Gulf SWFs Surge, Western Nations Voice Security Concerns

The article, published in Spring 2008 by Nimrod Raphaeli and Bianca Gersten, details how burgeoning oil prices, rising from $27.69 per barrel in 2003 to $79 in 2006, generated enormous liquidity for GCC states. This led to a decrease in government debt to 16% of GDP by 2007 and a rise in foreign exchange reserves to almost $100 billion.

Gulf SWFs, including the Abu Dhabi Investment Authority ($875 billion) and Kuwait Investment Authority ($213 billion), shifted investments from traditional assets and slow-growth economies to alternative investments, private equities, real estate, and rapidly-growing economies like China and India. Notable deals included Dubai Istithmar's $942.3 million acquisition of Barneys and Dubai World's $5 billion commitment to MGM Mirage.

Western nations, including the U.S., expressed worries about foreign governments acquiring strategic assets, as exemplified by the rejection of Dubai Ports World's bid for U.S. port operations and concerns over Dubai's offers for Auckland International Airport and OMX.