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UAE investment in US under review over China ties: Report

Due to national security concerns, the US is reviewing a plan by Abu Dhabi's Mubadala to take over a New York-based investment group
United Arab Emirates President Sheikh Mohammed bin Zayed al-Nahyan gestures after a meeting with French prime minister at l’Hotel de Matignon, in Paris, on 19 July 2022

The US is reviewing a plan by Abu Dhabi's sovereign wealth fund to take over the New York-based Fortress Investment Group, over national security concerns stemming from the UAE’s ties to China, the Financial Times reported on Tuesday.

Mubadala, a holding company that serves as a sovereign wealth fund, agreed in May to buy a majority position in the $46bn US firm from Japan’s SoftBank Group. The Emirati fund hopes to seal the deal in 2024, a move that would give it a 70 percent stake in Fortress’ equity.

According to the Financial Times, the Committee on Foreign Investment in the United States' (Cfius) review of the deal is in its “early stages” and a decision is not expected for several months.

But it is the latest case of the UAE’s ties to China proving an irritant in its relations with Washington. Abu Dhabi's talks with Washington to acquire the F-35 fighter jet broke down out of concerns Bejing would gain access to sensitive US technologies.

In April, leaked US intelligence documents suggested that China had also resumed construction at a suspected military facility at Khalifa Port in the UAE - which Abu Dhabi had pledged to halt in the face of opposition from the US.

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Washington is facing increasing competition with China in the Gulf region. Beijing has emerged as the biggest buyer of Gulf states’ oil and has sold sensitive technology to Saudi Arabia, Qatar, and the UAE. Last year, China’s Huawei won a contract to roll out 5G technology in the Emirates.

Both Saudi Arabia and the UAE have shown more willingness to pursue a foreign policy more independent of Washington, amid concerns about the US’s commitment to their security.

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In May, the UAE exited a US-led multinational security force that protects shipping in the Gulf. The pullout came following a Wall Street Journal article that said that Emirati officials had complained to Washington over its weak response to Iran’s seizure of two oil tankers in the Gulf of Oman.

While analysts say the UAE views Iran as a major threat, it has recently moved to patch up ties with the Islamic Republic, reappointing an ambassador this year. Saudi Arabia followed soon after a deal brokered by China.

Business and security are closely linked in the UAE, a collection of seven small monarchies, or emirates, led by the emirate of Abu Dhabi.

The UAE’s powerful national security advisor, Sheikh Tahnoun bin Zayed al-Nahyan, who is known for his trademark aviator sunglasses, chairs the Abu Dhabi Investment Authority, a $790bn sovereign wealth fund.

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