Should Dubai Buy Part of the Nasdaq?

The proposed purchase of a 20 percent stake in the Nasdaq by Borse Dubai, a Dubai-controlled exchange, probably won't raise anywhere near the same level of alarm in Washington as the attempt in 2006 by another Dubai company to buy a company that managed operations at U.S. ports. That latter deal was bashed over concerns it would somehow compromise national security. As Rep. Barney Frank of Massachusetts told the New York Times yesterday, "In the ports deal, the concern was smuggling something or someone dangerous into ports. What are we talking about here—smuggling someone onto a stock exchange?"

The proposed purchase of a 20 percent stake in the Nasdaq by Borse Dubai, a Dubai-controlled exchange, probably won't raise anywhere near the same level of alarm in Washington as the attempt in 2006 by another Dubai company to buy a company that managed operations at U.S. ports. That latter deal was bashed over concerns it would somehow compromise national security. As Rep. Barney Frank of Massachusetts told the New York Times yesterday, "In the ports deal, the concern was smuggling something or someone dangerous into ports. What are we talking about here—smuggling someone onto a stock exchange?"

Rather, you can make the argument that not approving such deals compromises national security. Here is an Arab, Islamic country that is trying to connect to the global economy through finance and tourism rather than though the narrow conduit of oil. (Oil and gas revenues make up just 3 percent of the country's $46 billion gross domestic product and should dwindle to zero within two decades.) This is a good thing. Economic codependence is a good thing. It's what makes the possibility of a future war between trading partners China and the United States seem implausible. As my friend and geopolitical strategist Tom Barnett wrote during the political firestorm over the Dubai ports deal:

Do I want Dubai to become a Hong Kong/Singapore of the Middle East? Sure. Because I want the Middle East to connect up to the world. In fact, that's the whole purpose behind our Big Bang strategy of toppling Saddam: connecting the Middle East up to the global economy faster than the jihadists can disconnect it. The al Qaedaists of the Middle East know damn well what they're doing: They want to sabotage the region's economies, disconnecting them from the world, and reap the whirlwind of social distress.... I know that some op-ed strategists want to play that game as well, arguing we should cut the global economy off from the Middle East by denying ourselves its oil as quickly as possible, but I argue for just the opposite approach. I want shared economic and strategic interests, not some rapid-fire economic divorce.