Canadian Cabinet Discusses Arab Financial Threats

The Inner Cabinet, after meeting last night to discuss Arab threats to suspend all financial transactions with Canada, refused to disclose what if any decisions were taken. While lower echelon officials indicated that any Arab actions would have minimal effects on the Canadian economy, Industry Minister Robert de Cotret said that “Arab and Canadian business reaction warrant continued attention.”

He said any guess at the level of Arab invest- ment in Canada “would be a real stab in the dork but I will be very surprised if it amounted to $1 billion.” That was the figure contained in a report from Bahrain, Abu Dahbi on Tuesday announcing that the Arab Monetary Fund, and Arab League agency has halted all financial dealings with Canada and would withdraw Arab funds from Canadian banks because of the government’s stated intention to transfer its embassy in Israel from Tel Aviv to Jerusalem.

A Finance Department official said today that little was known here about the Arab Monetary fund but he thought any investments in Canada “would be relatively small.” Dr. Michel Kelly, director of the Finance Department’s international division, also thought that “the direct implication of the announcement by the AMF would appear to be minimal.”

But Roland Frazee, president of the Royal Bank of Canada, the country’s largest bank, said today that he was “worried about what can happen to major contracts Canadian companies have in Arab countries for housing, building and communications projects. We cannot afford to jeopardize that business.” Although Frazee told the Jewish Telegraphic Agency on Tuesday that “I have never heard of the Arab Monetary fund,” his bank apparently does a significant amount of business with Arab countries.

Before last night’s Cabinet meeting, Immigration Minister Ron Attey assured Canadians that “If the Arabs want Canadian products they will buy them. The Arabs bank is worse than their bite,” he said.