How will the Qatar Investment Authority economic strategy affect the Western world?
The country's sovereign wealth fund, the Qatar Investment Authority, has opened a New York office and is aggressively looking to acquire U.S. assets with $35 billion. At the same time, Qatar and its related investors are also spending money in other places around the world, including China and the European Union.
In the midst of all this, many are asking how these relationships will affect Western nations, which traditionally have pushed for democracy around the world. Will EU nations and the U.S. still be as vocal and up front about human rights problems when they are receiving so much money from Gulf states like Qatar? Will the influence and partnerships start to erode the ways that free nations advocate for those trapped in countries with fewer human rights?
William Palumbo of Stop Qatar Now talked to the Gulf News Journal on Friday about some of the biggest problems with this kind of somewhat back-channel international commerce.
Palumbo said in some ways the issue is not so much the monarchy that’s in place in Qatar as it is the type of Sharia law that governs the country.
“(Sharia) is antithetical to Western values - and (the monarch) finances international terrorism to advance his country's foreign policy objectives.” Palumbo said. He also talked about a conflict of interest that’s often inherent in the investment practices of sovereign wealth funds (SWF) and how the SWFs can have an edge on conventional investment groups.
“It is possible that the fund managers face an inherent conflict of interest, namely, they must achieve a certain return on investment, but in theory they should also not invest in companies whose values conflict with national values or interests.” Palumbo said. “It is also possible, at least hypothetically, that the states that operate these funds use secret or classified information to inform their investment decisions. Such asymmetrical information would give a distinct advantage to a SWF vs. a non-state connected hedge fund or mutual fund, for example.”
Palumbo called upon Western government officials to really understand the implications of Gulf state investments. Pointing to the association of some Qataris to groups like ISIS, Palumbo questioned any real economic involvement between Qatar and the US, when American leaders are broadly determining how to fight and eradicate ISIS but might not pay a lot of attention to some types of foreign influence.
“Qatar has been very successful at using their money to influence American foreign policy, particularly through universities and think tanks (especially the Brookings Institution).” Palumbo said. “So far, Washington has turned a blind eye."
Of course, Palumbo conceded, business is business.
“Corporations, as history and recent events have shown, rarely let their values get in the way of profit.” Palumbo said. “If it is legal for corporations to accept foreign money, regardless of the source, they usually will.”
It’s up to governments, he said, to rein in economic activities that could harm their national interests.