MUMBAI, May 29 (Reuters Breakingviews) - Middle East money is the answer to plugging the growing financial gaps created in Asia by Western investment restrictions, or at least that’s the very wishful thinking of the regions’ financiers and governments.
The latest example is courtesy of the New Development Bank (NDB). The Shanghai-based multilateral institution, known as the “Brics bank”, is in talks with Saudi Arabia to become a member as sanctions weigh on Russia, which is one of five founding members of the lender alongside Brazil, India, China and South Africa.
A rich new supporter may ease some funding pain for an institution that has lent $33 billion to 96 projects since its 2015 inception, compared to $67 billion of disbursements by the World Bank as of the year ending in June 2022. Even if the NDB might have teamed up with Saudi regardless of sanctions on Russia, any deal will be high on symbolism.
It makes sense for petrodollar countries to look East given Asia’s growing oil demand. But oil-rich countries’ past caution to investing in the continent suggests they will not live up to expectations. Bankers also want Middle East companies to come and list in Hong Kong as those from elsewhere stay away and economists believe Middle East funds will step up investments into China as global funds retreat. That’s a lot of boxes for the oil region to tick. (By Una Galani)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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