Undue focus on the Middle East

Here Dixon points to the fact that the Kuwait Investment Authority (KIA), considered the world's oldest SWF, was founded in London in 1953. It’s also worth keeping in mind that there are influential Western SWFs. If you find Norwegians uncomfortably shuffling their feet as you share your retirement worries, it’s probably because their Government Pension Fund (which used to be called the Petroleum Fund of Norway) is bigger than Saudi Arabia and Qatar’s SWFs put together.

Public interest in the SWFs of Gulf States has recently peaked due to the 2022 World Cup. Dixon, who is not especially concerned with football, which, problematically, he describes as “soccer”, points out that those states have been major investors in Europe and North America for decades. “The Qatar Investment Authority for example owns significant shares in Volkswagen and Porsche, along with major real estate assets. This is not for strategic geopolitical reasons. They have no interest in meddling in the running of those companies – and they have never done so.”

Rather than a grand Machiavellian scheme to undermine Western values, the idea of those funds are quite pragmatic. The authorities of fossil fuel exporting countries have tremendous wealth at their disposal and are acutely aware that this income will diminish over time. Thus, they seek to invest in such a way as to guarantee continued revenue. “The goal is intergenerational equity, so saving for future, but also keeping the existing political regime in place.”

According to Dixon, these investments are driven by confidence in the industrial capabilities of Europe and North America and an understanding that the sheer volume of capital they sit on can needs to be moved. Iconic brands, real estate, and even football clubs are big-ticket items where a lot of capital can be moved at once. “You could see why people suspect an underlying political agenda – but really it’s just a sound investment with possibly big returns.”

Surely, the same can’t be said of a World Cup hosted at exorbitant costs? “Mega events like this one or the Olympics increasingly cost host countries more than they earn. There’s a reason Qatar is hosting the World Cup.”

Dixon puts criticism of Middle Eastern SWFs down to good faith hypocrisy. “It’s in the media now because of the World Cup, but it’s been going on for decades and notwithstanding the criticism it won’t stop. The attention given to human rights and social issues right now doesn’t change the economic relations and it likely never will.” He also points to more relevant interventions in the recent past. “SWFs stepped in to support the liquidity problems of Western banks during the 2008 global financial crisis.”

Of the discrepancy between the moral grandstanding towards Qatar and the eagerness for increased financial ties, Dixon remarks realpolitikally: “Global economic relations can be problematic and they always have been.” His confident prediction for the 2022 World Cup final is that the West will forget its concerns about human rights in Qatar shortly after. “No country in the world will say no to their money.”

Dixon emphasises that the real concern is China, rather than the Gulf states. Western governments avoid taking a strong position on the latter while instrumentalising Chinese treatment of the Uyghurs to justify growing protectionism. This contrast is worth reflecting on. “The West isn’t worried about small Middle Eastern states that live off hydrocarbon production. China, however, is viewed as a major economic and geopolitical competitor with vast ambitions: a direct threat to Western industrial dominance.”

“The challenge, however, is that we in the West want an open and liberal international system. It is part of our values. As such, can we close the doors to China and the Middle East? We had hoped China would embrace democracy. The same can be said for much of the Middle East.”

It would be a step too far to claim that spreading a liberal world order was the prime motivation of Europe and North America’s financial decisions. Through the parade of empty gestures surrounding the 2022 World Cup, the thing that’s become clear is that, while the West does care about human rights, it collectively may value money and entertainment infinitely more. But that’s something to be discussed during the commercial breaks at halftime.