The Gulf's Sovereign Wealth Funds (SWFs) are coming under pressure of a different sort due to the tumultuous events in the world's financial markets.
The success of the rescue of the US financial system probably depends as much on the central banks of China and the Middle East as on the US Congress and Federal Reserve. This is a defining moment in the world's economic history, with far reaching implication in terms of emerging geopolitical power. The growing importance of foreign cash represents the triumph of globalisation of financial services, with the lowering of barriers enabling capital to flow easily - but allowing financial panic to spread just as easily. The current imbalance between those countries in need of liquidity and those with surpluses, however, lays the seed of what the former US Treasury secretary, Larry Summers, crudely but correctly calls "the balance of financial terror". Mr Summers, who served under the former president Bill Clinton, was referring to the relationship between the US and its newer creditors such as China, the Middle East and Russia.
Foreign countries now own nearly a quarter - some US$2.6 trillion (Dh9.5tn) - of the total US debt. They also own more than $14tn in US assets - that is more than the total US national output. This is now a top concern in Washington, but one which cuts both ways as the US does not want to drive away the geese laying the golden eggs. A big reason the Fed and Treasury stepped in to rescue the mortgage giants Fannie Mae and Freddie Mac was to reassure China, which holds roughly $1tn in US debt, that US securities were safe.
History can be cruel indeed for financial superpowers. Just 10 years after the US oversaw the financial rescue of Asian nations, the country now risks becoming the world's largest subprime borrower. This change of fortune has been hard to swallow politically.
And what of the foreign creditors? The US, despite current woes, is still the world's sole military superpower, and the US currency is still dominant. The latter is important even if foreign holdings of US debt grow, as is likely. Foreign governments did not fail to notice that despite wrangling between Congress and the administration, a bill was finally passed to cover all American financial institutions in a uniform manner, while financial chaos in Europe was partly due to the go-it-alone decisions of many sovereign states, with little initial co-ordination. This makes the euro zone still a secondary financial superpower to the US.
Even so, foreign lenders have a great deal of sway. If they were to dump US government debt - or be unwilling to buy more - the interest rates needed to attract buyers of Treasuries would soar. The already fragile US economy would absorb yet another hit. The Chinese, and others in the Gulf, have voiced growing dismay about the outlook for the dollar. The introduction of an additional $700 billion in debt might drive the currency's value down further, at least in the short term, but passing that emergency measure was a bitter pill that had to be swallowed as every state faced a financial doomsday meltdown scenario if they did not pull together. The day of reckoning had to be postponed for now, but it will be a long time before we are told that a chief executive of a bank will earn more than $300 million over eight years and still think it is fair compensation, as the chief executive of bankrupt Lehman Brothers admitted to an astonished Congress.
In the short term, China, the UAE, Saudi Arabia, Singapore and other big foreign holders of Treasury bills are unlikely to take anti-dollar measures precisely because they own so much US debt. To the extent the dollar declines, so does the value of those nations' holdings. Mr Summers was spot on when he called the situation "the financial balance of terror", although the choice of words is unfortunate, as these foreign benefactors and saviours of the US would rather be seen as saviours than financial terrorists. But it is naive to assume that this "balance of terror", with its implied threat of bringing the whole house down if the SWFs don't play the game, will protect US interests indefinitely.
If they decide not to buy any more of the new debt, or dump existing debt, then the outlook for the US is truly dire. Interest rates will have to be pushed up again to attract new investors. It is a zero sum game: if the foreign holders do pull out, then they would only be hurting their own investments. The Chinese and the Arabs are being co-operative, and this may explain why the dollar has been strengthening during this recent crisis despite such low interest rates, but this co-operation will be put under much strain if the US decides to take drastic interest rate cut decisions. Besides lowering the value of their investments in Treasury bills, the rate cuts will lower Gulf lending rates, which, while easing the liquidity squeeze, might add to inflationary pressures if money supply goes up.
In the Gulf there does not seem to be much appetite for state investment funds to jump to the rescue of ailing Wall Street banks. Some have already admitted to massive losses from their earlier banking stakes and have adopted a wait and see attitude to see if national governments are now ready to bail out distressed banks and pump in liquidity.
