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The Gulf countries like the British Green

The rich Arab investors buy whatever they want in the United Kingdom. The latter is in dire need of them

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Announced as top priorities a few weeks ago, the infrastructure projects which are scheduled to start or which will be renovated during the coming years in the United Kingdom have not reassured a lot of people.

The fact that the government of David Cameron is focussing its budgetary efforts on the “structural veins” of British society during an austerity period is quite revealing. Roads, railways, nuclear plants, internet networks: the country must jump on the wagon or it risk losing some of the qualities that qualify it as a global power. This status is primarily recognized through essential structures.

And once again, it is the rich Gulf investors who are openly called to bring in their capital. The economics minister, George Osborne, has designed a national infrastructure plan which is totally transparent regarding the massive investments involved. These investments are expected to reach several billion pounds sterling. The rich oil countries of the Gulf and the sovereign wealth funds have been clearly invited to join the buffet.

“As an asset class, the British infrastructures can generate as much interest as the privatisation programmes that took place during the eighties and nineties” has promised Lord Sassoon, the government’s state secretary for commerce. He was recently on a tour in the Middle East to convince Saudi, Kuwaiti and UAE investors.

This next rescue plan of the British economy is nothing more than a logical next step in the ever stronger presence of Middle Eastern investors in Europe and particularly in the false cousin of the United States.

During the past few years, rich Arabs have bought a great deal of the most significant real estate assets. Canary Wharf, the second “city” of London which was built at the beginning of the nineties, is mainly held by the sovereign wealth fund of Qatar through the firm Songbird.

The highest inhabited tower of Europe, Shard London Bridge, which shall be completed during next spring, is also mainly held by Qatari investors. They also possess Harrods, the American embassy building, part of the London Stock Exchange and shares in Barclays.

“They have a lot of money and so they obviously need to invest” commented David Roberts for Next Finance, deputy director of the Qatari branch of the Royal United Services Institute. “We are first and foremost looking to diversify their revenues by taking into account the evolution in methods of energy distribution. But it is also a matter of security for the Qataris and the Europeans as well. The threat of Iran which constitutes the main risk for the coming years is a primary reason for these common investments. There are also rivalries sometimes between Qatar and Saudi Arabia but this is settled through the rivalry among soccer clubs” he smiles.

As far as soccer is concerned, the club of Manchester City, which is held by Sheikh Mansour the brother of heir prince of Abu Dhabi, has distinguished itself during 2011 by becoming the biggest loss making club in history (195 million pound sterling).

Arab Investments which is held by Arab and Kuwaiti investors has recently secured financing for the second highest tower of London, in the heart of the city, and which will be completed in 2014

One of the most spectacular steps of the next few years will be the financing of nuclear plants. The British government is arguably the most attached one to it compared with its European peers.

40 billion pound sterling will have to be found and this will have to be done through the foreign sovereign wealth funds. “It should be easier to find money to finance them than means to build them” said with amusement the minister for energy Charles Hendry.

These agreements also allow the British to export their know how in the gulf in order to obtain lucrative contracts from countries which are rapidly developing their infrastructures. The British expertise in terms of stadium construction will therefore be most welcome in Qatar considering the upcoming 2022 World Cup…

Johann Harscoët , February 2012

Article also available in : English EN | français FR

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