09/11/2023 – 21:52
From football clubs to telephone companies, Gulf countries are sponsoring a wave of investments funded by the rise in oil prices. There are those who view these moves with concern. When it wasn’t trying to lure football stars like Neymar, Cristiano Ronaldo and Karim Benzema to Riyadh for a few hundred million euros a year, Saudi Arabia regularly opened its coffers to support companies in trouble in the West .
It was it, together with the neighboring United Arab Emirates (UAE) and Qatar – through the Saudi Public Investment Fund (FIP) – that came to the rescue of several Western banks at the height of the 2008-2009 financial crisis, even when their own economies were sinking along with the price of oil.
“Gulf sovereign wealth funds can invest large sums without bureaucracy, especially when things get difficult. They have often proven to be the ‘white knights’ for many companies,” says Eckart Woertz, director of the GIGA Institute for Middle Eastern Studies.
The Saudi kingdom currently has stakes in Nintendo, Uber, Boeing and the English football team Newcastle United Football Club. In June, the PGA Tour, a company that organizes professional golf tournaments in the United States, approved a controversial merger with LIV Golf, supported by Saudi Arabia and denounced by human rights organizations.
The FIP also owns almost two-thirds of Lucid Motors, an aspiring rival to Tesla, contributing US$5.4 billion (R$26.6 billion) in the last five years to a company that produces less than 10,000 vehicles per year.
Investments in telephone companies raise fears
The most recent investment, although much smaller, is the acquisition, announced last week by Saudi Telecom (STC), of a 9.9% stake in Telefonica, a Spanish telecommunications giant, worth around 2.1 billion of euros (R$ 11.1 billion).
Over the past eight years, Telefonica’s market value has shrunk by two-thirds. Price wars in the provision of mobile and internet services, investments in new technologies and expansion into new markets have left the Spanish company with a huge debt.
e& (formerly Etisalat), a telephone company in the United Arab Emirates, increased its stake in another large European telecommunications company, Vodafone, from 10% to almost 15% this year. In August, e& said it was evaluating reaching 20%.
Both investments raised national security concerns – the Gulf countries are autocratic regimes, with a long history of human rights violations and increasing surveillance of their populations.
Deputy Prime Minister of Spain, Nadia Calvino stated last week that the stake in Telefonica would need to be assessed “with the defense of Spain’s strategic interests in mind”.
The Madrid government would be especially cautious about Telefonica’s links to the country’s defense sector.
The UK is also concerned about the impact of Vodafone’s partnership with e& on Vodafone’s planned $19 billion merger with rival Three UK, currently scrutinized by the free competition authority. in the country.
Three is owned by Hong Kong-based CK Hutchison, and the deal could give China – but also the UAE – access to the UK’s critical communications infrastructure.
Gulf countries are not China
For some analysts, however, these concerns may be exaggerated. “Saudi Arabia does not pursue interests comparable to those of China or Russia”, assesses Woertz. “While China has pursued technology that is already installed here in highly sensitive communications infrastructure, this is not the case in Saudi Arabia. They don’t produce cutting-edge technology like China’s Huawei.”
Huawei, like other Chinese technology companies, has been banned by the United States and many of its allies. Western intelligence agencies fear Chinese wireless network equipment could be surveilled by Beijing.
Big money for high quality chips
Amid a global shortage of high-quality semiconductors needed for advanced artificial intelligence language models, Saudi Arabia and the United Arab Emirates are reportedly purchasing chips made by American technology company NVIDIA.
Both countries have spoken openly about their desire to become leaders in AI technologies – while experts warn about the dangers of their misuse by autocratic regimes. China, an example of this, remains at the forefront of monitoring a population of 1.4 billion people.
Speaking to the Financial Times newspaper, the director of the European office of the Center for Democracy and Technology, Iverna McGowan, commented last month on the harmful impacts that AI can have in a context where human rights defenders and journalists are frequent targets of government repressions. – case of the United Arab Emirates and Saudi Arabia. “Add to this the fact that we know how AI can have discriminatory impacts or be used to intensify illegal surveillance. It’s a scary idea.”
Surveillance and close ties with China
In recent news, Gulf countries have gained notoriety for their own surveillance abilities. In 2019, Google and Apple banned a popular UAE messaging app, ToTok, after the New York Times reported that it was being used by the country’s intelligence agencies to spy on users.
Gulf countries also heavily censor the internet: anti-Islamic content, content critical of the government or liberal issues such as LGBTQ+ rights, for example.
They are also China’s essential partners on the Digital Silk Road, the technological arm of the new Silk Road, an initiative that aims to facilitate China’s foreign trade.
Several analysts have warned that the ubiquity of Chinese spying technologies in the Middle East is likely to raise additional security concerns for the West.
Sportswashing: sport as marketing
Human rights defenders have regularly denounced Saudi Arabia for a practice known as “sportswashing”, a strategy to improve and promote its own image through sport. In other words, it means distracting public attention from a poor human rights record with mega sports deals, such as the recent merger with the PGA Tour and investment in a Saudi league filled with Western soccer stars.
“It has been clear for some time that Saudi Arabia was willing to use vast amounts of money to assert itself at the top of golf – it is just part of a wider effort to become a major sporting power and try to divert attention from the appalling record of country’s human rights”, comments Felix Jakens, from Amnesty International in the United Kingdom.
In its latest annual report, the organization accused Saudi Arabia of violations that included unfair trials, torture in prisons, mass executions and discrimination against women.
While these concerns are important and security threats need to be investigated, GIGA’s Woertz says pragmatism often takes precedence over other issues in business, especially in times of crisis. “For companies, human rights are not their main concerns. It’s about expanding their respective businesses and, as investors, they [países do Golfo] They are very useful.”
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