This boycott is quite effective. I don't think the appreciation of the U.S. dollar is the main reason for declining U.S. exports," said Ibrahim Foudah, executive director of Saudi Export Association.

Japanese diplomats said provisional figures showed that exports to Saudi Arabia soared around 20 percent year-on-year during the first quarter from 90.7 billion yen ($731 million).

French exports rose to 535 million euros during the first four months of 2002, a 12.9 percent rise from a year earlier, said Philippe Fouet, commercial officer at the French embassy.

Copyright 2002 Reuters Ltd

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