ArabianBusiness.com - Middle East Business News
Saturday, 21 November 2009 17:03 UAE time

YOUR DIRECTORY /

| Share |

Abu Dhabi moves to soothe US fund fears

by This email address is being protected from spam bots, you need Javascript enabled to view it  on Tuesday, 18 March 2008
COMMERCIAL PLEDGE: Abu Dhabi has tried to soothe US concern, pledging it will not use its wealth funds for political ends. (Getty Images)

Abu Dhabi has sought to quell the West’s growing concerns over the role of sovereign wealth funds (SWF) in international finance with a letter to the US Treasury pledging not to use its money for political ends.

The letter, dated March 12 and addressed to US Treasury Secretary Hank Paulson, outlines nine principals for Abu Dhabi’s investments, according to a report published Monday by the Wall Street Journal.

It states the intentions of Abu Dhabi funds “are similar to pension funds, combining a strong focus on long-term capital returns”, and seeks to calm fears that foreign governments harbour political motivations when investing in the US, the paper said.

Story continues below
advertisement

Abu Dhabi funds, according to the letter, seek to make “independent, commercially driven investment decisions” and will follow “all the laws, regulations and rules” of the country the fund invests in.

Abu Dhabi is home to the Abu Dhabi Investment Authority (ADIA), one of the world's largest sovereign wealth funds that has invested in major US corporations in the last year, including Citigroup, the largest US bank by assets.

SWFs, now believed to have around $2.9 trillion under management, have played an increasingly large role in providing emergency cash for stricken lenders, particularly in the US, as banks there struggle under the weight of the subprime mortgage crisis and the ensuing credit crunch.

Over the past four months, funds from Kuwait, Abu Dhabi, Singapore and South Korea have bought stakes in US banks Citigroup and Merrill Lynch, as well as Swiss lender UBS.

But the heightened activity of SWFs has sparked growing fears in the West that foreign governments are using their record budget surpluses as a tool for political ends to move the production of US companies offshore.

Concerns surrounding the motives of SWFs prompted US president George W. Bush to sign an executive order in January designed to tighten controls over the inflow of foreign direct investment.

The order requires SWFs to pass a more stringent, second review phase before foreign investment can be made in areas deemed sensitive to US national security such as energy and critical infrastructure.

Earlier this month, the world’s richest man, billionaire investor Warren Buffett, lashed out at the US government, blaming the administration’s trade policy for the rise of SWFs and rebuked critics’ claims that the funds are driven by political rather than financial motives.

In Buffett’s annual letter to shareholders of Berhshire Hathaway, the company of which he is chairman and CEO, he said the growing influence of SWFs “is our doing, not some nefarious plot by foreign governments”.

| Share |


READERS' COMMENTS

Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
Bushed
Posted by T Crowe Semler, Kuwait City, Kuwait on Tuesday 18 March 2008 at 19:57 UAE time

The Bush Regime has successfully "bushed" itself. They have now driven themselves into a hyper-paranoid mental state. The Bush regime's propaganda brought the majority of USA citizens into a state of paranoid fear which enabled them to push their Military Industry Corporation War and attack Iraq. This Regime is totally incompident. They are a kick-back from the "Cold War" looking to create a new enemy. However, their "dysfunctional paraniod collective ego" has bought into and believes their own propaganda machine...Buffett said,"the growing influence of SWFs “is our doing, not some nefarious plot by foreign governments”.
The Bush Regime will go down in history as the worst presidency in the history of the USA...and one of the worst leaders in the history of the world.

Click here to post a comment


Add your Comment
All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *
(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments


Please click post only once - your comment will not be published immediately.


MORE FROM ARABIANBUSINESS.COM

SHARE PRICE CHECK

RELATED LINKS

  1. Abu Dhabi Investment Authority»
  2. Citigroup Incorporation»
  3. Merrill Lynch»
  4. Wall Street Journal»

 EMAIL ALERTS

  1. Abu Dhabi Investment Authority

  2. Citigroup Incorporation

  3. Merrill Lynch

  4. Wall Street Journal

  5. Politics & Economics


CURRENCY CONVERTOR

Tell us your story

READER COMMENTS

  1. Somali pirates free UAE-owned cargo ship 02
    21 Nov ' 09 at 07:58
    In the old days pirate ships were blown out of the water as soon as spotted.Now they have to wait until they attack a ship and then...   More  »
  2. UAE announces Eid and National Day holidays 02
    21 Nov ' 09 at 10:22
    Is it any wonder that Emiratis are reluctant to work in the private sector? One day extra and no request for early payment of salaries.   More  »
  3. RTA to lease out last batch of retail outlets available on Red Line 01
    21 Nov ' 09 at 14:10
    What happened of Last Minute and their 28 outlets - one on each station?   More  »

Read all user comments >

Gitex 2009

MORE FROM ARABIANBUSINESS.COM