A report on Saudi investors withdrawing their assets in the United States because of fears they might be frozen was the main business news item this week in the Middle East.

There were mixed reactions to the report, in Wednesday's Financial Times, that Saudi investments worth 200 billion dollars fled the United States.

Saudi billionaire Prince Al-Walid Bin Talal bin Abdul Aziz on Thursday said "there may be some withdrawals, but not of the magnitude mentioned in the FT."

Al-Walid, a nephew of Saudi Arabia's King Fahd, said that as far he was concerned, he was increasing his investments in some US companies, including Citigroup.

Bankers in several Arab countries confirmed that Arab funds were in search of new investment opportunities, but were not able to say how much or whether they were fleeing the United States.

Lebanon's Central Bank Governor Riad Salameh said in comments published by Thursday's An-Nahar newspaper that Lebanese banks were "attracting deposits of capital that are being withdrawn from some places.

"I cannot give figures because of the banking secrecy principle, but I can say that contacts that have been engaged with us and the activities of Arab bankers show an interest in our banking sector," he told the Lebanese daily.

Last week, the Saudi central bank said deposits in local banks rose 6.4 percent to 78 billion dollars on June 30, from 73.3 billion dollars a year ago, partly because of repatriation of funds from overseas.

The FT has quoted Youssef Ibrahim, a senior fellow at the US-based Council on Foreign Relations, saying the fund withdrawal had been fueled by calls from some US hardliners for a freezing of Saudi assets.

Ibrahim Said the outflows could pick up in response to the suit filed in the United States last week against three members of the Saudi royal family, Sudan and several Gulf banks and charities by relatives of the victims of the September 11 attacks, accused of financing the al-Qaeda network.

Other major developments in the Middle East came from Moscow, as Russia on Monday confirmed it was close to striking a massive economic deal with Iraq, but denied it was worth 40 billion dollars as reported by Baghdad.

The news prompted Washington to remind Russia of its obligation to respect UN sanctions against Iraq.

Iraq's ambassador to Moscow, Abbas Khalaf, said the five-year agreement covers cooperation in various industries, including oil, electrical energy, chemical products, irrigation, railroad construction and transport.

Russia also signed a deal with Kuwait to jointly develop oil fields and projects on their respective territories, Kuwait's acting oil minister, Sabah al-Ahmad al-Sabah, said Monday during a visit to Moscow.

Russia's giant oil producer Sibneft had already applied to take part in a tender for the future development of Kuwait's northern oil fields, on the border with Iraq, whose reserves are estimated at 10 billion dollars.

In regard to the oil market, Sabah said OPEC would likely raise its crude production should the United States launch a military campaign to unseat Iraqi President Saddam Hussein, in order to compensate for the probable subsequent halt in Iraq's production.

For his part, Iranian Oil Minister Bijan Namdar-Zangeneh said oil prices would not rise "because the United States will use its oil resources not to allow a sudden jump."

In gas-related news, Jordan on Wednesday appointed an Egyptian consortium to build the 250 million-dollar Jordanian portion of a regional pipeline that will deliver Egyptian gas to Syria, Jordan and Lebanon by 2005.

The consortium EPEG was awarded the BOT contract for 370 kilometers (230 miles) of pipeline linking Jordan's southern Red Sea town of Aqaba to Rihab near the northern Syrian border.

In corporate news, Arab Banking Corp. (ABC), the largest Arab bank, on Thursday said net profits for the first half slumped 31.1 percent to 51 million dollars from 74 million a year earlier.

And EgyptAir on Wednesday said will sell its two ageing Boeing 747s and use the money to buy spare parts for other aircraft.AFP