March 8, 2006	Wednesday	Safar 7, 1427

WASHINGTON, March 7: Middle Eastern investment in the United States is once again picking up steam, showing big gains since the tense period following the Sept 11, 2001, terrorist attacks, Washington Post reported on Tuesday.

The report notes that while some takeovers are triggering alarm — most famously, the purchase by a Dubai-owned company of a seaports management firm — others are evoking warm welcome.

Spearheading the trend is Dubai’s Sheikh Mohammed bin Rashid Maktum, ruler of the free-wheeling city-state, which is part of the United Arab Emirates UAE). The ports deal is just one of a series of recent purchases by companies he controls.

Other acquisitions include a $1 billion portfolio of 21,000 apartments in the US Sun Belt cities; a 2.2 per cent stake in the automotive giant DaimlerChrysler AG, that cost another $1 billion; and a Manhattan landmark building, 230 Park Ave. The emirate also made major purchases in other countries over the past year, notably a $1.5 billion takeover of Britain’s Tussauds Group, which owns the famous waxworks, along with theme parks and other entertainment-oriented businesses.

On Thursday, came the news that yet another Dubai acquisition is drawing the Bush administration scrutiny because of the national security risks — this time of plants in Georgia and Connecticut that make precision components used in engines for military aircraft and tanks.

But an entirely different reaction greeted the disclosure several months ago that Dubai Investment Group had acquired the Essex House hotel in Manhattan and promised to sink $50 million into renovating it.

That announcement prompted New York City Mayor Michael R. Bloomberg to exult: “Another iconic hotel overlooking Central Park will be preserved and its unionized workforce protected. This is excellent news for New York’s tourism and hospitality industries.”

Behind such transactions are two powerful forces. One, of course, is the high price of energy, which has left several oil-producing Arab countries swimming in cash. The other is the burgeoning US trade deficit —$726 billion last year — which means that the United States needs foreign capital; a country that imports more than it exports must cover the gap with money from abroad.

Until now, investments in the United States from Europe and other parts of Asia have dwarfed those from the Middle East. But an increasing share of the foreign money required to fuel the US economy is likely to come from places, like Dubai, that trigger visceral reactions among Americans seared by memories of the Sept 11 attacks, the Post notes.

Already, the list of US businesses owned by Arab investors — not just from Dubai — includes some well-known names. Among them are Caribou Coffee Co., the fast-growing rival to Starbucks Corp.; Church’s Chicken, a fast-food concern; Loehmann’s, a speciality retailer; TLC Health Care Services Inc., a provider of home nursing and hospice care; and even several financial publications, including the American Banker.

Whatever Arab investors abroad finally do, their clout is relatively small — at least for now. At the end of 2004, investors from Arab countries held just $4bn in direct investment in the United States, according to the Commerce department data.

British investors, by contrast, held $252bn, Japanese investors $177bn, Dutch investors $167 billion and German investors held $163 billion. Their holdings span industries often deemed “critical,” such as telecommunications (Finland’s Nokia Corp. and Sweden’s Ericsson Inc.), energy (British Petroleum PLC and Royal Dutch Shell PLC) and utilities (E. On AG) of Germany, which controls much of the gas and electricity distribution in Kentucky.