Waseem Sayegh

Over the past couple of years Sovereign Wealth Funds (SWFs) have received massive media coverage, leading many to mistakenly believe that they are a 21st century invention. This media coverage has focused on several high-profile deals that went sour. The reality of the matter is that the history of SWFs date back to 1953 when Kuwait established the first SWF, Kuwait Investment Office (KIO), to reinvest Kuwait’s petrodollars. Furthermore one of the more high profile deals that went sour happened in 1987 when KIO bought more than 20% of British Petroleum. This deal inflamed the British government and KIO responded by selling more than half of their stake.
As with most things under the sun, SWFs are neither villains nor saviors. These funds are not isolated islands. Rather,  they are complex entities that are forced to play within the international political landscape. SWFs are thrown into the mix of international political tension, string pulling, power play, political perception, pragmatic nationalism, sovereignty and autonomy, the rising price of oil, and huge US foreign account deficits and Asian and Middle-Eastern economy surpluses. This mix results in a multidimensional equation with a slew of stake holders ranging from your average Joe to governments. In other words, everyone on this earth is directly or indirectly affected by SWFs.

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