Some see the present crisis is pushing the US into a fall as catastrophic and swift as that of the Soviet Union when the Berlin Wall came down. That might or might not be true in the long run, as America is a resilient nation and nothing rallies its people more than national challenges and overcoming obstacles, but what will be really interesting to watch is the foreign - particularly the Chinese - response to this crisis.
For the US, a change in mindset is important. Domestically, the reliance on foreign money means a loss of policy autonomy that Americans are simply going to have to get used to. Part of the accommodation is already occurring. The controversy over investments by SWFs is taking many twists and turns, blowing hot and cold, and probably we will never see the end of a new love-hate financial world order. US politicians had previously worried that the funds would gain political influence by their investments in US companies; now the same politicians are scared the SWFs will have cold feet.
The US needs the world's money more than it thought it would. How it copes with the loss of financial power has political and geo-strategic implications to all of us in the Gulf. As such, the Gulf has to weigh short-term losses against long-term diversification that does not harm it. Investments at home could be a small step.
Dr Mohamed A Ramady, a former banker, is a visiting associate professor in the finance and economics department at King Fahd University of Petroleum and Minerals in Dhahran, Saudi Arabia.
Company Profile
Name: Neo Mobility
Started: February 2023
Co-founders: Abhishek Shah and Anish Garg
Based: Dubai
Industry: Logistics
Funding: $10 million
Investors: Delta Corp, Pyse Sustainability Fund, angel investors
Company profile
Name: Envi Lodges
Started: September 2021
Co-founders: Noelle Homsy and Chris Nader
Based: UAE
Sector: Hospitality
Number of employees: 12 to 15
Stage of investment: Series A
Gulf Under 19s
Pools
A – Dubai College, Deira International School, Al Ain Amblers, Warriors
B – Dubai English Speaking College, Repton Royals, Jumeirah College, Gems World Academy
C – British School Al Khubairat, Abu Dhabi Harlequins, Dubai Hurricanes, Al Yasmina Academy
D – Dubai Exiles, Jumeirah English Speaking School, English College, Bahrain Colts
Recent winners
2018 – Dubai College
2017 – British School Al Khubairat
2016 – Dubai English Speaking School
2015 – Al Ain Amblers
2014 – Dubai College
COMPANY PROFILE
Company name: Revibe
Started: 2022
Founders: Hamza Iraqui and Abdessamad Ben Zakour
Based: UAE
Industry: Refurbished electronics
Funds raised so far: $10m
Investors: Flat6Labs, Resonance and various others
ENGLAND SQUAD
Goalkeepers: Jack Butland, Jordan Pickford, Nick Pope
Defenders: John Stones, Harry Maguire, Phil Jones, Kyle Walker, Kieran Trippier, Gary Cahill, Ashley Young, Danny Rose, Trent Alexander-Arnold
Midfielders: Eric Dier, Jordan Henderson, Dele Alli, Jesse Lingard, Raheem Sterling, Ruben Loftus-Cheek, Fabian Delph
Forwards: Harry Kane, Jamie Vardy, Marcus Rashford, Danny Welbeck
Cultural fiesta
What: The Al Burda Festival
When: November 14 (from 10am)
Where: Warehouse421, Abu Dhabi
The Al Burda Festival is a celebration of Islamic art and culture, featuring talks, performances and exhibitions. Organised by the Ministry of Culture and Knowledge Development, this one-day event opens with a session on the future of Islamic art. With this in mind, it is followed by a number of workshops and “masterclass” sessions in everything from calligraphy and typography to geometry and the origins of Islamic design. There will also be discussions on subjects including ‘Who is the Audience for Islamic Art?’ and ‘New Markets for Islamic Design.’ A live performance from Kuwaiti guitarist Yousif Yaseen should be one of the highlights of the day.
UAE SQUAD
Muhammad Waseem (captain), Aayan Khan, Aryan Lakra, Ashwanth Valthapa, Asif Khan, Aryansh Sharma, CP Rizwaan, Hazrat Billal, Junaid Siddique, Karthik Meiyappan, Rohan Mustafa, Vriitya Aravind, Zahoor Khan and Zawar Farid.
