We have seen a period of intense activity by Gulf-based sovereign wealth funds (increasingly referred to as SWFs): the ADIA [Abu Dhabi] $7.5bn investment in Citigroup; the complex bourse bidding war between Qatar and Dubai in Europe; and the geopolitics that seems to be pushing fund money increasingly towards Asia rather than the West.

Put this together and you see something like a grand plan that contains the elements of a traditional strategy for a protective hedging investment overseas by dynasts but is now (with perhaps the laggardly exception of Saudi Arabia) moving in some interesting new directions.

Even in Saudi Arabia, a debate has started on whether it should change a somewhat conservative approach to the recycling of petrodollars and develop its own sovereign wealth presence overseas.

There seem to be three components in all this, alongside the traditional hedging interest in property assets:

- a) the purchasing of stakes and collaboration rights in critical elements in the Western capitalist infrastructure [trade logistics and transport (especially ports and entrepots), financial infrastructure especially international banks, and the 'soft' zone of leisure and tourism, including gaming, hotels, films and other entertainment];

- b) cross-investment in productive capacity and development within the region rather than outside it - much of it related to a peculiar Arabic form of urban mega-development that makes Milton Keynes look like Ambridge and, of course, to the development of independent financial, educational, cultural and professional services sectors; and,

- c) investment in trading relationships with the rising powers to the East.

This suggests continued interest in London as global hub in potential partnership with Dubai and with other centres (much to the continued irritation of Paris and other rival European centres), but it also suggests that, except as ‘hedge’, investment interest in the trading economy of Europe and the US may diminish rather than increase.

We hasten to add that we are talking relatively rather than absolutely. There will always be interest in the right 'deal' but the prejudice is now not only in favour of the maintenance of the global system (which probably also fits US strategic needs) but in the Indian-Ocean-East Asian complex rather than just hedging political risk with Western assets.

A long term geo-political implication may be that any hopes that a pro-Western Arab world will act as a buttress (virtually on post-colonial terms) against rival Russian and Chinese SWF interests is flaky to say the least.

Europeans in particular are not going to have their former informal and formal empires come to their rescue out of 'sentiment' or because the 'west' is the only game in town. In Europe, Russia now holds a lot of the energy and investment cards.

The Gazprom acquisition in principle of a controlling interest in the Serbian oil sector is, for example, the price that Europe has paid for the expensive business of supporting Kosovan independence and putting 1,800 civil force personnel to create a 'cordon sanitaire' around it.

Europe gets a province, Russia get the pipeline. It is interesting to consider which is getting the better part of the deal.

The one exception to this rapid extension of SWF power into the wider world (which should not yet be exaggerated in terms of scale and whose interventions are often tactical for strategic ends rather than strategic in themselves) is the Kingdom of Saudi Arabia.

Saudi Arabia, we have noted, has been very laggardly in developing its own formal SWF structures. It is still a moderator of rises to the oil price and it still insists on a peg to the dollar that works against many local and regional economic interests - which may cause major disruption within the GCC if inflation continues to grow.

Saudi conduct, in this context, can only be interpreted as political – as a matter of an alliance of interest with the West to protect the dynastic and the general conservative Sunni interest. It is an important and anomalous part of the system that is, accordingly, vulnerable to political change within the Kingdom.

Saudi 'complicity' with the West cannot be assumed in the long term. Saudis are being daily insulted, very vociferously in London last year but constantly in an American populist context, while the immediate cause to fear US military retribution for terror attacks in 2001 is well past.

The ‘wrong’ sort of President in the US who fails to understand that the Saudis are supportive of the West out of conviction and not fear may get a very rude awakening on the dollar and on oil.

Saudi wealth is historically well embedded in the pre-credit crisis model of Western dominance and it would suffer losses from any change in direction, but the West has every reason to be cautious about contributing to a tipping point where Saudi interests come to lie elsewhere.

Saudi foreign policy is also based on reducing regional tensions through the Peace Process, keeping the Shia contained (whether in the Gulf or Iraq) and eliminating insurgencies both through its support for the West Asian war on terror and its informal but restrained and sometimes conditional support for information-sharing with intelligence agencies elsewhere.

Western support for these principles is increasingly part of the price for Saudi economic co-operation but it is also noticeable that Crown Prince Abdullah has made indirect and direct efforts to sustain contact with Iran, India and China to provide some future flexibility.

Overall, this is yet another situation where traditional Atlanticist thinking, obsessed with Eurasia and Russian dominance and perhaps treating the rest of the world as a playground for Western values in a continuation of the Long War of the Twentieth Century, is completely out of kilter with facts on the ground.

The new global thinking actually requires that Western values be seen in a more co-operative manner in the context of a fairly vulnerable global economic system in which all major players are treated with equal respect rather than just as suitors for Western regard and notice.

A final note may be useful here on the utter failure of the European-African Summit. The Africans left extremely irritated by the patronizing tone (expressed partly by Europeans trying to go over the top in not being patronizing) and European failure to deal with what they consider to be important trade issues. When African leaders were entertained in China, they were treated very differently.

The exclusion of Mugabe, a marker for liberal sentiment in the West, was perceived by many to be a colonialist insult directed implicitly at all African leaders. The contrast is made with China which is not merely offering credit without conditions but seems actively to be attempting to release African states from the cultural ‘bondage’ of Western development aid that comes with disruptive governance conditions.

Africa may seem like a 'basket case' to the West but Africans are genuinely torn between respect for values that imply modernisation and the need to decide their own destiny.  The US often remains respected, Europeans much less so.

With Europe, the issue is seen, by some African leaders, as essentially cultural with ghosts of the colonial past implicitly contrasted with a 'realist' partnership with a fellow victim of attempted colonialism [the Opium Wars are part of the Chinese national narrative] that is now a rising superpower. Comments to this effect have been made from Senegal to South Africa.

It is a theme of As It Happens that the Western foreign policy elite has still not adjusted to the collapse of the settlement of the 1940s. This analysis was not made a priori from some theoretical analysis but has emerged from the facts of the case as we have observed the rapid shifts in the structure and balance of the global system for over a decade.

In some ways, the current economic crisis has merely opened more eyes to changes in the economic infrastructure that have otherwise been taking place under the surface for some years.  Yet it would be a shame if the West panicked about what is still merely a correction.

The West, especially the US, remains a formidable and dominant force in global affairs. All that has changed is that it is now having to share power and that it would do best to manage and control the transition, go with the flow, rather than hold on to what it has got and then see it ripped away with more pain and suffering decades hence.

Some observers are talking about the logic of an eventual US-Chinese alliance to manage the global system, of a Franco-British merging of interests to try to hang on to what declining underfunded influence they have in the world and of a shift in Europe to rapprochement with Russia on the basis of shared interests despite security fears and US disapproval.

All these and more represent dangerous possible trends that we regret to say seem to be far beyond the mental facility of so many of the current foreign policy elite to comprehend. And it is very interesting that some of the best thinking is coming from military and business - even dissident Leftist analysts - than from a tired mainstream political community that long ago lost the plot.

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