The Gulf’s Quiet Takeover of Global Finance

Western financial institutions are retreating from riskier markets. Higher interest rates, tighter regulations, and geopolitical risks have made traditional lenders more cautious. But Gulf nations—Saudi Arabia, the UAE, and Qatar—are stepping in, reshaping global finance through sovereign wealth funds, private credit, and alternative lending structures.

Middle Eastern capital is filling the gap left by U.S. and European banks, often with fewer restrictions and longer investment horizons. This isn’t just about higher returns—it's a strategic play to expand influence in emerging markets, secure critical assets, and shift financial power away from the West.

The Rise of Gulf-Backed Private Credit

Private credit markets, once dominated by Western hedge funds, are now being fueled by Gulf sovereign wealth funds. The UAE’s Mubadala, Saudi Arabia’s Public Investment Fund (PIF), and Qatar Investment Authority (QIA) have been quietly deploying billions into direct lending, distressed assets, and infrastructure.

• Mubadala partnered with Apollo Global Management to deploy $12 billion into private credit in 2023.

• PIF launched a $40 billion private credit fund, aggressively targeting global corporate lending.

• ADQ and QIA are snapping up distressed assets in emerging markets, where Western banks are pulling back.

• Private credit in the GCC surged over 50% in 2023, highlighting the region’s growing dominance in alternative lending.

This is more than just a financial shift—it’s a geopolitical realignment. By funding infrastructure and strategic industries, Gulf investors are embedding themselves deeper into the economies of Asia, Africa, and Latin America.

Who Wins, Who Loses?

Middle Eastern sovereign funds are the biggest winners. They’re securing discounted Western assets, expanding their influence in capital markets, and forging deeper ties with emerging economies.

• Borrowers in emerging markets are also benefiting, as they gain access to fast, flexible financing without IMF or World Bank conditions.

• Western banks are losing ground, constrained by compliance risks and capital requirements that make them less competitive.

• Debt-reliant firms without Gulf ties are struggling as U.S. and European banks reduce exposure to distressed credit.

• The U.S. and EU are losing leverage in key regions, as Gulf-backed credit flows into economies that once relied on Western financing.

Beyond Banking: A Strategic Play

Gulf money isn’t just replacing Western credit—it’s rewiring global trade and infrastructure.

• The UAE has become a key financial conduit for sanctioned economies like Russia and Iran, helping bypass Western banking restrictions.

• Crypto and alternative payment networks in Dubai are accelerating de-dollarization by enabling discreet cross-border transactions.

• Saudi Arabia’s PIF and Abu Dhabi’s Mubadala are taking on the role of lenders of last resort, stepping in where the IMF and Western banks have imposed stricter lending conditions.

• The BRICS expansion in 2024, which welcomed Saudi Arabia, the UAE, and Egypt, has given the Gulf even more leverage in non-Western financial networks.

Middle Eastern capital is also playing a role in global infrastructure power struggles. The Grand Ethiopian Renaissance Dam (GERD) has become a geopolitical flashpoint, with Ethiopia, Egypt, and Sudan competing for control over the Nile. While Western financial institutions remain hesitant, Gulf investors have quietly backed Ethiopia’s infrastructure push, reinforcing their influence in Africa.

Gulf investors are also reshaping trade routes beyond the Middle East. In Latin America, Mexico’s new trade corridor is reconfiguring global supply chains, and Gulf capital is flowing into logistics and industrial hubs, aligning with Saudi and UAE interests in diversifying trade.

What Comes Next?

Expect even deeper Gulf-backed investment in energy, tech, and infrastructure, further eroding Western dominance in emerging market finance. U.S. and European banks will either adapt—or risk an irreversible decline in global influence. Political pushback is inevitable, but the capital flows are already shifting. For investors, ignoring the Gulf’s quiet financial takeover is no longer an option. By the time the market catches on, the best deals will already be taken. Romerus provides exclusive insights into how to position for these shifts—before the window closes.