Courses at Istituto Marangoni, Dubai
Undergraduate courses
Interior Design; Product Design; Visual Design; Fashion Design & Accessories; Fashion Styling & Creative Direction; Fashion Business; Foundation in Fashion; Foundation in Design
Professional courses
Fashion e-Commerce & Digital Marketing; Fashion Entrepreneurship; Fashion Luxury Retail and Visual Merchandising
Short courses
Fashion design; Fashion Image & Styling; Fashion Trend Forecasting; Interior Design; Digital Art in Fashion
More information is at www.istitutomarangoni.com
Company profile
Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices
Stamp duty timeline
December 2014: Former UK chancellor of the Exchequer George Osborne reforms stamp duty land tax (SDLT), replacing the slab system with a blended rate scheme, with the top rate increasing to 12 per cent from 10 per cent:
Up to £125,000 – 0%; £125,000 to £250,000 – 2%; £250,000 to £925,000 – 5%; £925,000 to £1.5m: 10%; More than £1.5m – 12%
April 2016: New 3% surcharge applied to any buy-to-let properties or additional homes purchased.
July 2020: Chancellor Rishi Sunak unveils SDLT holiday, with no tax to pay on the first £500,000, with buyers saving up to £15,000.
March 2021: Mr Sunak extends the SDLT holiday at his March 3 budget until the end of June.
April 2021: 2% SDLT surcharge added to property transactions made by overseas buyers.
June 2021: SDLT holiday on transactions up to £500,000 expires on June 30.
July 2021: Tax break on transactions between £125,000 to £250,000 starts on July 1 and runs until September 30.
SPECS
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
More from Rashmee Roshan Lall
Turning waste into fuel
Average amount of biofuel produced at DIC factory every month: Approximately 106,000 litres
Amount of biofuel produced from 1 litre of used cooking oil: 920ml (92%)
Time required for one full cycle of production from used cooking oil to biofuel: One day
Energy requirements for one cycle of production from 1,000 litres of used cooking oil:
▪ Electricity - 1.1904 units
▪ Water- 31 litres
▪ Diesel – 26.275 litres
Liverpool’s fixtures until end of 2019
Saturday, November 30, Brighton (h)
Wednesday, December 4, Everton (h)
Saturday, December 7, Bournemouth (a)
Tuesday, December 10, Salzburg (a) CL
Saturday, December 14, Watford (h)
Tuesday, December 17, Aston Villa (a) League Cup
Wednesday, December 18, Club World Cup in Qatar
Saturday, December 21, Club World Cup in Qatar
Thursday, December 26, Leicester (a)
Sunday, December 29, Wolves (h)
TWISTERS
Director:+Lee+Isaac+Chung
Starring:+Glen+Powell,+Daisy+Edgar-Jones,+Anthony+Ramos
Rating:+2.5/5
Winners
Best Men's Player of the Year: Kylian Mbappe (PSG)
Maradona Award for Best Goal Scorer of the Year: Robert Lewandowski (Bayern Munich)
TikTok Fans’ Player of the Year: Robert Lewandowski
Top Goal Scorer of All Time: Cristiano Ronaldo (Manchester United)
Best Women's Player of the Year: Alexia Putellas (Barcelona)
Best Men's Club of the Year: Chelsea
Best Women's Club of the Year: Barcelona
Best Defender of the Year: Leonardo Bonucci (Juventus/Italy)
Best Goalkeeper of the Year: Gianluigi Donnarumma (PSG/Italy)
Best Coach of the Year: Roberto Mancini (Italy)
Best National Team of the Year: Italy
Best Agent of the Year: Federico Pastorello
Best Sporting Director of the Year: Txiki Begiristain (Manchester City)
Player Career Award: Ronaldinho
THE BIO:
Sabri Razouk, 74
Athlete and fitness trainer
Married, father of six
Favourite exercise: Bench press
Must-eat weekly meal: Steak with beans, carrots, broccoli, crust and corn
Power drink: A glass of yoghurt
Role model: Any good man
COMPANY PROFILE
Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends
A QUIET PLACE
Starring: Lupita Nyong'o, Joseph Quinn, Djimon Hounsou
Director: Michael Sarnoski
Rating: 4/5
Tori Amos
Native Invader
Decca
'Top Gun: Maverick'
Rating: 4/5
Directed by: Joseph Kosinski
Starring: Tom Cruise, Val Kilmer, Jennifer Connelly, Jon Hamm, Miles Teller, Glen Powell, Ed Harris
On Instagram: @WithHopeUAE
Although social media can be harmful to our mental health, paradoxically, one of the antidotes comes with the many social-media accounts devoted to normalising mental-health struggles. With Hope UAE is one of them.
