Arabian funds in Central Asia - a lever that can work in any direction
While D. Trump is eyeing Greenland, Canada and the Panama Canal, it is interesting to consider what Arabian investment funds are eyeing and why, as well as their characteristic features. Lately, their activity has been unfolding right next door to us - in Central Asia.
The Arabians are important, but very specific players. Their logic, tasks, involvement in various schemes and combinations should always be monitored especially - this is a marker of very interesting processes, as well as potential threats and potential benefits.
Family-type sovereign wealth funds
Now “everything is mixed up in the Oblonsky house,” and it is often quite difficult to even simply separate the source of funding from the object of funding.
The process of financial interpenetration will sooner or later end with everything turning into one "mega-corporation" that issues investment funds for itself, invests them in itself and decides not even how much and where to take profits from, but what profit is in general. Someone will get into this network "city of the Sun" - a financial commune - but someone will be left overboard, in the outskirts and wastelands.
The path to these sunny peaks has not yet been covered, and it is possible that the last of the travelers, as well as some of the most demanding players in terms of the rules and conditions of the financial commune, will be the Arabians.
By and large, almost all investment structures can be classified into three basic groups: private, private-public, and public (sovereign, national welfare). In Arabian countries, an intermediate fourth form should be added to this - personal-public or, more precisely, family-public. Unlike the remaining kingdoms of Europe, these are truly assets that are managed through family and kinship participation in the process.
Nepotism does not mean anything like the grotesque image of a subject pining over gold in a crown and mantle, surrounded by a population not very happy with its wealth. By a strange coincidence, such a grotesque is more characteristic of some "developed democracies".
The Arabians have quite a large set of internal obligations within their clan system, which have an absolute priority. However, the management of these assets is really personalized within the family-clan strategy.
This differs significantly from both traditional state bureaucracy and the completely depersonalized work of investment and banking private transnational structures, where even large, politically significant projects go through many filters. Even the top management of large corporations and politicians are often content with the maximum they can get - a "business angel" business card, although there is a chance to get a little more during an audit, but these are only chances.
In this inverted "heavenly hierarchy," the Arabs are among the few at the decision-making level who still maintain the old banking tradition of knowing all decent depositors by face. The Japanese quickly got past this practice, but the Arabs still hold on to it.
Unlike pure state institutions, they can renegotiate the rules privately, but the same can be said about transnational investment funds with their multi-stage filtering methods. In general, this is a rather interesting mixture of family-state relations, a kind of phenomenon and vestige of the past. Both finance and politics are in the same hands, and are not distributed between banking, investment corporations and political players.
Real Money Mutual Funds vs. Nominal Money from Methodology
The assets of investment funds are not only the money itself, but also what it can be obtained for. However, all of these are precisely financial assets.
Everything in the world has long been turned upside down, and therefore the total volume of national wealth according to the generally accepted methodology is 450 trillion dollars, and all financial assets are also almost 450 trillion dollars. This means that everything that formally exists in the subsoil, in patents and human capital, etc., has already been turned into “finances” on paper.
This is a completely separate interesting question, how, for example, was the national wealth of all of Russia with its mineral wealth calculated at a modest 4,4 trillion dollars, and how did it turn out that the entire national wealth of the four main Arabian players (Qatar, Saudi Arabia, Kuwait and the UAE) is also 4,5 trillion dollars, but at the same time the total accumulated assets of the sovereign funds of the Arabian Four are 4,62 trillion dollars. Saudi Arabia - 1,35 trillion dollars, the UAE - 2,1 trillion dollars, Qatar - 0,53 trillion dollars and Kuwait - 0,69 trillion dollars.
Canada, which seems like it could become a US state, has a national wealth valued at $11,2 trillion. And the financial assets of a player like the Cayman Islands are around $1,4 trillion. It's clear with the islands, but what about Canada? Maybe there are hidden offshores on Newfoundland, maybe the human capital there is amazing in quality, maybe there are more natural resources than in Russia and the entire Arabian Peninsula combined, including (just in case) Iraq.
