Sovereign-Wealth Funds Are:

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The Abu Dhabi Investment Council announced it was in talkslast week to buy a 75% stake in the Chrysler Building. Some NewYorkers were up in arms about the selling of a landmark building toa sovereign-wealth fund, but more than half (56%) of our readerswere somewhat complacent about the news. A little more than aquarter (26%) of poll-takers believe this overseas money is just afad, while 17% feel this is a serious threat to national security.Stuart A. Jackson, managing partner of Maidman and Mittelman, wasnice enough to give us his views on these foreign investments on USsoil.

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"I am surprised that 56% say 'They are here to stay.' I thoughtmore people would appreciate the danger inherent in allowing someforeign countries the opportunity to buy major assets in theUS.

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"The ports decision did not allow foreign investors to buyports. The purchase of benign real estate is not nearly assensitive except from an emotional point of view. People view portsas integral to security and safety in the US. They don't view theChrysler building in same fashion.

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"At best these sovereign-wealth funds have a benign interest injust having profits associated with assets they buy. But looking atit from a negative point of view, countries like Iran, if they wereto use buying power associated with the price of oil, might put usto a substantial disadvantage if they invested in scientific,electronic or manufacturing assets used in our nationaldefense.

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"In the world today, we use economic pressure against ourenemies because it is easier to do that than to go to war. Youwould expect economic pressure would be utilized against us bythose who have the ability to do so, and more people would be alertto the inherent danger in that happening.

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"Foreign companies buying US buildings has happened before. Butit did not involve anybody we would at the time have considered anenemy, like the Soviet Union in its day or Iran today. Many yearsago, the Japanese would buy anything and everything in the US andHawaii. Their purchases were fostered by the tremendous valuescreated in Japanese real estate. All investments came back whenJapanese real estate investments crashed. The Japanese had overpaidfor assets they purchased and were unable to sustain them.

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"When we have a depressed dollar and foreign currencies are onthe increase relative to the value of the dollar, and the price ofoil is as high as it is, people with access to petrodollars wouldattempt to use those dollars as a tool to buy assets in a placelike the US."

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