The group, which has about 3,600 followers, was started three years ago by five Emirati women to address the stigma surrounding the subject. Via Instagram, the group recently began featuring personal accounts by Emiratis. The posts are written under the hashtag #mymindmatters, along with a black-and-white photo of the subject holding the group’s signature red balloon.
“Depression is ugly,” says one of the users, Amani. “It paints everything around me and everything in me.”
Saaed, meanwhile, faces the daunting task of caring for four family members with psychological disorders. “I’ve had no support and no resources here to help me,” he says. “It has been, and still is, a one-man battle against the demons of fractured minds.”
In addition to With Hope UAE’s frank social-media presence, the group holds talks and workshops in Dubai. “Change takes time,” Reem Al Ali, vice chairman and a founding member of With Hope UAE, told The National earlier this year. “It won’t happen overnight, and it will take persistent and passionate people to bring about this change.”
Indoor cricket in a nutshell
Indoor cricket in a nutshell
Indoor Cricket World Cup - Sept 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
THREE POSSIBLE REPLACEMENTS
Khalfan Mubarak
The Al Jazira playmaker has for some time been tipped for stardom within UAE football, with Quique Sanchez Flores, his former manager at Al Ahli, once labelling him a “genius”. He was only 17. Now 23, Mubarak has developed into a crafty supplier of chances, evidenced by his seven assists in six league matches this season. Still to display his class at international level, though.
Rayan Yaslam
The Al Ain attacking midfielder has become a regular starter for his club in the past 15 months. Yaslam, 23, is a tidy and intelligent player, technically proficient with an eye for opening up defences. Developed while alongside Abdulrahman in the Al Ain first-team and has progressed well since manager Zoran Mamic’s arrival. However, made his UAE debut only last December.
Ismail Matar
The Al Wahda forward is revered by teammates and a key contributor to the squad. At 35, his best days are behind him, but Matar is incredibly experienced and an example to his colleagues. His ability to cope with tournament football is a concern, though, despite Matar beginning the season well. Not a like-for-like replacement, although the system could be adjusted to suit.
Our Time Has Come
Alyssa Ayres, Oxford University Press
Oppenheimer
Director: Christopher Nolan
Stars: Cillian Murphy, Emily Blunt, Robert Downey Jr, Florence Pugh, Matt Damon
Rating: 5/5
The drill
Recharge as needed, says Mat Dryden: “We try to make it a rule that every two to three months, even if it’s for four days, we get away, get some time together, recharge, refresh.” The couple take an hour a day to check into their businesses and that’s it.
Stick to the schedule, says Mike Addo: “We have an entire wall known as ‘The Lab,’ covered with colour-coded Post-it notes dedicated to our joint weekly planner, content board, marketing strategy, trends, ideas and upcoming meetings.”
Be a team, suggests Addo: “When training together, you have to trust in each other’s abilities. Otherwise working out together very quickly becomes one person training the other.”
Pull your weight, says Thuymi Do: “To do what we do, there definitely can be no lazy member of the team.”
UAE currency: the story behind the money in your pockets
COMPANY PROFILE
Name: Kinetic 7
Started: 2018
Founder: Rick Parish
Based: Abu Dhabi, UAE
Industry: Clean cooking
Funding: $10 million
Investors: Self-funded