The Gulf has made establishing a sovereign wealth fund seem like a strategic—and glamorous—choice, leading countries like Canada to launch their own. But Latin America has run this experiment many times over the years, offering a more realistic view of an SWF’s pitfalls and promise.
NEW YORK—What’s not to love about a sovereign wealth fund? Gulf states’ SWFs, which control roughly $6 trillion in assets, are no longer mere investment vehicles. They have become tools of statecraft, transforming kingdoms and emirates into power brokers and benefactors. Alongside splashy spending on sports and luxury retail—Saudi Arabia’s Public Investment Fund (PIF) bought the English soccer club Newcastle United, and the Qatar Investment Authority (QIA) owns the department store Harrods—these funds have poured money into strategic sectors such as AI, logistics, and renewables. They also provide economic support to allies, serving as a foreign-policy lever.
NEW YORK—What’s not to love about a sovereign wealth fund? Gulf states’ SWFs, which control roughly $6 trillion in assets, are no longer mere investment vehicles. They have become tools of statecraft, transforming kingdoms and emirates into power brokers and benefactors. Alongside splashy spending on sports and luxury retail—Saudi Arabia’s Public Investment Fund (PIF) bought the English soccer club Newcastle United, and the Qatar Investment Authority (QIA) owns the department store Harrods—these funds have poured money into strategic sectors such as AI, logistics, and renewables. They also provide economic support to allies, serving as a foreign-policy lever.