NEW YORK - Investing remains risky in Saudi Arabia, Qatar and Kuwait, notably because the presence of US forces in the region makes these countries vulnerable to terrorist attacks, a security consulting firm said Wednesday.
Kroll Inc., a global risk consulting company, said it released a report examining business risk in the region in response to client concerns over stability in the region.
"Uncertainty in Iraq, increasing terrorist activity in Saudi Arabia and building antipathy towards the US all contribute to widespread security concerns," Kroll said.
Saudi Arabia "clearly presents the highest risk," the report noted.
"A rise in militant Islamist violence in Saudi Arabia poses a risk to investors and has a knock-on impact amongst other states," said the report.
"The upsurge in Islamic militancy has affected wider economic and political confidence; there is international uncertainty about the future of the country's political and social institutions; and relations with the US are subject to post-9/11 tension."
Qatar and Kuwait were second highest, even though Qatar is a current favorite with international investors and has tried to offset its small size and scant military with an American presence, Kroll said.
But due to questions over the long-term role of US forces and the country's proximity to Saudi Arabia and Iran, Qatar is exposed to "potential instability."
Kuwait's location meanwhile "exposes it to tensions in Iraq, Saudi Arabia and Iran," the report said.
Kroll said the situation is complex, because the presence of US forces helps improve security in some cases, but their departure could lead to greater vulnerabilities.
Bahrain, the United Arab Emirates and Oman are all in the lowest tier of risk, according to the report.
Oman benefits from being geographically distant from the biggest risk areas, the report noted. The UAE has larger more modernized security forces and a diversified economy.
Bahrain, while exposed to events in Saudi Arabia and links to the United States, has a lower risk than its neighbors "because of its economic stability and investment infrastructure," according to the report.
"The Gulf states face a dilemma," said Andrew Marshall, head of Kroll's Middle East practice.
"They are investing heavily in business infrastructure to attract international investment because they need to ensure future economic and social stability. But bringing in investors means reducing risks. In the end, these problems will only be dealt with by re-examining their reliance on the US and clarifying their future political direction."
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