LAST year, when DP World tried to buy into the US market, the proverbial hit the fan. “Foreign control of our ports, which are vital to homeland security, is a risky proposition. Riskier yet is that we are turning it over to a country that has been linked to terrorism previously,” thundered Senator Charles Schumer.

The United Arab Emirates, which owns DP World, might be an ally in the war on terror, but, Schumer pointed out, one of the 9/11 terrorists was born there.

Some 18 months on, Schumer has obviously changed his tune. Last week, Abu Dhabi spent $7.5 billion (€5 billion) for a 4.9% interest in Citigroup. America’s largest bank is now almost 10% owned by Middle Eastern investors. Saudi Arabia’s Prince al-Waleed bin Talal owns about 5%.

Thanks to sky-high oil prices, the Arab states have been snapping up corporate America. In the past two weeks alone, Dubai and Abu Dhabi, two of the seven city-state emirates, have injected cash into Sony and Advanced Micro Devices, a leading semiconductor maker and a company with plenty of Pentagon contracts.

This is not Abu Dhabi’s first adventure in US banking. Sheikh Zayed bin Sultan Al Nahyan, the father of the current ruler of Abu Dhabi, owned the Bank of Credit and Commerce International (BCCI), an institution regulators brought down after finding it was involved in arms dealing, money laundering, bribery, support of terrorism and the sale of nuclear technologies.

So what did Schumer have to say this time? “It seemed to me that this is good for Citigroup, it is good for jobs in New York. It bolsters their capital position, allows what is fundamentally a very strong company to weather a difficult time,” he said.

Abu Dhabi had given assurances that their investments were driven only by economic considerations, not political ones. “They have made those assurances and have lived up to them in the past,” said Schumer.

Presumably these were the same assurances Schumer was unconvinced by when Abu Dhabi was “linked to terrorism”.

It is easy too see why Schumer had a change of heart. The big banks are in turmoil; the venture capital houses have bitten off more than they can chew. Meanwhile, in cash-rich oil states and China, government-controlled sovereign wealth funds have so much money they do not know what to do with it.

China has more than $1.2 trillion in foreign exchange reserves. Oil-export proceeds netted by members of the Organisation of Petroleum Exporting Countries have more than doubled since 2000 to an estimated $688 billion this year. The emirates alone collectively have $5 billion a week in need of recycling. In the midst of the credit crunch, global banks cannot afford to bankroll local bailout efforts. Some, like Citibank, need to be bailed out themselves.

The buying spree looks set to continue. How long the political truce will hold remains to be seen.

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