Across the Middle East, from Lebanon to Iraq, there is growing popular anger and frustration at government mismanagement of financial resources and service delivery. Fiscal policy is at the center of popular politics. As some states seek to hold off on cutting subsidies, raising taxes, altering state and military structures of ownership and deflating bloated public sectors, there are few policy options to raise additional sources of cash. The governments can borrow. They can sell off assets. They can increase dependence on foreign aid. Or they can devalue their currencies and pass the cost of failing to reform to citizens by erasing their savings.
Where the money comes from matters; enticing foreign investment has proved harder than some states may have expected. Saudi Arabia spent three years trying to raise capital with an initial public offering of its national oil company Aramco, only to raise $26 billion from mostly domestic investors, from an early goal of over $150 billion in an international offering of a larger portion of shares. In Oman, the sleepy sultanate has embarked on a fast track to capital raising, seeking a number of privatizations of state-owned assets. It needs the money, and fast. The investors coming to the rescue are of a new kind — states and state-owned entities, many from China.