PARIS -- Have you wondered how petro-states are handling the crash in oil prices? Looking at the situation through a strictly Western prism, it would be tempting to think that these countries might be in dire straits. But crisis is a matter of perspective and mindset. How we perceive it depends on our prior experiences in turbulent situations. And as with a virus, surviving a crisis can provide inoculation against future ones.
Let's face it: North Americans live relatively charmed lives, at least compared with the rest of the world. We're soft. When we fight wars, they're a world away, not at home. There are no violent revolts against authority, as much as we might complain on social media. We're told by authorities to watch out for Islamic State terrorists potentially lurking behind palm trees in swanky suburbs. Our interpretation of problems in the developing world often centers on things like "climate change" -- as if people struggling to find even a dollar on which to live tomorrow give a damn about whether you drive a Prius.
There are countries for which the status quo is turbulence, and they have adapted in an almost Darwinian manner, as a high-ranking Russian official recently reminded me. He shrugged off the effect of current world events on Russia -- from the oil price crash to economic sanctions -- viewing it all as an opportunity.
With their national history of turbulence, Russians have mastered a skill that many of us in the West haven't had the opportunity to develop: exploiting crisis. The Russian official explained to me that the oil price crash has prompted Russian President Vladimir Putin to draw from two sovereign wealth funds worth more than $150 billion, according to the Sovereign Wealth Fund Institute. The official explained that the money from the funds would be used to stimulate growth in non-oil sectors. There's little incentive to develop those sectors if you can just drill a hole in the ground and a cash flow gushes out of it, but plummeting oil prices provided the motivation.
Other oil-rich nations have also tucked away their black-gold revenues in their state-managed pillowcases, including United Arab Emirates (which has six oil-revenue funds valued at about $1 trillion combined), Saudi Arabia ($672 billion), Kuwait ($592 billion) and Qatar ($256 billion).
These countries are leveraging this wealth to foster cooperation and interdependence between one another. Over the summer, Saudi Arabia invested $10 billion in joint ventures with a Russian direct investment fund to support agriculture, retail and infrastructure projects in Russia.
You might wonder how Saudi Arabia can afford it, given its rapidly dwindling oil revenues. But who really cares what the price of oil is when China is willing to take as much Saudi oil as it can -- and is also willing to build the Saudis infrastructure, industrial plants, domestic energy alternatives and railways in exchange for it? For the Saudis to worry about oil prices would be like worrying about the cost of rent while living in your mom and dad's basement.
Co-investment fosters stability amid turbulence. That's why the world can safely ignore the recent Saudi whining about Russia's offensive against the Islamic State, which has the Saudis fearful that Syrian President Bashar al-Assad will be strengthened once the Islamic State has been eradicated. Cash typically supersedes blowhardism, and a profitable relationship with Russia is likely to keep Saudi Arabia from getting too worked up about Russia's military ventures. We've seen a similar dynamic in Iran, where the Iranians stopped chanting "death to America" long enough to sign a U.S.-led deal that effectively opened up Iranian markets to Western interests.
You might be surprised to learn that America doesn't have a sovereign investment fund of its own. This could be seen as a good thing: Set up a public trough, and we'll eventually see the ugly display of dirty pigs falling over each other for a place at it. Maybe that's why these funds tend to work better in countries with less governmental transparency. In America, we like to keep these kinds of things relegated to the opacity in the long shadows of Wall Street towers.
It would be a mistake to judge the maneuvers of other nations in the current economic climate based on our own Westernized institutions, experience, adaptability and mindset. Just because we think they should be panicking doesn't mean that they are. One man's umpteenth round of vodka is another's alcohol poisoning.