Thread: White House: U.S. Open to Gulf Investors

White House: U.S. Open to Gulf Investors

Tuesday, October 28, 2008 1:45 PM

A high-level Bush administration official told business leaders in the oil-rich Gulf Tuesday that the battered U.S. economy is open to more investment by the region's government-owned funds and other wealthy investors.

Speaking to officials and reporters at the Dubai International Financial Center, Deputy U.S. Treasury Secretary Robert Kimmitt said he is meeting with sovereign wealth funds, investment companies and other financial institutions in the region in an effort to promote the U.S. as an investment destination.

Kimmitt said that while he is not seeking specific commitments from Gulf leaders, he is aiming to emphasize that the U.S. is "open to investment."

"Neither the United States ... nor the rest of the world can afford to turn inward," he said. "Instead, we must rely on increased interaction with each other to help drive our economies forward."

Kimmitt's visit to the United Arab Emirates was his second stop after Saudi Arabia on a five-country tour in the region. He was scheduled to travel to Qatar later in the day before moving on to Kuwait and Iraq.

Kimmitt said many potential investors he has met in the region have been looking at possible deals in the U.S. over the past month. The question now is how soon they might invest.

"The decision of when, where to invest of course is a commercial decision," he said.

State-owned funds from the Gulf and elsewhere pumped tens of billions of dollars into ailing Western financial institutions such as Citigroup Inc. (C, Fortune 500) and Merrill Lynch & Co. (MER, Fortune 500) over the past year. But as the global financial crisis deepened, the funds largely backed away from putting more money into financial companies as the value of their existing stakes dwindled.

Raising capital

That could be changing. Swiss bank Credit Suisse Group said earlier this month it raised $8.75 billion in new capital, most of it from the Qatar Investment Authority, the tiny nation's sovereign wealth fund.

Meanwhile, Abu Dhabi's increasingly active Mubadala Development Co. has been building up investments in a range of nonfinancial sectors. It recently agreed to more than double its stake in chipmaker Advanced Micro Devices Inc. (AMD, Fortune 500) to 19.3%.

Deutsche Bank estimated last week that sovereign wealth funds around the world now control $3.6 trillion worth of assets. The bank predicted that number will grow by 15% per year, and reach nearly $10 trillion by 2015.

Gulf sovereign wealth funds have attracted considerable attention from U.S. lawmakers in recent years as their host states grew richer on the back of ballooning energy prices.

National security

Critics argue that the funds' lack of transparency is cause for concern, and some worry that the funds pose a threat to national security by giving foreign governments too great a stake in strategic U.S. companies.

Investors in the Gulf have tried to keep a low profile in the U.S. following a political firestorm that broke out in 2006 over the possibility that a Dubai-based company would operate some U.S. ports.

Kimmitt said "much has changed, and changed for the good," since the DP World ports controversy.

The U.S. has streamlined the approval process covering acquisitions by foreign investors, he said, and has formalized a policy that seeks to "resolve any concerns" rather than block deals outright.

Federal regulators are also rewriting policies with the aim at giving potential overseas investors more clarity about the approval process and about the types of deals that have raised security concerns, he said.

"We're going to treat (sovereign wealth funds) on a nondiscriminatory basis, as we would any investor coming to the United States to look for commercial opportunities," he said.

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In my opinion since P&O the target company stock price had gone up DP Worldwide should have sold down it's position to profit take instead of completely selling out. They could have allowed the control of the target company to remain in American hands while they obtained a free stake. That chauvinists from the United States which has major foreign holdings abroad would complain about foreign holdings in the United States was not good for the foreign holdings of investors from the United States.