US 'welcomes Gulf funds'

Dubai: The United States, the world's biggest economy, is aggressively seeking Gulf money to rescue its ailing financial institutions, just a few months after it had led an attack on the Gulf's sovereign wealth funds.

Collective efforts are needed to tackle the global financial crisis and Gulf countries have a key role to play in resolving it, a top American official said yesterday as he sought investment from the region in his country.

Robert Kimmitt, deputy secretary of the US Department of the Treasury, also praised sovereign wealth funds (SWFs) such as the Abu Dhabi Investment Authority (Adia) in sharp contrast to a debate in the West early this year that sought to put protectionist barriers against investments made by these organisations.

Kimmitt said the US favours "the free flow of capital, both from sover-eign wealth funds and all other overseas investors."

He is meeting officials and business leaders in Saudi Arabia, Kuwait, Qatar, Iraq and the UAE, trying to encourage Arab funds to invest in the US.

Referring to the DP World debacle in 2006, when the Dubai-based port operator had to abandon efforts to manage six key American ports due to political opposition, Kimmitt clarified the US is now more open to Arab investors, who invested $7 billion in the US last year.

Kimmitt tried to address the issue again with the promise that "much has changed, and changed for the good, in the two and half years" since.

"That controversy made clear to US policymakers the importance of reconfirming our commitment to open investment and of taking proactive steps to respond to the lessons learnt," he said in his remarks at the Dubai International Financial Centre (DIFC).

Acknowledging that inadequate regulation of the US financial system has created the current market meltdown, he underlined the global nature of the crisis.

"It has become evident that the turmoil is not isolated to the United States and Europe, but has ramifications for all countries, including in the Gulf. Our capital markets are more integrated than ever before, allowing opportunities, but also financial difficulties, to spread rapidly across borders," he told a gathering of officials, potential investors and the media.

"Collectively, we need to rebuild confidence in our markets so that capital can flow again to help spur global growth," Kimmitt added.

It remains to be seen how Gulf investors will respond to these calls while uncertainties prevail. DIFC governor Omar Bin Sulaiman told reporters funds in the region are "trying to understand whether it [crisis] has reached bottom."

Campaign: Pressure on Iran

While the US struggles to overcome the paralysis in its financial system, Washington appears intent to maintain the pressure on Tehran over its controversial nuclear programme.

Robert Kimmitt, deputy secretary of the US Department of the Treasury, called for curbing business links with Iran, echoing similar calls in the past by visiting US officials.

"Enhanced vigilance over all business with Iran is necessary as we have seen Iran abuse its access to financial and commercial markets in order to further its proliferation efforts," the US official said, noting that "protecting the integrity and reputation of a country's financial system is especially difficult when business is done with Iran."

Asked for a response by reporters, DIFC governor Omar Bin Sulaiman said the DIFC and UAE respect UN resolutions whether they refer to Iran or others.