Mubadala, Saudi Fund deals on US radar for potential China angle

K Raveendran

The increasing engagement by Gulf countries with China is raising eyebrows in Washington, with reports suggesting indicating that Committee on Foreign Investment in the United States (CFIUS) is reviewing several multibillion-dollar deals entered into by Gulf sovereign wealth funds, particularly the UAE’s Mubadala and the Saudi Public Investment Fund.

Bloomberg reported the other day that officials in President Joe Biden’s cabinet are currently reviewing more than half a dozen acquisitions in this regard.

The review has been caused by concerns that critical technology, infrastructure and data that get to the UAE and other Gulf countries could potentially end up in the hands of Beijing, posing threats to US national security.

The contentious deals reportedly include Mubadala acquiring a stake in the Fortress Investment Group.

There has been no official reaction from the Gulf capitals to the reported review, although it is bound to create irritants in their ties with Washington. Saudi Arabia, under crown prince Mohammed bin Salman Al Saud, has not been particularly warm to President Joe Biden’s policies, despite the fact that the US plays a critical role in the national security of major Gulf powers.

There is disquiet in Washington over the emergence of China as an increasingly attractive investment destination for Gulf countries. Bloomberg quoted Global SWF to say that the value of acquisitions and investments by Gulf funds into China has climbed to $2.3 billion in 2023 from about $100 million last year. That coincides with Beijing’s push to bolster political ties in the region since President Xi Jinping’s December visit to Riyadh, it added.

According to the report, CFIUS has requested access to the internal books of several Gulf funds and the mangers of these funds are not happy to open up their full records to a foreign government, the people said.

CFIUS reviews have existed for decades. According to US government sources, it originally focused on the acquisition by foreign companies of US businesses directly or indirectly supplying the US Department of Defence, but, especially after the 9/11 terrorist attacks, the concept of national security – and therefore the types of transactions subject to review under the regime – was broadened by statute and in practice.

Its expansion in recent years has been fuelled by rapid advancements in technology, increasing digitalisation, increasingly globalised supply chains, and the appearance of China as a significant investor and technological competitor.

Most recently, concerns over domestic sourcing, infrastructure and capabilities have brought attention to national security risks inherent in the global supply chain in particular in areas deemed strategically important including semiconductor manufacturing and advanced packaging; large capacity batteries, like those for electric vehicles; critical minerals and materials; and pharmaceutical and advanced pharmaceutical ingredients (APIs).

via Mubadala, Saudi Fund deals on US radar for potential China angle Provided by SyndiGate Media Inc. (Syndigate.info).