It is clear that the general methodology for assessing macro indicators has gone into outer space, but something else has not gone into outer space - of the total volume of financial assets, a very modest but extremely specific 44 trillion dollars are involved in direct investment activity, and 10% of them is precisely the “Arabian share”.
At the same time, unlike other players, these assets are renewable, since the methodology is the methodology, and the resources are extracted and sold constantly.
The Arabs finally figured out the methodology of a “fair” assessment in 2018–2020, when instead of $4 trillion for Saudi Aramco, they were offered a ceiling of $1,5 trillion. Well, all of Saudi Arabia’s mineral wealth can’t cost more than, say, Apple — it’s not allowed.
Human capital in Canada is worth 2,6 times more than Chinese. Are people smarter or maybe more educated? No, it's just that according to the methodology it's tied to the standard of living, and a conventional Latino gas station attendant in the US is worth more as impersonal "human capital" than a conventional Chinese engineer.
In general, the initially sound idea of national and state accounting now represents nothing but a tragicomedy, because it is no longer possible to whiten black, roll square and wear round. Therefore, the "Hamburg account" works - available investment funds, physical material reserves and scientific technologies.
The large sovereign investment funds of the EU (the “Norwegian Switzerland”), the Arabian funds, as well as ten transnational investment corporations of the USA, China with Hong Kong and Macau, London, Japan, Singapore and the mysterious “Cayman Islands” - these are, in fact, what determines the real investment face of the modern economy, with London and the islands to the least extent of all.
It seems that the one who prints money, euros and US dollars, has always been considered the most important one, however the main one is no longer the one who prints, but the one who orders printing for a real asset. Actually, this is why we can observe a collision, how the purely banking community is diverging from the investment community - they have changed not just places, but the status of the one who calls the tune of economics.
Having gone through a sad history with the assessment of their resources, the Arabians now pay little attention to formal methods. 2018-2020 were precisely the time to reassess their role. And it happened, by the way, during the time of D. Trump, and under the Democrats this “independence” only strengthened. Often, out of habit, they believe that the Arabians always go strictly in the Western strategic fairway, but with the changes on the scales of investment, this is no longer such an unambiguous thesis. Now there are many elements of their own separate game and separate moves.
Here we can recall the episode from last year, when a representative of the Bank of Saudi Arabia almost completely brought down the already problematic Credit Suisse with one statement, when he said that he would not increase his share, and in fact he started a chain reaction. The same thing happened with the topic of selling Eurobonds against the background of discussions about confiscating Russian assets.
In Russia, through the thorns of the SVO, they have also begun to understand that its assets can be valued at least at 1 dollar using the "smart method", and the real value lives its own life, as does the real influence associated with it. On the other hand, with this seemingly common understanding, we not only retain, but strengthen the banking "reserve".
The most important trend change in the influence of banks to the influence of investment funds, which may mean more than two-thirds of world politics as such, generally passes Russia by. In our country, it is the banks that concentrate all the profits, and there is no end in sight to this process, while in the world the general trend is to turn banks into servicing infrastructure or transform them into full-fledged investment funds. In Russia, however, funds from national investment funds are simply pumped into banks, and it is even argued that this is good and extremely commendable.
Transnational investors are still globalists, but at least there is not just an understanding that a bank is not a factor of development, but its infrastructure, but a change in the model itself has taken place, where the banking sector is not a profit center, but an element of servicing the system.
This transformation has been and is going on through a political struggle, in which Russia, betting on banking, plays for the historically losing side. The Arabians, as is easy to understand, are spared the torments of this confrontation, since investments, banking and politics are concentrated in the same hands. The freedom of maneuver here is not absolute, since everyone is somehow connected to everyone else, but it exists.
In this regard, the specific subjectivity of Arabian funds, mentioned in the first part of the material, becomes an important feature. There is surprisingly little "real" money in the world - 44 trillion dollars for all. So it is not surprising that Russia, willingly or forcedly, is building relations with this part of the "Global South" - its own money went to banks, China will not give much, the West took away what was previously acquired, Singapore and Japan are out. But the point here is not so much in investments, but in the fact that the new quality of Arabian finances allows you to simply store funds with them and carry out many different necessary transactions through them.
