Banner Left

Ports row gives petrodollar investors jitters

Ports row gives petrodollar investors jitters

DUBAI – The controversy over a Dubai company’s bid to control key US ports has reinforced a perception in the Middle East that investments in the United States can be politically risky for Arabs.

Wealthy Gulf Arab retail investors are likely to be put off by the furore US lawmakers have kicked up over the deal although largely government-channelled petrodollar flows are unlikely to change for the moment, analysts say. But state-backed investors have grown more sophisticated since the last oil boom and are already diversifying portfolios that are an important source of funding for the US current account deficit.They are likely to factor more political risk into any future high-profile US investments.Gulf Arab cash flows to the US are becoming increasingly important to the global economy.Michael Metcalfe, head of global macro strategy at London’s State Street Global Markets, says surpluses in oil-producing countries are fast catching up with those of the booming Asian economies, thanks to surging oil prices.Ever since the Sept.11 attacks on the United States, investors in the world’s biggest oil exporting region have feared their assets in the West would be targeted for security reasons.The backlash against the deal that gives government-owned Dubai Ports World control over six US ports is seen in the region as a sign that some of those fears are being realised.Credit Suisse estimates Gulf funds available for investment in foreign assets would increase by about US$130 billion a year until 2007 – about 16 per cent of the external funding needed to cover the US current account deficit.A lot of that money is channelled through central banks and state bodies such as the Kuwait Investment Authority or the Mubadala Development Company in the United Arab Emirates, which reveal virtually nothing about their investment strategies.- Nampa-ReutersBut state-backed investors have grown more sophisticated since the last oil boom and are already diversifying portfolios that are an important source of funding for the US current account deficit.They are likely to factor more political risk into any future high-profile US investments.Gulf Arab cash flows to the US are becoming increasingly important to the global economy.Michael Metcalfe, head of global macro strategy at London’s State Street Global Markets, says surpluses in oil-producing countries are fast catching up with those of the booming Asian economies, thanks to surging oil prices.Ever since the Sept.11 attacks on the United States, investors in the world’s biggest oil exporting region have feared their assets in the West would be targeted for security reasons.The backlash against the deal that gives government-owned Dubai Ports World control over six US ports is seen in the region as a sign that some of those fears are being realised.Credit Suisse estimates Gulf funds available for investment in foreign assets would increase by about US$130 billion a year until 2007 – about 16 per cent of the external funding needed to cover the US current account deficit.A lot of that money is channelled through central banks and state bodies such as the Kuwait Investment Authority or the Mubadala Development Company in the United Arab Emirates, which reveal virtually nothing about their investment strategies.- Nampa-Reuters

Stay informed with The Namibian – your source for credible journalism. Get in-depth reporting and opinions for only N$85 a month. Invest in journalism, invest in democracy –
Subscribe Now!

Latest News