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Dubai and the US swap investment tips

American financiers like David Rubenstein of the Carlyle Group have started to look towards the Middle East in search of energy dollars to finance deals in the United States.

Rubenstein has had to defend his firm’s Middle East fund search as investment attention on the Middle East comes at a particularly delicate moment. Last year, the proposed sale of American ports to a Dubai firm set off a firestorm in Congress that was quelled only after alternative buyers were found.

As Dubai and neighbouring Emirates begin to invest aggressively outside the Persian Gulf, American investors, in turn, have begun investing in the region. Some of that money is coming from American pension funds.

Lawmakers in the US have increasingly questioned the public-policy implications of pension fund investments. On Monday, Gov. Schwarzenegger of California pledged to sign legislation forcing the state’s two pension funds to shed holdings of all companies that have energy or military-related business in Iran.

Last week, the Borse Dubai, the government-controlled exchange, agreed to take a 19.9 percent stake in the Nasdaq and buy Nasdaq’s 28 percent stake in the London Stock Exchange. At a similar time, the Qatar Investment Fund said it had acquired 20 percent of the LSE.

In addition to that, the Abu Dhabi government bought a 7.5 percent stake in Carlyle and in July of this year, Istithmar, an arm of the Dubai government, bought Barney’s New York.

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