President: Abu Dhabi wealth fund estimates ‘exaggerated'

H Michael Jalili

• Last Updated: June 28. 2008 11:19PM UAE / June 28. 2008 7:19PM GMT

Oil drilling in Abu Dhabi emirate. Sovereign wealth funds are financed by Abu Dhabi’s surplus oil revenue. Courtesy of Adnoc

Suggestions that the sovereign wealth funds of Abu Dhabi are worth more than US$800 billion (Dh2.9 trillion) are exaggerated, the President said yesterday, in one of the first official comments on the issue.

The size of Abu Dhabi’s sovereign wealth funds, believed to be the largest in the world, are the subject of much speculation amid growing pressure for the disclosure of more information about their guiding principles and holdings.

In response to a reporter’s question, which put the value of those investments in excess of $800bn, Sheikh Khalifa bin Zayed, President of the UAE and Ruler of Abu Dhabi, said: “I think the estimations you have mentioned are exaggerated and they do not reflect the truth and the size of Emirati investments abroad.”

He made the comment in an interview yesterday with the Lebanese daily Al Nahar newspaper, according to the state news agency, WAM.

Sheikh Khalifa continued: “Regardless of the numbers and estimations, however, the sovereign funds, which you have referred to, operate according to economic principles, not political considerations. We have made that clear to our partners in international markets. We work in accordance to investment opportunities available to us in all markets.”

The funds are financed by Abu Dhabi’s surplus oil revenue, a consequence of record high prices for the export of crude oil.

“In many cases, we depend on long-term investments because we believe that our investments are part of our commitment to future generations, which may not have the same resources available now. That is especially true if one takes into consideration that oil resources are depleting and global demand on energy is on the rise,” Sheikh Khalifa said.

Some sovereign wealth fund investments from the UAE have been met with hostility in the United States, as in the case of the failed 2006 acquisition of six US ports by the Dubai-based DP World, although relations have improved since then.

In March this year, sovereign wealth funds from Singapore and Abu Dhabi signed an undertaking with the US in which they agreed that investments should be purely commercial and have more disclosure. The US agreed that the funds should not be hindered by protectionism or be discriminated against.

Henry Paulson, the US treasury secretary, visited the UAE earlier this month and invited sovereign wealth funds to invest in the cash-starved American economy, now reeling from a credit crisis.

Turning to the situation in Lebanon, Sheikh Khalifa was asked if the Emirati private sector planned any new investments there after last month’s Doha accord.

He replied: “The Government in the Emirates does not interfere with investment choices of the private sector, because on the one hand, it follows a free market policy, and on the other hand, it has a total confidence on the level of maturity the private sector has reached – that does not need guidance, whether inside or outside the country.

“Generally speaking, however, security and stability are the most important factors in attracting investors. When these two prerequisites are met, investors will direct their investment the way they think would benefit them the best.”

He delivered an upbeat outlook for investment in Lebanon after the Doha agreement, based on the experience of the period following the Lebanese civil war in 1975-1990.

mjalili@thenational.ae