The Justice against Sponsors of Terrorism Act (JASTA) has been internationally rejected due to its ambiguous motives, starting from the European Union to the Gulf countries, and by Russia and to the rest of the world. Even some US institutions have criticised it.

Although the media has focused on Saudi Arabia as the target of the Act, its provisions may apply on any country with no exception. However, the essential point here is that the measure represents a blatant violation to the international law and sovereignty of countries. It comes from a country that claims to be the leader of the world and the one who maintains the respect and application of international law.

Beside the legal and political consequences, the law could lead to grave economic impacts that have not been discussed so far.

It is widely known that confidence is the most essential force driving investment, but the new law destabilises the confidence that Washington enjoys among global investors as evidenced by the volume of the overseas commitments in US treasuries ($6.25 trillion).

These investments, however, might be confiscated under any pretext to be made by US lawmakers, which is a serious issue that could result in creating a state of extreme uncertainty in the US financial marketplace and making it an untrustworthy recipient of investments in spite of its high credit rating.

Over recent years, Washington has seized foreign investments and imposed exaggerated fines for unconvincing reasons. UK’s BP, for example, was fined $20 billion two years ago on account of an oil spill in the Gulf of Mexico and now the talk is about fining Deutsche Bank $14 billion because for alleged misconduct in selling financial instruments. These have sparked a collapse of the bank’s share price.

Many more examples can be given in this regard and that reflects the US’s dire need for funds to cover its soaring public debt that is at 104.5 per cent to its gross domestic product (GDP). This is indicative of a very critical financial situation that could yet foreshadow a new global crisis, which is why Washington is trying desperately to avoid bankruptcy.

Meanwhile, any application of the act might push some countries to punish Washington in return and confiscate its interests, forcing the global financial system to drift into a state of permanent chaos with unpredictable consequences.

As for other countries investing in the US, the situation looks ever more complicated. The Saudi private and public investments in the US, for instance, range from $750 billion to $1 trillion and combined with other Gulf investments, the volume will be double. Of this, $230 billion are invested in US treasuries. Yet, according to the proposed law, these investments could be frozen and the same applies to Chinese, Indian, Russian and European and any other country’s investments.

Although it appears that the Gulf investments are the one targeted especially Saudi, the provisions of the law could affect other countries when necessary as US legislators are ready to tailor laws to blackmail.

It is true the US is the world’s first economic power, but prudent thinking indicates that the global balance of power is now tilting and the US cannot face the entire world alone.

The Gulf investments in the US are targeted without any legal or logical justification. It forgets that the GCC states are suffering from terrorism and are the best equipped to fight against it. They are the only one who fund the United Nations Counter-Terrorism Programme.

In fact, accusing them is no more than a ridiculous play, taking into account that US congressional committees had exonerated these countries from such preposterous accusations.

There is another way Washington can address its financial crisis instead of confiscating others’ money. It is through boosting confidence to attract more investments and overcome its structural economic difficulties. But keeping on the same track will compound its — and others’ — problems and will expose the global economy to serious risks.

Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.