Arab World Wheeler-Dealer

What the tiny (pop. 1.4 million) Persian Gulf emirate of Kuwait loses in size to Saudi Arabia, it more than makes up for in aggressive money management. In contrast to the Saudis, with their conservative investment policies, the Kuwaitis have long used their surplus oil revenues, which now exceed an estimated $65 billion, to wheel and deal in real estate and in the stocks and bonds of blue-chip Western companies.

Unlike the desert-dwelling Saudis, the coastal Arabs of Kuwait have a lengthy tradition of commerce with other peoples. Less orthodox in their Islamic observance than the Saudis, the Kuwaitis also have a more relaxed and open attitude toward banking and finance. Sniffing out a deal is in their blood.

In the U.S., Kuwait has built an impressive investment portfolio, with some $7 billion in the securities of a rich slice of U.S. industry that includes everything from computer companies to energy firms to banks. The Kuwaiti U.S. portfolio is managed chiefly by New York's Citibank, though reportedly Kuwaiti officials have threatened to move some of it elsewhere because of dissatisfaction with the bank's management of their investments.

In real estate, the Kuwaitis have moved rapidly into the U.S. Sunbelt. They own the 30-story Atlanta Hilton Hotel, as well as all of South Carolina's Kiawah Island, a resort that has generated some $200 million in revenues for the Kuwaitis on an original investment of only $17.4 million. Kuwait owns parcels of real estate in New Orleans, Boston and Washington, D.C., including office space now rented by the General Services Administration.

Sophisticated though they are, the Kuwaitis have also made some mistakes and miscalculations. In the 1970s the sheikdom tried to acquire a controlling interest in West Germany's Daimler-Benz automaker but abandoned the effort after German bankers formed a consortium to keep the power in German hands. Last year Kuwait bid $982 million for a 14.6% share of Getty Oil of Los Angeles but dropped the tender offer after executors of the estate of J. Paul Getty resisted. In spite of such setbacks, the emirate is plainly doing something right: revenues from its investments this year should reach $7.6 billion, nearly three times the $2.6 billion that Kuwait received from oil in 1972.

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