This city in the UAE sits on the third largest oil reserve in the world. It has a native population of just 420,000 people so there's money to go around and then some. This hotel is rumored to be the most expensive ever built. There's a saying that everything here that looks like gold is gold. This visitor is impressed. The money used to build this hotel is also being used to bail out US banks hit hard by the subprime mortgage crisis. Last month, the Abu Dhabi Investment Authority put $5 million dollars into CitiGroup. That's chump change for the state owned investment authority, ranked as the largest sovereign wealth fund in the world. Four of the such 11 are owned by Gulf countries. This bank authority says the oil-rich countries are using huge cash windfalls from high oil prices to buy up assets on the US market. Is this really anything new? The CitiGroup purchase is just a high profile example of a slew of purchases in the US over the last few years. The Gulf Country asset funds currently own half a trillion dollars in US assets and recent studies say the Gulf rivals China as an economic superpower. The Gulf's presence on the global stage is here to say, says this economist. But what does this mean for countries on the receiving end of the Gulf's finances? Critics point to foreign countries owning assets in the US, especially considering the lack of transparency involved in these transactions. This economist wonders about big investments from non-democratic investors in a volatile area of the world. And there are national security concerns as well. In 2005, Congress worried about having Arabs running port facilities in the US. this economist says national security is the least of his concerns. For now the sovereign wealth funds from the Gulf are trying to keep a low profile, and the Abu Dhabi fund never buys more than 5% of a company.
GlobalPost.com is now PRI.org
GlobalPost and PRI have joined forces to expand in-depth global news reporting to create a more informed, connected and empathetic world.Learn why See GlobalPost stories Dismiss