Riyadh, Asharq Al-Awsat- The world looks at the Gulf region as a source of low-cost financing due to its surplus wealth and as a result of the limited investment opportunities available there. However the financiers and their wealth in this region suffered discrimination in western countries as they were prohibited from investing in many vital fields. Perhaps many of us recall the DP World company [subsidiary of Dubai World] attempt to take over major US ports, and the media uproar that this caused, as well as the political escalation, which eventually forced the company to abandon the deal. Such discrimination may be blatant, as in the case of the DP World company or concealed with talk that this type of investment does not comply with domestic laws, or that it is not in line with national security.
However the global financial crisis and its consequences, such as the loss of financial liquidity in the West and economic recession, have led to many companies declaring themselves bankrupt as well as high unemployment and budget deficits. This has caused many Western governments and corporations to abandon the reservations and racism that previously governed investment in these countries. Therefore the doors of these previously closed markets and companies have now been thrown open, and these [Gulf] financiers are welcome and attract attention wherever they go. This is also positively reflected in the Islamic financial industry and its corporations as a great deal of the financial liquidity that is being targeted is part of this industry.
The financial corporations in the region – including Islamic financial corporations and sovereign wealth funds – have failed to exploit this opportunity for strategic investment. These institutions have failed to invest in vital fields that would provide sophisticated technology to the region in the future, which is something that the region is in dire need of, or in corporations that have a direct impact on decision-makers such as major financial corporations and major industrial firms that have electoral weight. This kind of investments could serve to establish a “[political] lobby” for the region in these countries that could, in the future, positively influence decisions concerning the region’s interests that are made in these countries. We are all witnesses of the power that a “lobby” can have today on influencing decision-makers, and this can be seen in the case of the US government and the Toyota Company [over the issue of Toyota recalling a number of its cars due to technical faults]. The Toyota Company gained the support of all US State Governors of states where Toyota factories are present.
The region and it’s [financial] institutions lack of long-term investment plans that seek to implement strategic objectives has led to the region – represented by its financial institutions, Islamic financial corporations and sovereign wealth funds – dealing with this openness with the mentality of a speculator that is only interested in making quick profits, rather than a strategic investor with a vision and long-term objectives in mind. This is preventing the region from benefiting from the [global financial] crisis and consolidating its interests in these countries and protecting the region from pressure in the future, as well as strengthening its presence in the decision-making centers.
In contrast to the manner that the region and its [financial] institutions dealt with this crisis, China sought to exploit its investments in order to achieve its strategic, technological, political, and financial objectives, without being concerned about the tension and sensitivities that such investment causes. Everybody today is busy attempting to reduce the impact of the global financial crisis, and this is something that reflects political rationality.
Since we are not out of this crisis yet, I believe that the opportunity is still favorable for the region’s countries to move towards strategic investment in a way that will enable them to fulfill their long-term objectives.
The Islamic financial industry and its corporations in the region need to modify their behavior with regards to investment in order to achieve greater interests for society, and this is via researching into strategic investment opportunities and avoiding speculation and marginal investment which is something that does not provide any added value to society or the economy. In fact this is a greedy and short-sighted behavior that contradicts Islamic Shariaa law and prevents the principle of succession on earth.