The Gulf Emerging Economies as New Global Investors

Gulf economies have become increasingly important to the international financial system, fueled largely by growing investements of Arab sovereign wealth funds in European financial markets. These investments have raised concerns in the West at the same time that the the financial crisis have left many markets in desperate need for fresh investment.

Sven Beherendt, Associate Scholar at the Carnegie Middle East Center, and Ibrahim Saif, Resident Scholar at the Carnegie Middle East Center, led a series of discussions on the topic throughout Europe.

• Saif gave his insights on the problems facing the Gulf economies - unemployment; economic, geographic and political disparities between states; unequal distribution of GDP; and the lack of opportunity for political reform.
• In London, Behrendt, Alastair Newton and Nicolas Veron gave a detailed analysis on the capacity of sovereign wealth funds to contribute to the global financial markets and the need for a clear global policy explaining their role.
• Consensus was reached that there is a need to address the volatility of the Gulf economies which stems from their reliance on the price of oil. This will need to take the form of both political and economic reform.
• Behrendt observed that sovereign wealth funds would not contribute to solving the financial crisis unless they are provided with business opportunities.