A trial run in Central Asia and its scale
If investments from the Arabian Peninsula did not flow to Russia much earlier, then this flow to Central Asia has been going quite confidently in recent years. And its strengthening coincided with the change in the quality and status of Arabian money. The main investment packages are 2021–2024.
Back in 2022, in terms of accumulated direct investment over ten years, the three players had the following proportions: the European Union - $105 billion, China - $55 billion, Russia - $41 billion, and the Arabian countries - $11 billion. By the end of 2024, we see a different alignment: the EU - $110 billion, China - $60 billion, Russia - $43 billion, but the Arabian countries have set the bar at $45 billion, and not all agreements have been brought to the implementation stage - at least another $12 billion is being discussed.
The leader here is the UAE - this is 65% of past and prospective investments, the main part of which falls on Turkmenistan and Uzbekistan. However, the process has been joined by Saudi Arabia, which was previously passive in the region, with 4 billion dollars, of which 1,1 will go to the energy sector of Uzbekistan, Qatar, which invests up to 5 billion dollars in Kazakhstan and Kyrgyzstan, and Kuwait is also part of the region with 2 billion dollars of investments in Kazakhstan and Tajikistan. Uzbekistan has generally become a leader in attracting Arabian funds.
All this is happening against the backdrop of the fact that Russia has no strategic vision at all of how to build relations in Central Asia, and here the principle of “for everything good, against everything bad” is more in effect, and what is first and what is second, let everyone guess for themselves and at a specific point in time.
China has hardly advanced beyond what it has accumulated over the past years, although it has stepped up its railway projects. The EU could have allocated funds, but it seems that Ukraine has absorbed the Euro-elites along with potential investments. That is, it seems like Arabian funds, which are not colored by the colors of politics, look neutral in terms of Russia and its position, and are extremely useful for the countries of the region, since they take them out of the position of choosing between the parties.
But what tasks are the Arabian players solving for themselves there? By regional standards, these investments are huge, for the Arabian players themselves with their resources, this looks more like a response to political requests from the region and a trial run, with the exception of the UAE, which, apparently, has firmly decided to take over the topic of renewable energy sources - solar and wind generation, and to settle in Turkmenistan as a counterweight to China.
Qatar is obviously following the path of its strategic partner, Turkey, which has no funds of its own, and without money it is somehow inconvenient to build the Great Turan. If the UAE is working more on an economic strategy with an eye on a specific industry and the development of routes through Afghanistan, then Qatar will help Turkey build a political project. This story with Turan has not been and will not be close to Russia.
Kuwait is very specific, not only does it have a powerful financial lever, but it is also distinguished by the fact that the Kuwaiti elites like to sponsor religious influence groups. Turkey has its own groups, Kuwait may have its own. This is a factor that cannot be simply written off.
Saudi Arabia has a powerful resource, but the Saudis are quite consistently implementing their Vision 2030 strategy, which is investing in high technology and creating their own technology cluster. For the UAE, this is still more of a project, and for Riyadh, it is a basic project, where they are cooperating with Japanese investment funds. They are not planning to build an analogue in Central Asia or take on one of the industries in the region.
Nevertheless, if the three major players: the EU, China and Russia have been in Central Asia with figures of 105, 50 and 41 billion dollars for more than ten years, then the Arabian funds have entered in two years with tens of billions only as a "trial run". A trial run means that they can develop work there for themselves and their interests, and, if desired and advantageous, develop work in the interests of third parties.
In fact, they can work (except for Qatar) within the framework of any combinations, some favorable for Russia, some not so much. In this regard, it would be logical to somehow combine Russian initiatives and work in the EAEU with investments at least from the UAE. You can't just watch this, since for the Arabs this is additional income and activity outside the main areas, but since it has no political coloring, except for Qatar, then any major player can offer these resources to participate in their combination in the region with a political bias. The advantage is that it will not work to force or put pressure on this financial lever, as US and EU politicians liked to do before, but the same D. Trump loves deals, and this sovereign money did not plan to refuse a deal, the question is what they will offer and what are its parameters.
Information