These days, the marble lobbies of Abu Dhabi’s financial district are filled with a certain kind of silence. The air outside still has a subtle jet fuel and seawater odor, and the roads leading to Dubai are busy and smooth, as though nothing has changed in the area. Inside, men wearing fitted thobes browse through Bloomberg terminals that display Brent crude above $100. Meanwhile, a few hundred miles north, border towns in Iraq are taking in refugees they are unable to feed, and Iranian cities are dark.
The contrast is difficult to ignore. Rainy-day funds were intended to be the Gulf’s sovereign wealth funds. Depending on who you trust, the eleven major vehicles—PIF in Riyadh, ADIA and Mubadala in Abu Dhabi, QIA in Doha, KIA in Kuwait City, and the others—were built over decades using hydrocarbon revenues and currently hold close to six trillion dollars. China publicly reports twice as much. This money silently moved outward for years, supporting Western tech valuations, purchasing English football teams, saving Credit Suisse, and lubricating private credit markets in the United States that most likely couldn’t have survived without it.
The peculiar thing about the present is that it has finally started to rain, and the funds seem to be doing fairly well, at least temporarily.
Since the start of the strikes, oil prices have increased by about 20%. Although the Strait of Hormuz is only partially open, the barrels that do depart are fetching prices that no one could have predicted last winter. Despite the loss of Saudi Aramco’s largest domestic refinery, PIF has continued to engage in international transactions despite bearing the massive capital requirements of Vision 2030. In the Paramount-Warner Bros. deal, PIF, QIA, and L’IMAD of Abu Dhabi are discreetly writing equity checks. In the US, there are bets on biotech, semiconductors, and AI infrastructure. Even if the volume slows, investors appear to think the Gulf money will continue to flow in.
Remittance collapses are being processed by Beirut’s banks in the meantime. Jordan has lost its tourism earnings. Every night, Iraq’s electrical grid falters. Egypt, which relies on Suez traffic and Gulf deposits, is facing a balance-of-payments issue that no one in Cairo wants to publicly acknowledge. To put it simply, the asymmetry is uncomfortable: the neighborhood’s wealthiest corner is benefiting financially from the same crisis that is harming the neighborhood.
The image isn’t straightforward, of course. Last year, Saudi Arabia ran a seventy-three billion dollar deficit. JPMorgan has already reduced non-oil growth projections for the GCC, with the UAE taking the biggest cut. PIF’s domestic responsibilities, such as those theme parks, futuristic cities, and tourism megaprojects, continue to eat away at its balance sheet. The UAE is said to have more than two trillion dollars in assets, which is why Scott Bessent’s offer of a dollar swap line to the Emirates caused controversy in Washington. Why is an American backstop necessary for such a wealthy nation?
Perhaps the solution is that accessible wealth and liquid wealth are not the same. Even with a trillion dollars, a fund may find it difficult to raise money without selling assets at the wrong time. Quietly, Gulf officials believe that the buffers will hold, but only if the conflict doesn’t continue for another quarter or two.
As this is happening, a minor historical parallel keeps coming up. These same funds came to the rescue of Barclays, UBS, and Citigroup after 2008. The cavalry may now be required at home. For months, Robert Mogielnicki and others have alluded to this change. According to Ana Nacvalovaite of Oxford, PIF is now funding a nation’s rebirth rather than merely being a global investor.
The calculation has an almost moral quality, but no one in Doha or Abu Dhabi would present it that way. When a region uses petrodollars to purchase decades of stability and then exports the excess, it discovers that the neighborhood it left behind is now the source of its disruption. The funds might come out stronger. This could also be the start of something more subdued and challenging. In any case, the distance between the marble towers of the Gulf and the smoke north of them continues to grow, and no one is quite certain when or if it will close.
