Mubadala and Saudi Fund Deals on US Radar, Potential China Angle Explored

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The deepening economic ties between Gulf countries and China are triggering scrutiny in Washington, with reports indicating that the Committee on Foreign Investment in the United States (CFIUS) is evaluating several multibillion-dollar transactions involving Gulf sovereign wealth funds, particularly the UAE’s Mubadala and the Saudi Public Investment Fund.

Recent reports from Bloomberg suggest that officials in President Joe Biden’s cabinet are currently scrutinizing more than half a dozen acquisitions in this context. The review has been prompted by concerns that crucial technology, infrastructure, and data flowing to the UAE and other Gulf countries might eventually end up in Beijing’s hands, posing potential threats to US national security.

Among the contentious deals under review is Mubadala’s acquisition of a stake in the Fortress Investment Group. Although there has been no official response from Gulf capitals regarding the reported review, it is likely to introduce tensions in their relations with Washington. Saudi Arabia, led by Crown Prince Mohammed bin Salman Al Saud, has not been particularly receptive to President Joe Biden’s policies, despite the significant role the US plays in the national security of major Gulf powers.

The rise of China as an increasingly attractive investment destination for Gulf countries is causing unease in Washington. According to Bloomberg, the value of acquisitions and investments by Gulf funds into China surged to $2.3 billion in 2023 from around $100 million last year. This coincides with Beijing’s efforts to strengthen political ties in the region since President Xi Jinping’s visit to Riyadh in December. The report suggests that CFIUS has sought access to the internal records of several Gulf funds, and the fund managers are reportedly reluctant to open up their full records to a foreign government.

CFIUS reviews have been in place for decades, originally focusing on foreign companies acquiring US businesses supplying the Department of Defense. However, over the years, the concept of national security has broadened, especially with China emerging as a significant investor and technological competitor. The recent expansion of CFIUS reviews has been driven by technological advancements, digitalization, globalized supply chains, and concerns over national security risks in strategically important areas such as semiconductor manufacturing, large-capacity batteries, critical minerals, and pharmaceuticals.