Filenews 30 March 2022
By Dominic Dudley
Several (and large) investors from the Middle East have announced the suspension of their investment activities in Russia, since they are concerned about the military operations conducted in Ukraine and the wider economic impact they will have.
High-ranking officials from the Qatari government and the Mubadala Investment Company, based in the United Arab Emirates, said days ago that they were stopping their investment planning in the country. The Arabs may not be following the mass exodus of westerners from Russia, but the "freeze" of their investments will exacerbate the economic "pain" for Moscow, while it could encourage other big investors to reconsider their stance.
"Obviously, under the current circumstances, we need to suspend our investments in the Russian market," Mubadala CEO Khaldoon Al-Mubarak commented, speaking at a conference in Dubai, according to Bloomberg. "We are declaring a pause and waiting to see how the situation develops."
"The Russian-Ukrainian crisis is a travesty with devastating consequences for human life and the economies of the whole world," he added.
Meanwhile, from Doha, Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said his country has no plans to make new investments in Russia until there is a "more favourable environment and political stability".
"Right now, we're not thinking about new investments in Russia," he stressed while speaking to CNN on the sidelines of the Doha Forum. The suspension of investment activity is extended to other countries in Europe, where there is an increased political risk, according to Qatar. However, the sheikh did not name them.
Doha's main sovereign wealth vehicle is the Qatar Investment Authority (QIA). It is estimated to have assets amounting to EUR 450 billion. dollars, an amount that brings it within the 10 largest sovereign wealth funds in the world, according to the SWF Institute. Mubadala is a similar fund in the UAE, with its assets estimated at $243 billion. dollars.
Both Mubadala and QIA have made investments jointly with the state-owned Russian Direct Investment Fund (RDIF). The Gulf States Newsletter reported that Mubadala's joint investments with RDIF since October 2019 had a value of $2.3 billion. dollars, including their participation in the oil and gas company Gazpromneft-Vostok. QIA owns about 19% of the Russian energy company, Rosneft.
Arabs' investment activity in Russia may be "on ice", but they do not yet seem to be considering selling their assets and leaving the country, as many Western companies have done.
It is noted that other wealthy Gulf countries have invested in Russia through their state coffers, such as the Abu Dhabi Investment Authority (ADIA), the Kuwait Investment Authority (KIA) and the Saudi Arabian Public Investment Fund (PIF).
What is worrying for Moscow is that some large Chinese investors also appear hesitant. As reported by Reuters, already the state-owned Chinese group Sinopec has suspended talks on a major investment in the petrochemical sector in Russia and on the plan to promote Russian gas in the Chinese market.
Source: Forbes
