In theory: Restoring trust in US market

From time to time, the US administration sends clear signals to investment corporations in the Gulf Cooperation Council (GCC), especially sovereign funds, welcoming their investments in the US.

The move comes after the series of mistakes committed by the former administration in dealing with Gulf investments.

Correcting these mistakes is not an easy task which can happen by simply issuing statements, especially now the global investment map has witnessed radical changes recently, resulting from the global financial crisis.

Also, the loss of foreign investment can happen quickly, but re-attracting them needs tremendous efforts and promotional campaigns to regain the trust of foreign investors.

Change

Prior to the crisis, the US was the destination of global investment, and although the American market remained an important hub for these investments, the crisis created new investment hubs.

These hubs provide better services and facilities for foreign investors rather than the American market which fluctuates with the US dollar and suffers from inconsistency in dealing with foreign investments.

Among the emerging markets are those in the Middle East, Asia and South America, besides the traditional markets in Europe, which offer stable investment opportunities, thanks to the new circumstances created by the euro.

Accordingly, the advantages enjoyed by the US market in the past decades are no longer limited to this market.

Furthermore, the damage to the reputation of the US market caused by the administration of former president George W. Bush needs significant efforts by the administration of US President Barack Obama, similar to the efforts exerted to bring the US economy back on the growth track.

To regain the trust of foreign investors, the first step is to create a legal and legislative ground that ensures the safety of foreign investments.

It must also isolate them from the different ideologies of previous administrations, especially the conservative right that attempts to blackmail foreign investment and make illegitimate profits through creating a state of panic.

These reforms include granting a larger margin of freedom for US companies to enter into alliances and deals with foreign partners without unnecessary interference by the Congress and the administration.

There are many over-used excuses for such interference, including protecting national security, as if the US is the only targeted country in the world, although there are many countries targeted by terror, and they all agree to coordinate their efforts to combat it.

US relations with other countries must be pragmatic, just like their relation with China, regardless of who the president is.

This must include Arab countries, since Israel now prevents the US from dealing pragmatically with Arab countries, because this is against its expansive policies in the occupied Palestinian territories.

The global financial meltdown contributed to clarifying the importance of Gulf investments for the American economy, because these sovereign funds helped save many American financial institutions from collapsing, including giant institutes like Citigroup, which got back on its feet thanks to the contribution of sovereign funds.

New approach

Finding a way out for the US economy requires dealing with international economic developments with a different spirit and new approaches that take into consideration American interests and provides incentives for foreign investors.

They should offer better opportunities than the current fluctuating and ideological investment atmosphere, which cares for Israeli interests more than those of the US.

It is time to change this equation, and only then will the US market regain its attractiveness for foreign investors in view of a global competition that knows nothing except interests and the exchange of benefits between all parties.

Dr Mohammad Al Asoomi is a UAE economic expert.