Flush with Oil-Exporting Revenues, Dubai Looks for Overseas Investment
As Dubai Ports World (DP World) prepared to take over the Peninsular and Oriental Steam Navigation Company of Great Britain (P&O) on Thursday, the United Arab Emirate’s (UAE) economy minister, Sheikha Lubna al-Qassimi, told Reuters in an interview that the furor in the United States about the purchase would not deter the Emirates from further investment in the US. She cautioned, however, that if commercial deals in the US “are prolonged by interference of a political nature. . . it may encourage many countries in terms of going into investments in other places.” Dubai is one of the seven emirates in the federation.
Unlike most countries in the Middle East, which have made few investments in publicly held assets in the United States in recent years, according to a report in the New York Times, companies from Dubai, a leading commercial and financial center in the region have been making high-profile purchases. Jumerirah, a hotel group, recently bought the Essex House in New York City, and Dubai International Capital, has acquired a 2 percent stake in DaimlerChrylser. Dubai International Capital is currently seeking approval to buy a British company with plants in Georgia and Connecticut that make precision parts used in engines for military aircraft and tanks, the Times reports. Most investment in the United States from the Middle East has been in privately held real estate, or in oil refining and financial services.
The UAE has a trade surplus with the US, Fariborz Ghadar, director of Penn State’s Center for Global Business Studies said, according to newhousenews.com. “They buy $6 billion more from us than we buy from them. They are by far one of the most liberal countries in the region; they are a big logistical center and they want to be a major financial center.”
The UAE is a major purchaser of American aerospace products, mainly F-16 fighter planes built by Lockheed Martin, according to asiantribune.com. “The UAE arms market is definitely important to the United States,” says Tom Baranauskas, a Middle East analyst at Forecast International, a leading provider of defense market intelligence. But the UAE has also purchased French Mirage fighters and British Aerospace Hawks Baranauskas told asiantribune.com. “If I had to hazard a guess on the potential impact of the current imbroglio, there will be increased interest on the part of the UAE military to move to further arms source diversification.”
The United States and the UAE are currently engaged in talks on a free trade agreement, due to resume March 13. Sheikha Lubna told Reuters that the controversy over DP World would not affect the outcome of these talks and that the trade agreement could be signed by summer.
In Australia where DP World will be taking over management of 80 percent of the nation’s ports from P&O Company, the deal has aroused little interest, abc.net.au reports. Stephen Skinner, a commentator for ABC, mused that “The sun will set on one of the last vestiges of the British Empire tomorrow if, as expected, the deal to sell the P&O company is finalized in London.”