ABU DHABI (Thomson Financial) – Speaking on the home turf of the
largest sovereign wealth fund in the world, U.S. Treasury Secretary
Paulson had a simple message for foreign investors: Bring it on.

‘As we seek to open new markets abroad, America will keep our
markets open at home to investment from private firms and from
sovereign wealth funds. We reject measures that would isolate us from
the world economy,Paulson said in prepared remarks to the U.S.-United
Arab Emirates Business Council here.

Paulson is on the final day of three day trip to the region, where he has met with leaders from Saudi Arabia, Qatar and the United Arab Emirates. He returns to Washington later today.

Paulsons visit to the region is his first as Treasury Secretary
and comes two years after the controversy surrounding Dubai-owned DP
Worlds attempt to take control of six U.S. seaports. A public outcry
in the United States caused Congress to tighten laws regarding foreign
investment and has led investors in the Gulf to question U.S.
commitment to open investment.

‘One of my highest priorities remains challenging the mistaken
notions that underlie protectionism — with facts, figures and a firm
belief in a future that holds more promise, not less,Paulson said,
adding that the number of acquisitions by Gulf country investors rose
by more than 100 pct in the past two years and the dollar value of
those deals jumped by more than 400 pct.

Still, Paulson called for more transparency by the often-secretive
funds to make clear their lack of politically motivated investment
decisions.

The U.S. has already agreed on a set of SWF practice principles
with the Abu Dhabi and Singapore governments. Their intent is to serve
as a model for the International Monetary Funds current effort to work
out a set of best practices for SWFs worldwide.

‘Among some sovereign wealth fund managers, our initiative has
raised concerns that we are trying to limit the scope of their
activities or release privileged information,Paulson said.

‘In fact, our purpose is just the opposite. We are trying to quell
calls for restrictions by urging sovereign wealth funds to endorse best
practices to create a dynamic rise to the top and help allay concerns
about opacity and systemic risks,he added.

He then praised the Abu Dhabi Investment Authority, a sovereign
wealth fund set up more than three decades ago to invest the emirates’
oil wealth. Estimated to have holdings of as much as $900 billion, the
ADIA late last year invested almost $8 billion in Citigroup Inc.

The Treasury chief repeated comments that high oil prices are a
burden on the United States and global economies, which he called the
most pressing issue for the region.

‘This threatens to exacerbate economic volatility in the Gulf and
abroad,he said, adding his familiar refrain that there are no simple
solutions.

‘The Gulf region alone cannot alleviate the pressures in global oil
markets. High oil prices are the result of supply and demand factors
that are likely to persist for some time,he said.

He reaffirmed the U.S.commitment to a strong dollar’.

‘I am committed to promoting policies that enhance the underlying competitiveness of the U.S. economy
and ensure that the dollar remains the worlds reserve currency,he
said, adding familiar language about the the long-term health of the
U.S. economy being reflected in the currency markets.

With regard to the current sub-prime-related economic uncertainty,
Paulson called for investors to recognise bank losses ‘as quickly as
possibleand said he believes the market turmoil will continue for
longer.

‘We are talking about months,he added.

Also on the subject of banking sector writedowns, Paulson said
investors had taken too much risk and, as as result, the system had
been hampered by excessive leverage.