Petrodollar flush

6 October 2007

The Gulf states are competing for prestigious Western investments, say Jon Ashworth and Allister Heath

As if all this were not ambitious enough, the petro-sheiks have an even greater plan: following the lead of China’s state investment company, which took a 10% stake in Blackstone, the private equity giant, they are preparing to snap up stakes in the world’s most powerful buyout giants. Mubadala Development, a vehicle controlled by the Abu Dhabi government, has just splashed out $1.35bn for a stake in the management arm of Carlyle. The next one to succumb is likely to be Kohlberg Kravis Roberts (KKR), which is preparing for a float.

British TV viewers and sports fans already have a taste of the Gulf rivalry courtesy of Emirates and Etihad, with their multi-million pound marketing and promotions budgets, to Qatar Airways, which blankets Sky News with commercials. Emirates, the elder of the trio, is only 22 years old; Qatar was launched in 1994; Etihad first flew in July 2003.

Already, they punch far above their weight; their respective governments, fuelled by petrodollars and economic self-confidence, are attacking overseas targets with similar aggression. There will be many more deals to come, as the Gulf states finally embrace capitalism, hopefully showing the rest of the Middle East that trade is better than war and hate. The Arabian falcon is in flight; its prey is scattering in all directions.