Sovereign wealth funds readjustify US global impact
I think the two major decisions announced last week by President Donald Trump are linked. The first was an executive order creating a US sovereign wealth fund, and the second was a decision to close the US International Development Agency. Only one of these can be linked to the conduits of American cooperation both nationally and internationally. The transition from grants and “charity” instruments to investment instruments is the headlines that come from two decisions.
I’ll be honest. I was offended when I read about some of the international projects that USAID was raising funds. I was not angry as a citizen by the fact that the program was a domestic intervention. I was offended as a media owner who never knew that such an unrelated project had been given millions of dollars. Jokes aside, it’s clear that USAID drifted from its original goal. Expanded development support missions to promote political or ideological agendas. While there was already a push towards freedom and democracy in the 1990s, the past decade had begun to promote progressive Western agendas.
There is no doubt that today’s world is very different from the world in 1961, when USAID was founded. It’s very different from just 10 years ago. Therefore, countries need to adapt the tools they use. The US needs this transformation.
When focusing on sovereign wealth funds, there is no doubt that the success achieved by the states of the Gulf Cooperation Council can be used as a good example. Whether it’s the Kuwait Investment Bureau, the Saudi Arabia Public Investment Fund, the Abu Dhabi Investment Bureau, Mbadala, Lunath or Qatar Investment Bureau, they are all engines of growth domestically and internationally. As with usual investments, there are good and bad, but it is clear that they are fulfilling their mission to maintain the wealth of future generations and promote strong domestic growth while diversifying from hydrocarbon income. .
Their results have been guided by vision and strategy. For example, a number of duties PIFs have unlocked new sectors in Saudi Arabia that could not be developed through the private sector and other public agencies and assistance. Such investments in both material and intangible infrastructure could only be made with patient capital and long-term vision. Therefore, only through sovereign wealth funds.
I don’t dig into the different types of sovereign wealth funds very much, but they can invest either nationally or internationally. Examples of the former include Samruk-Kazyna in Kazakhstan and the Egyptian Sovereignty Fund. They hold major national assets and work on partnerships with international investors to promote international investment and partnerships.
Sovereign wealth funds readjustify US global impact
Khaled Abou Zahr
Then there is international investment. It aims to build and maintain the abundance of future generations. This was the goal of the Kuwait Investment Bureau, and in 1953 it became the world’s first sovereign wealth fund. The depiction of goals between domestic and international investments allows for the success of such funds.
Another major factor is partnerships. Approximately 90 sovereign wealth funds collectively manage around $13 trillion in assets globally and play a leading role in global finance. This also means influence and power. Obviously, the US couldn’t afford to stay far longer from this club.
Furthermore, many of the projects restructuring US infrastructure have stagnated due to failure to implement the right partners. California’s high-speed rail projects and gateway programs come to mind. But even more importantly, there is an infrastructure for a new digital economy that the US cannot afford to overlook. So, on this front, we need a sovereign wealth fund. This is a public institution with clear financial goals.
At the international level, aid in developing countries has reached its limits. Again, GCC countries provide a good example. They moved from “blind aid” to direct investment in projects, leaving aid for certain humanitarian goals. This was a successful strategy in Africa and Asia. Furthermore, it created a stronger bond of cooperation and cooperation, with concrete results for the citizens.
The US failed to achieve the same results. Those who refer to the US International Development Finance Corporation are wrong because they are development financial institutions such as the Saudi Arabian Fund for Development and the Abu Dhabi Development Fund.
The key achievement achieved by most sovereign wealth funds is that they focus on financial goals rather than ideological programs. Their goal is not to affect them. However, by choosing good investments that serve your obligations, they can achieve an undeniable influence on global business. The cherry blossoms on top of the cake. Trying to use a sovereign wealth fund for influence will outweigh that purpose. This is why the Gulf Fund has the most sharpest, high-level investment experts and follows a rigorous process of investment decisions.
In his executive order, Trump said: “Making maximum control of national wealth for the sole benefit of American citizens is a US policy.” This is certainly a much-needed goal for Washington. Adding the $58.8 billion 2025 budget request from the State Department and USAID will quickly build a US sovereign wealth fund. If domestic projects were added, there is no doubt that the fund would not only achieve better financial results, but also recalibrate and modernize the US global influence. Nevertheless, this lies in the nature of American citizens, so it is important to maintain a proper window of generosity nationally and internationally.
•Khaled Abou Zahr is the founder of SpaceQuest Ventures, a space-focused investment platform. He is CEO of Eurabiamedia and editor of Al-Watan Al-Arabi.
Disclaimer: The views expressed by the writers in this section are unique and do not necessarily reflect the Arab news perspective.
