The deep pockets of Gulf sovereign wealth funds (SWFs) could be an increasingly important source of funding for western economies facing spending cuts in the new era of austerity. Projects in Europe may become more financially attractive for the region’s government investment vehicles as austerity measures by EU governments depress market valuations, said Dr Alexander Mirtchev, the founder and chairman of the US economic consultancy Krull. “These SWFs are starting to look increasingly as the premier source of available financing for a cash-starved international financial system,” said Dr Mirtchev, who is also an independent director of the Kazakhstan SWF Samruk-Kazyna. “The Gulf SWFs can underwrite the autonomy of states by acting as an insurer of last resort – in other words, a buffer against global crises and cyclical development.” SWFs could become increasingly accepted as investors in the US and Europe, as the spending capacity of western governments remains constrained by the need to cut bulging budget deficits, he said.
