Money trees in the Gulf: The power of sovereign wealth funds in shifting GCC international politics
This article investigates the role of Sovereign Wealth Funds in the Gulf States' foreign policy and is featured in Orient II/2023.
Gulf sovereign wealth funds (SwFs), large state-owned investment funds, have historically been known as quiet global investors deploying capital through a long-term approach, mainly in western financial markets. More recently, however, Gulf ruling elites have been leveraging them to proactively drive nation-building projects, deepen strategic international partnerships and claim a more prominent role on the world stage. why is that the case? The article argues that Gulf SwFs are now pivotal agents in the region’s shifting international politics. A new generation of leaders is using them to pursue elite-based interests and economic development goals that induce deeper economic and political influence in a regional sphere of influence. They also drive Gulf governments’ attempts to boost alternative revenue streams through significant investments in disruptive technologies and low-carbon projects, simultaneously expanding the rentier monarchies’ international reach beyond their role as fossil fuel producers. The article delineates the rise of SwFs as alternative mechanisms of regime maintenance; they enable incumbent elites to advance foreign policy ambitions and maintain shared expectations about the appropriate organisation of a political economy by harnessing the impending energy transition and the impact of the climate crisis.
Alexis Montambault-Trudelle is pursuing his Ph.D. at the University of edinburgh. His research focuses on Saudi Arabia’s Public Investment Fund to explore the effects of internal political dynamics on sovereign wealth management. He investigates how intra-elite dynamics, regime structures and state-society relations in the post-2015 Saudi political landscape shape the sovereign wealth fund’s institutional design and behaviour, whether in the kingdom or across the global financial market. He is particularly interested in the political economy of Gulf states and the multiple facets surrounding the relationship between states and the financial market.
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