Mideast Money Pinch

JIDDA, Saudi Arabia -- The economic rift that opened between the Middle East and U.S. after the Sept. 11, 2001, attacks has widened into a chasm. While the U.S. was once the first stop for goods and services, Middle Easterners are turning to what many see as more Arab-friendly environments in Europe and Asia.

Attention in recent months has focused on Arab investment, after security concerns derailed the acquisition of U.S. port operations by an Arab company, Dubai Ports World. But a decline in Middle Eastern spending has also hit service sectors such as tourism, education and health care, triggering business-strategy shifts in such places as Cleveland and Rochester, Minn.

A hallmark of past oil booms was that money America spends on oil and gas gets cycled back into the U.S. economy as investment and spending on U.S. goods and services. Middle Eastern investors and consumers aren't completely ignoring the U.S. this time: They are major buyers of U.S. government bonds, and have purchased U.S. hotels, such as New York's Essex House, and real estate in the South.

But America's allure appears to be waning, and travel to the U.S. from the Mideast has dropped. U.S. visits by Saudi Arabians, for example, fell to 18,573 in 2004, the last year for which statistics are available, from 72,891 in 1999, Commerce Department figures show. That represents an especially pronounced drop in tourist dollars because Saudi visitors spend three times as much per person as any other group of U.S. tourists, $9,368 per trip to the U.S., the Commerce Department says.

Visa hassles have affected export businesses, too, Arabs and Americans say, by placing a wall between U.S. companies and prospective clients who may turn to countries to which travel is easier.

Arab tourists, deterred in part by U.S. visa hassles, are flocking to other burgeoning tourist destinations close to home, such as Dubai in the United Arab Emirates, which offers resort hotels, theme parks and shopping malls patterned on U.S.-style attractions.

Jay Rasulo, president of Walt Disney Parks and Resorts, has been outspoken about how the visa process deters tourists. Mr. Rasulo told a recent travel-industry gathering that U.S. share of international travel has dropped by double digits since 2000, to its all-time low, dropping by "about $20 billion a year."

The Department of Homeland Security said it does its best to process visas quickly. "We definitely want to make it easier for those who are trusted to enter the U.S. to come in the time they want," said department spokeswoman Joanna Gonzalez. "But if decreasing wait time means softening security, then [the wait time] is not our problem," she said.

In the health-care industry, immediately after Sept. 11, the number of Arab patients at high-end medical clinics such as the Cleveland Clinic and the Mayo Clinic immediately fell by 20% to 50%, say industry officials.

The fallout hit more than the clinics. High-profile Arab patients often came to the U.S. for lengthy treatments along with large families and staffs. When former U.A.E. President Sheikh Zayed bin Sultan Al Nahyan traveled to Cleveland in 2000 for a kidney transplant, he and his entourage of hundreds stayed for four months. All needed to be fed, transported and housed during that time.

The Mayo Clinic in Rochester, where the late King Hussein of Jordan received treatment in the late 1990s, has worked hard to draw patients. The clinic started flying doctors to the Mideast after Sept. 11 and recently it opened a cardiovascular clinic in Dubai. The Dubai facility coordinates travel to the U.S. for further treatment, if necessary.

As for education, U.S. colleges and universities, once highly desirable destinations for wealthy Arabs, have seen a steep drop in Middle Eastern students, losing as much as $43 million a year. The consistently steepest decline comes from Saudi Arabia, which sent 14% fewer students to the U.S. last year, according to the International Institute of Education. Enrollment by students from Muslim nations in general has fallen steeply as well, evidence that Middle Easterners aren't alone in finding America a more forbidding destination since Sept. 11.

Robert Gates, a former director of the Central Intelligence Agency who is now president of Texas A&M University, has been a forceful voice for improving the visa process. Mr. Gates's worry extends beyond monetary losses. "In the last half century allowing students from other countries to study here has been the most positive thing America has done to win friends from around the world," he said.

But the U.S. consulate in Jidda has been closed since November due to security concerns and another consulate in Dammam, Saudi Arabia, hasn't been open since 1999. This has meant applicants have to travel long distances to Riyadh, where the workload has kept applicants waiting up to several months for appointments.

Even among students who go to the U.S., the experience is often mixed these days. Saeed Abdullah, a Ph.D student from the U.A.E. studying at Texas A&M, says that before Sept. 11, his friends used to prolong their studies -- taking seven years to complete four-year degrees. "America was about the social life as well," he says. Now they often try to squeeze the four years into three. "Now we come for a mission -- to work as hard as we can to get our degrees as fast as we can and then leave."

Students point to new options. In Qatar, for example, the state-supported Qatar Foundation has funded bringing U.S. universities -- including Texas A&M, Georgetown University's School of Foreign Service and Cornell Medical School -- to its capital, Doha. And Saudi Arabia's minister of higher education recently unveiled a "look east" strategy for education. An increasing number of students, he said, will be sent to China, India, Malaysia, Singapore and South Korea.