DUBAI (Reuters) – Abu Dhabi has turned its strategy of using its sovereign wealth fund ADQ to invest across the region to seek to use economic diplomacy to build regional alliances from Turkey to Israel to Egypt. It reflects the efforts of Abu Dhabi, a Gulf oil-producing country, to a source said.
The change comes after years when Abu Dhabi, the wealthiest emirate in the United Arab Emirates, appeared to prefer a more draconian and militarized method of gaining influence in the Middle East and North Africa. It suggests that the use of power has expanded.
The smallest of Abu Dhabi’s three major sovereign wealth funds, ADQ was launched in 2018 as a vehicle to hold state-owned assets.
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However, it then expanded overseas. According to Global SWF estimates, ADQ, which manages $108 billion in assets, has made its 25 investments worth about $6.6 billion from January 1 to October 1 this year, making it the Middle East’s largest. An active dealmaker, he became one.
“The region is a priority. They want to have strong political ties with these countries,” one of the three sources told Reuters on condition of anonymity.
ADQ and the UAE Ministry of Foreign Affairs did not respond to emails seeking comment.
Abu Dhabi has pursued a hawkish foreign policy and in recent years has sought to contain Iran’s growing influence in the region and counter the rise of political Islamist movements.
The hardline tone matched the inflexible style of then-U.S. President Donald Trump, who saw Iran as a villain and scrapped a deal aimed at stopping its development of nuclear weapons.
But the military adventurism that has seen the United Arab Emirates tread into conflicts from Yemen to Libya and participate in Arab boycotts of Qatar has yielded little benefit and has led to a lack of resilience with Western allies. It caused tension.
‘Huge financial power’
The United Arab Emirates is now focused on building economic bridges, said an emirate official when outlining foreign policy.
Abu Dhabi forged ties with Israel in 2020, engaged with Iran to manage tensions, and moved to mend ties with Turkey and Qatar after years of hostility to Islamism.
Among recent deals, ADQ launched a Turkish Sovereign Wealth Fund and a $300 million Technology Fund in March to invest in domestic venture capital funds and opportunities.
Iraq is on the investment radar, with investments in Egypt, an ally of the United Arab Emirates (UAE), and other Arab countries such as Syria, which remains under severe Western sanctions, the two sources said. muscle said. We also have a contract with Israel.
Abdulkarek Abdullah, a political analyst in the United Arab Emirates, said, “The UAE is now using its enormous financial and economic power to pursue the same Achieving Goals Abdulla defined this goal as the UAE’s “vision of a stable and moderate Middle East and a vision to promote the UAE’s national interests”.
He said ADQ was acting in a similar manner to Mubadala, another sovereign fund of the emirate, both of which had a “political footprint and an investment footprint”.
“They are the driving force behind the UAE’s economic diplomacy, its regional and global influence,” he said.
ADQ’s strategy is similar to Mubadala’s strategy of investing globally, including local and regional, but its portfolio is skewed towards the US and Europe, with ADQ primarily focused on national champions and regions. .
The ADQ claims its mandate is purely commercial, according to people close to the ADQ, but its chairman Sheikh Tahnoon bin Zayed Al Nahyan, the UAE’s national security adviser, said: , his half-brother MbZ’s foreign policy troubleshooter and prominent businessman.
According to sources familiar with ADQ’s strategy, Sheikh Tahnoon will sit on the board but prefers to keep his role separate.
“He (Turnoon) is a strategic pragmatist and has a very strong external network that helps the Emirati run the state,” said Andreas Krieg, an associate professor at King’s College in London.
“Opportunity”
Sheikh Thanoon visited Turkey and Iran as the United Arab Emirates moved to war with Turkey and Iran. After meeting him in August 2021, Turkish President Tayyip Erdogan said the UAE would soon make “serious investments” if negotiations continued “in a good way.”
ADQ, likened to Temasek, a Singaporean sovereign wealth fund, started as a holding company for government assets such as Abu Dhabi’s port, stock exchange and nuclear power company.
Use local equity listings to build domestic champions, consolidate and privatize some of their assets, then choose markets often hit by high inflation or currency devaluation to build non-UAE companies started to advance to
In April, it sunk about $2 billion into five listed Egyptian companies that were seeking foreign exchange after Russia’s invasion of Ukraine forced foreign investors to withdraw billions from the treasury market. rice field.
“80% to 90% of large strategic deals like energy are agreed top-down at the intergovernmental level. The rest are proactive. ADQ sees opportunities and works on them,” he said. A third source said.
Like other wealthy Gulf states, the UAE now prefers to invest rather than provide direct financial aid to its allies to avoid corruption and inefficiency and reap its own benefits. Most of ADQ’s investments are in areas of national interest for the UAE, such as energy, logistics, healthcare and food security.
“No one gives cash these days. It’s very rare that it happens. I think this is gone. They’ve learned their lesson,” said a third source.
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Reporting by Yousef Saba and Hadeel Al Sayegh.Edited by William McLean
Our standards: Thomson Reuters Trust Principles.
