Net foreign assets of GCC states reaching as high as US dollar 1.9tr
* By Dr Jasim Ali, Special to Gulf News
* Published: 12:53 August 25, 2012
Sovereign wealth funds (SWFs) of the six-nation Gulf Cooperation
Council (GCC) states are substantial enough on the one hand
and have positive implications for regional and global economies
on the other.
In other words, benefits of these SWFs are not confined to
GCC economies, as these investments in the form of
deposits, own ownership of securities issued by authorities
in the US and others as well as investments are all
over the world.
By one account, combined value of various SWFs of GCC
authorities surpassed US dollar 1.7 trillion at the start of
Certainly, this is a staggering figure by virtue of being some
dollar 600 billion above the monetary value of gross domestic
product (GDP) of GCC states put together.
The UAE in general and Abu Dhabi in particular is noted for
amassing a substantial amount of assets through its SWF.
According to the Sovereign Wealth Fund Institute, which tracks
SWFs, Abu Dhabi Investment Authority (ADIA) is the richest
of its kind in the world.
Latest statistics and rankings released by the institute put
ADIA's assets at an exceptional dollar 627 billion.
Interestingly enough, the Government Pension Fund
of Norway follows suit with assets of dollar 611 billion.
Still, Saudi Arabia's Sama Foreign Holdings is ranked
second regionally and fourth internationally with assets
of dollar 533 billion.
Kuwait provides an example of a country putting a part
of its SWF to use in 1990 in order to finance liberation war.
In fact, the country's authorities drew on the reserves to
provide financial support to their citizens whilst
being abroad during the occupation period.
Yet, with nearly dollar 300 billion in reserves, Kuwait
Investment Authority (KIA) ranks number six worldwide
in terms of amount of SWF.
Launched in 1953, KIA is the oldest SWF of its kind in the
In many respects, GCC economies practically redistribute
revenues generated from petroleum sources via their SWFs.
Suffice to refer to the ever-growing investments made by
GCC member-state of Qatar nowadays.
These investments cover real estate, hospitality and luxury
goods amongst others.
Of all GCC countries, Qatar stands out of placing funds in
numerous sectors and industries and across the world.
It emerged recently that Qatari authorities opted depositing
a notable dollar 2 billion in Egyptian banks in
order to shore up credit support for Egypt's economy.
Also, Qatar is noted for making public announcements
of its investments reflecting a conscious state policy.
Also, GCC states have proven their willingness to use their SWFs to
shoulder their international responsibility during critical times.
Reference is made to GCC's contribution of a special fund
designated by IMF in the aftermath of the global financial
crisis of 2008.
It is believed that GCC states have made generous contribution
to the fund deemed essential to provide assistance
countries via credit in soft conditions.
Unsurprisingly, revenues generated from the numerous SWFs help
achieving a key strategic goal for GCC economies, namely that of
diversifying away from oil.
To be sure, the petroleum sector, which includes all activities
related to oil and gas, contribute about three
quarters of exports, two thirds of treasury income and one third of
GDP within GCC economies on average. However, oil dependency
could only be worse but for all the positive matters relating to
SWFs, in turn helping bringing in other sources of income.
What's more, the Institute of International Finance or IIF projects
net foreign assets of GCC states reaching as high as dollar 1.9 trillion
by end-2012 and for the first time ever crossing the dollar 2 trillion
mark in 2013. Net foreign assets are total assets minus liabilities.
The writer is a Member of Parliament in Bahrain.
Amounts at stake are considerable.
What do we do to attract part of these funds to France
in high tech, defense, agriculture, industry, service and
What is French and EU approach to improve mutual
cooperation with these funds and create wealth, instead
of depression and excess of regulation in this country?