State-owned funds in the Middle East and North Africa manage almost $1 trillion in assets. However, as violence erupts across the Arab world, the region's governments are dipping into this money to appease angry protestors. Saudi Arabia has handed out about $37 billion, while Oman, Bahrain, Libya and Kuwait have boosted domestic spending up to 4 percent of GDP.
The result is the sovereign wealth funds are less able to invest overseas — something which, according to Efraim Chalamish, a SWF expert and adjunct professor at New York University, negatively impacts both global markets and regional economies alike. He says pump-priming, or projects to help local unemployment could add to the debt in many of these economies, putting a strain on national balance sheets and risking sovereign credit ratings.