Net Foreign Assets and International Adjustment: The United States, Japan, and Germany

Petitioner, the Libyan National Oil Corp. (NOC), filed the petition to confirm an arbitral award rendered in Paris against Libyan Sun Oil Co. (LSOC), a Delaware corporation. The petition was based on the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention). LSOC opposed the petition on the grounds that NOC was not entitled to access to U.S. courts because of the state of relations between the United States and Libya and that the Libyan Sanctions Regulations prevented NOC from maintaining its claim in the absence of a license from the Treasury Department’s Office of Foreign Assets Control. In addition, LSOC argued that confirmation of the award should be denied under various provisions of the Convention, including the “public policy” defense embodied in Article V(2)(b). The district court (per Latchum, J.) held that NOC had standing to bring the petitión and that the defenses set forth in the Convention were inapplicable. The award was thus confirmed.

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Why did the United States Evolve from the Largest International Creditor in 1980 to the Largest International Debtor in 1990?

Atlantic Economic Journal ◽

10.1007/s11293-020-09695-x ◽

2020 ◽

Vol 48 (4) ◽

pp. 405-411

Author(s):

Robert Aliber

Keyword(s):

Current Account ◽

Current Account Deficit ◽

The United States ◽

Household Wealth ◽

International Investment ◽

Domestic Saving ◽

Net Foreign Assets ◽

International Investment Position ◽

The U.S ◽

Foreign Assets

AbstractRemarkable transformation of the U.S. international investment position occurred over the last 40 years. U.S. net foreign assets were larger than combined net foreign assets of all other creditors. By 1990, foreign-owned U.S. securities and real assets were larger than U.S. owned foreign securities and assets. This change occurred without the U.S. Treasury borrowing in foreign currency and few U.S. firms borrowing, reflecting a surge in foreign purchases of U.S. securities. Inferences from the currency composition of portfolio changes of those who acquired U.S. dollar securities suggest that foreign savers took the initiative on cross-border investment inflows. The U.S. could not have developed a larger capital account surplus after 1980 unless a similar increase in the U.S. current account deficit occurred. The primary factor that led to the U.S. current account deficit increase was the surge in U.S. stocks and other asset prices, resulting in a U.S. household wealth surge and consumption boom. The foreign saving inflow displaced domestic saving. In addition, an increase in the price of the U.S. dollar led to expenditure-switching from U.S. goods to increasingly less expensive foreign goods. When investor demand for U.S. dollar securities declined, the U.S. dollar price fell in 1992, 2002, and 2020 and the price of U.S. dollar securities declined. The paper discusses the source of the change in the U.S. international investment position, the flow of foreign saving to the U.S., cyclical variability in the foreign saving flow to the U.S., and the potential impact of an adjustable parity arrangement.

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