This article in the New York Times is interesting:
Flush with petrodollars, oil-producing countries have embarked on a global shopping spree. With a bold outlay of $7.5 billion, the Abu Dhabi Investment Authority is about to become one of the largest shareholders in Citigroup.
The Dubai stock exchange, meanwhile, is negotiating for 20 percent of a newly merged company that includes Nasdaq and the operator of stock markets in the Nordic region. Qatar, like Dubai a sheikdom in the Persian Gulf, might compete in that deal. In late October, Dubai, which has little oil but is part of the regionâ€™s energy economy, bought part of Och-Ziff Capital Management, a hedge fund in New York. Abu Dhabi this month invested in Advanced Micro Devices, the chip maker, and in September bought into the Carlyle Group, a private equity giant.
â€œThe investments are diversifying outside the United States, though the U.S. still has the bulk of it,â€ said Diana Farrell, director of the McKinsey Global Institute, a research arm of the McKinsey consulting firm, which calculated in October that petrodollar investments reached $3.4 trillion to $3.8 trillion at the end of 2006.
â€œEurope is a prime target,â€ she added, â€œbut at least 25 percent of foreign investments from the Persian Gulf are in Asia, the Middle East and North Africa.â€ Though oil-producing countries have been looking at investments in the West since the 1970s, their strategies back then were largely confined to safe assets with a low return, like United States Treasury debt.
Coincidentally, I have an article today on Comment is free about the growing economic power of Dubai and how it may impact the Middle East. I just hope these people would invest the money in building local employment than buying American assets. It would be good for all of us.
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Filed in: Current affairs,Economics,Middle East