Hank Paulson, the US Treasury secretary who is visiting the Gulf, will invite oil producers to invest their petrodollars in this country
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Paulson to court Mideast oil funds
By Krishna Guha in Washington
May 30 2008 Financial Times UK
By Krishna Guha in Washington
May 30 2008 Financial Times UK
Hank Paulson, the US Treasury secretary who is visiting the Gulf, will invite oil producers to invest their petrodollars in his country, while urging them to take steps to curb the price of crude in the medium term.
Mr Paulson is expected to tell Saudi Arabia, Qatar and the United Arab Emirates that Washington welcomes investment from Middle East sovereign wealth funds.
But he is also likely to tell them it is in their interest to boost investment in oil production and cut subsidies for domestic oil consumption to ease pressure on prices.
He will try to discourage Gulf nations from financial dealings with Iran, and will urge them to do more to help Iraq and Afghanistan.
“We are open to sovereign wealth fund investment in various sectors including the financial sector,” said David McCormick, Treasury under-secretary, ahead of the trip that starts today. Mr Paulson would assure Gulf nations that wealth-fund investment would not be discriminated against by US officials. These funds have invested close to $60bn (€38.7bn, £30.4bn) in US financial institutions since the start of the credit crisis.
Mr Paulson will also emphasize the role that capital market liberalization could play in helping oil producers to reinvest oil revenues efficiently at home.
He is expected to tread lightly on the subject of currency pegs. Analysts say the US does not want to give the impression that any decision by other Gulf nations to join Kuwait in ditching the dollar link would amount to a loss of confidence in the dollar. But they expect US officials privately to highlight the benefits of the currency peg.
Copyright The Financial Times Limited 2008
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