Treasury Secretary W. Micheal Blumenthal yesterday pledged an all-out defense of the intergrity of the U.S. dollar to an audience of top-level Arab businessmen.
At the same time, he said the Carter administration is "counting" on them "to do their part" to keep the international economy on an even keel by continuing an oil price "freeze" at least through 1978. He also urged them not to shift out of their massive investments here, nor to change the basis for oil pricing from the dollar to some other unit of account.
The Arab businessmen, from 10 nations, are here to explore expanded trade opportunities as guests of the U.S. Arab Chamber of Commerce, Inc. They have already met in New York, and proceed from here to Houston, Chicago and Los Angeles.
But Blumenthal, although he laid out a program for U.S. would not change its anti-boycott laws, as had been suggested by leaders of the Arab delegation.
He expressed the hope that the U.S. and the Arab countries could "achieve an accommodation on the important issue of the Arab boycott of Israel."
Blumenthal ran through the administration's now familiar list of fundamental steps necessary to bolster the dollar, including energy and anti-inflation programs.
At the same time, he said the U.S. must be ever ready to intervence in the foreign exchange markets to counter disorder and curb speculation.
His commitment to defense of the dollar was the most vigorous and complete put forward by a high American official. It follows by two days a decision to sell gold at regular treasury auctions to help boost confidence in the dollar.
"A healthy dollar is vital to the world," Blumenthal told his Arab audience. "And we will continue to make significant efforts to preserve its intergrity. As recognition of our determination spreads, that the situation is improving, the markets will calm down."
He acknowledge the concern, expressed in the New York meeting ealier this week, that the oil producing nation's revenues had been cut by the reduction in the dollar's purchasing power. But against the Arab Spokesmen's estimate of a 20 per cent loss, Blumenthal said that the average dollar decline in the last six months had been only 7 percent, reversing a similar appreciation in the prior 24 months.
Blumenthal's plea for retention of Arab investments here was direct. He said the anti-inflation program "will help preserve the real value" of the Arab investments, and justify the confidence that the oil producing nations have shown in the U.S.
The Arab leaders have guessed that they own $45 to $65 billion worth of investments here, mostly in highly liquid securities. Blumenthal provided no specific figures on Arab investments, but estimated that 25 per cent of the gross surpluses of the Organization of Petroleum Exporting Countries has been invested here, and additional 13 per cent in U.S. banks abroad.
The sensitive boycott question had been brought up several times in the course of conversations the Arab leaders had had in New York and here with businessmen and government officials. The Arab leaders resent the American anti-boycott legislation, and hint broadly that it forces them to look for trading partners elsewhere. Privately, they blame the "Israeli lobby" for the U.S. anti-boycott approach.
But Blumenthal said bluntly that Israel is "another friendly country," and while the U.S. recognizes the legitimacy of the Arab boycott, it regrets it.