Oil prices retreated Monday following record-breaking surges last month that saw the price of crude soar above $84 a barrel. Despite prices dipping to more seasonal levels on Monday, the high cost of energy continues to be a boon to oil-producing countries.
Gulf State countries especially, are awash in cash. Instead of channeling the money into larger bank accounts, many oil-exporting countries have been busy accumulating foreign assets, much of it, in the United States. It is an investment trend that has some people worried. VOA's Mil Arcega reports.
Record high oil prices are generating what some analysts say may be the biggest shopping spree in history. The government of Dubai recently announced plans to buy 20 percent of the Nasdaq stock exchange. And last month, Dubai completed a deal to buy American luxury retailer Barneys.
Clyde Prestowitz is founder of the Economic Strategy Institute in Washington, D.C. "The oil producers are drowning in dollars. And so it's natural that they would want to invest them," he says.
Indeed, Gulf State countries have been investing at a furious pace this year, spending more than $60 billion to acquire foreign assets -- more than twice what they spent last year. Despite the political outcry in 2006 when a Dubai firm announced it wanted to buy the operating rights to some U.S. ports, the government of Dubai has been quietly amassing major stakes in U.S.-owned companies.
Energy security analyst Sarah Emerson says the list includes large private U.S. equity firms and Las Vegas casinos. "We don't want them to go elsewhere, we need the investment here in our own assets and our own securities."
But there is growing concern about foreign ownership of iconic American businesses. Prestowitz says some of those countries may not be democratic or even friendly to the United States. "The question here is, are you in a situation in which you have very influential governments becoming very influential in your economy who are pursuing policies that are at odds with your own policies."
But some analysts say the investments will increase economic ties between the U.S. and Persian Gulf countries at a time when relations are strained. Some lawmakers on Capitol Hill are strongly opposed to foreign ownership of strategic American businesses such as stock markets. President Bush promises a careful review of the Nasdaq deal.