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Arabia: The winds of change

The sands in the Arabian desert are constantly shifting. The one constant in Arabia for centuries is trade. Today, commerce remains at the fore front of the economies of virtually all of the countries in Arabia. Americans, however, have an image of Arabia that comes from the movies or the reports of the war in Iraq and essentially overlooks a bustling economy that exists in the region. As with all trading partners it is important to understand the dynamics of the countries and companies, as well as the individuals that you deal with in completing transactions.

Arab Investments in the United States

In the early 1980’s, the Maktoum family of Dubai first visited Kentucky for the purpose of buying thoroughbreds. Their initial visit did not result in a single purchase. The next year the Maktoums returned to the Keeneland Yearling Sales and started the acquisition of American Bloodstock that continues to this day. The Maktoum family alone has purchased from Keeneland in excess of $1 billion of thoroughbreds.

Greenebaum has been called upon to assist the family with the acquisition of almost 6,000 acres of prime Kentucky land.

These farms have been built on raw land and now are the homes of over 1,500 thoroughbred horses. The Maktoum family employs almost 350 men and women at the various farms located near Lexington. The construction projects, which Greenebaum assisted, provided a major economic boost to the region. These farms produce the young horses that are sent to trainers throughout the world to compete at the highest level of thoroughbred racing. The Maktoums race worldwide and have won virtually all of the major events with the exception of the American Triple Crown races.

The investment by Arabs in the United States requires a significant and thorough under-standing of U.S. governmental regulations and requirements. The tax structure of the entities doing business in the United States is vitally important. The Internal Revenue Service and other U.S. government agencies scrutinize foreign investment in the U.S.

The customs and culture of Arabia are different from those in the United States, and as a result significant time and effort must be expended in explaining and working with business people from the mideast.

The luncheons and business dinners with clients from the mideast are different from what we experience when dealing with companies and executives from Western Europe or the United States. An introduction to the culture is vitally important to ensure proper communication and understanding of the requirements for doing business in the United States.

Subsequent to the initial thoroughbred investment by the Maktoums of Dubai, Greenebaum has been fortunate to assist other investors from the Mideast in establishing businesses in the United States. These businesses include shopping center development, office towers and hotels. The various reporting requirements and disclosures for doing business in the U.S. and the structure of those businesses have been vital to the success our clients have achieved.

U.S. Investment in the Mid East

For years America had little investment in the Mideast other than through oil companies. The Europeans, particularly Great Britain, had significant investments in the area. Each country in the Mideast is different and care must be taken to understand the laws and rules for doing business in that particular country. It is vitally important to have connections with individuals in the area in which business is to be conducted. Greenebaum has assisted American clients in business ventures in Arabia for the past two decades. The investments, particularly in Dubai, have proven to be remarkable. The growth of the City State of Dubai located in the United Arab Emirates has been fantastic.

There are probably more cranes in Dubai than in any other city in the world and development proceeds at a tremendous pace. Arabia may be half way around the world but it is gaining more and more influence as a world trading partner. American businesses who ignore the region are simply ignoring an opportunity to expand and establish ties with new trading partners. The conduit to Arabia runs both ways and opportunities abound.

  • Senior Partner

    Phil is a member of the firm's Litigation Department and is a trial lawyer in the Lexington office. He represents business clients in federal and state courts and in administrative proceedings. Phil has significant experience ...

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