![]() Today, the Egyptian currency is again falling in value and inflation is soaring as authorities try to keep the economy afloat by securing loans from the International Monetary Fund (IMF). ![]() To Gulf states’ dismay, the events that followed briefly gave rise to the Muslim Brotherhood, an Islamist political group that is viewed with suspicion in Saudi Arabia and the UAE and is now considered a terrorist organization by both.Įgypt’s unrest more than a decade ago was sparked partly by the nation’s economic woes. A North African state with pinching economic troubles, Egypt erupted in nationwide protests in 2011, leading to the fall of longtime ruler Hosni Mubarak. One of the key regional investment destinations for both Abu Dhabi and Riyadh has been Egypt. The Gulf state manages around $1.3 trillion through its four funds, said Global SWF. The UAE’s wealth funds in particular are at the forefront of the industry. Last year was generally good for state-owned investors around the world, according to Global SWF’s 2022 annual report, with the size of the sovereign wealth fund industry expanding by 6% in 2021 and for the first time in history exceeding the $10 trillion mark. In a statement, PIF said that it was pursuing a “strategy of seeking new investment opportunities in the MENA region.” The investments are also meant to “diversify Saudi Arabia’s sources of revenue,” it added. PIF’s announcement came on the second day of the Future Investment Initiative in Riyadh. “The countries that projected power in the Middle East, including Saudi Arabia and the UAE – with the partial exception of Iran – found themselves overextended and to some extent exhausted after a decade of confrontation,” he told CNN. “This is part of the soft and sticky power aspect of the strategic and tactical move away from a decade of confrontation and conflict initiated by the Arab Spring,” said Hussein Ibish, a senior resident scholar at the Arab Gulf States Institute in Washington. Why the current oil boom for Arab states may be their last Belenkaya Marianna/SIPAPRE/Sipa/Associated Press/File The Saudi Aramco oil refinery at the Abqaiq and Khurais oil fields in Saudi Arabia. Others are still wedged in the economic and political chaos left behind. Some of these countries experienced political upheaval when the 2011 Arab Spring uprisings rocked the region more than a decade ago. Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman, last week announced that the nation’s wealth fund, the Public Investment Fund (PIF), is establishing five regional companies worth $24 billion across the Middle East.įrom infrastructure and real estate development to telecoms and technology, PIF’s new investments target Bahrain, Iraq, Oman, Jordan, Sudan and Egypt. “The current structure is certainly an evolution from days where hard power was viewed as more productive,” said Ayham Kamel, head of Eurasia Group’s Middle East and North Africa research team. They have also significantly reduced their military activity in Yemen, where they went to war seven years ago.Īnalysts say this is a new approach to ensure regional stability, mainly by bolstering key economies across the Middle East through investments that are closely tied to their funders. Both have mended ties with regional foes Turkey and Qatar, and both have reached out to Iran. “Sovereign wealth funds can be used as foreign policy tools, a sort of soft power.”Īfter almost a decade of a combative regional policy, Saudi Arabia and the UAE are moving towards a less confrontational approach. “Money talks,” Michael Maduell, president of the Sovereign Wealth Fund Institute in Las Vegas, told CNN. Middle Eastern energy exporters, including Gulf countries, are expected to see a windfall of around $1 trillion dollars over the next four years on the back of this year’s oil boom, said the International Monetary Fund (IMF) last week. Saudi Arabia and the United Arab Emirates – both of which are generating massive returns from this year’s oil price hikes – are taking the lead with such investments, entrenching themselves in countries that have faced unrest in part because of economic distress. At the heart of this diplomatic initiative are sovereign wealth funds, which are working to secure regional stability through billions of dollars’ worth of investments. The monarchies are now doubling down on economic cooperation. Big Gulf Arab oil states are using the newfound riches they’ve reaped as a result of the Ukraine war to build economic bridges with their poorer neighbors, some of whom they once considered adversaries.
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