The United States has for years promoted its own business interests abroad through public funds and lobbying to open up the economies of developing countries, but as foreign government-controlled sovereign wealth funds (SWFs) increasingly acquire or invest in US assets, Washington is scrambling to change the rules of the game. SWFs are essentially pools of money governments invest for profit. Oil-producing countries, buoyed by soaring prices, now account for about two-thirds of the total wealth of global SWFs.

But as these funds begin to acquire stakes in US companies, Washington has moved swiftly to curb their clout — prompting some analysts to point out that this could be perceived as a case of double standards by the US and its friends in the international financial institutions. “The US [itself] is in the business of sovereign wealth management,” Edwin M. Truman, a senior fellow at the Peterson Institute for International Economics, told a Congressional hearing last week. “We should be careful what we wish for.” After all, US state and federal governments own or control more than $3 trillion in financial assets, or 20% of the 15 trillion dollars invested by governments worldwide. This is close to the estimated $3.3 trillion that SWFs controlled in 2007.

The US has long advocated for the removal of trade and investment barriers in other countries through extensive programmes euphemistically labeled as aid and run by the State Department’s US Agency for International Development (USAID) and Washington’s proxy agents in the World Bank and the International Monetary Fund and other international financial institutions. Many of those institutions are notorious for enforcing economic “reforms” that erode local control over economic and even political decisions.

Yet when the rich Middle East SWFs sought to acquire important US assets, such as when the Emirate of Abu Dhabi purchased a $7.5-billion stake in Citicorp last year, Washington had its moment of revelation. Investments by the SWFs in private US companies, equity funds, and real property, among other assets, came under unprecedented scrutiny. A slew of congressional hearings on how to protect US national security ensued.

House Foreign Affairs Committee Chairman Howard L Berman told a hearing last week that investments by the funds of Middle Eastern countries “have raised questions about the power that these massive funds may have over US national security interests.” Congress even heard Alan Tonelson, a researcher at the US Business and Industry Council, liken the SWFs to the threat posed by Al Qaeda and suggest that sheiks in the Persian Gulf oil kingdoms can never be reliable allies. Last week, a high-level congressional delegation, led by US Representative Luis V Gutierrez, who chairs the Subcommittee on Domestic and International Monetary Policy, made a trip to the Middle East to convince investors there that only their money is welcome, but nothing more. — IPS