Paulson to promote foreign investment in energy
Wednesday May 28, 6:31 pm ET
By Martin Crutsinger, AP Economics Writer
Paulson will tell Mideast officials of burden soaring oil prices placing on consumers
WASHINGTON (AP) -- Treasury Secretary Henry Paulson will tell officials of Saudi Arabia and other Middle East oil producing nations that soaring oil prices are putting a "significant burden" on the global economy, a senior Treasury official said Wednesday.
David McCormick, Treasury's undersecretary for international affairs, said that Paulson in an upcoming trip will be promoting increased foreign investment in oil production as a way of boosting supplies.
"The key message that he will highlight is that record high oil prices are putting a significant burden on the global economy. They are also putting a significant burden on families and consumers, not just in the United States, but around the world," McCormick said in a briefing to preview Paulson's weekend trip.
McCormick said Paulson would be urging "all countries to open up their oil markets to investment that boosts yields, exploration and production." He said that message would not be aimed at any specific country but to all oil producing nations because a significant number of them are "walled off to private investment."
Paulson will not make any specific request for nations to boost their production during the current period of soaring oil prices, McCormick said. On a trip to the Middle East earlier this month, President Bush said that a modest oil production increase by Saudi Arabia "doesn't solve our problem" because the United States must take its own actions in the energy area.
Paulson's first stop will be in Saudi Arabia for talks on Saturday with government officials and private sector investors. He will also visit Qatar and Abu Dhabi and Dubai in the United Arab Emirates. He will deliver a major speech on the importance of open investment policies on Monday in Abu Dhabi.
While in Abu Dhabi, Paulson will have a series of meetings with officials from large government investment funds, known as sovereign wealth funds.
McCormick said that Paulson would stress that the United States is committed to maintaining open investment policies in this country and would stress the benefits other nations will receive from removing investment barriers in their nations.
Sovereign wealth funds, in many cases bulging with revenues earned through the sale of oil, have raised concerns among members of Congress regarding their intentions in making investments in the United States and Europe.
The administration has sought to walk a fine line on the issue, reflecting the United States' dependence on foreign investment to finance its huge trade deficits.
The Abu Dhabi Investment Authority is estimated to have holdings of as much as $900 billion, making it the largest sovereign wealth fund in the world. This fund, which was set up more than 30 years ago to invest the Persian Gulf emirates oil wealth, late last year invested $7.5 billion in Citigroup Inc., giving it a 4.9 percent stake in America's biggest bank.
In 2006, a public furor over foreign investment blocked an effort by Dubai-owned DP World to manage six of the largest ports in the United States. The outcry triggered congressional passage of a law tightening security reviews of foreign investments.
