Hold on to your proverbial Dubai hat!

“In a complex set of transactions, Dubai is moving to acquire 19.9 percent of the Nasdaq in New York, placing the Arab government in an ownership position of the key U.S. stock exchange and raising concerns in Congress.

As a result of the transaction, Dubai also will acquire 28 percent of the London Stock Exchange, one of the oldest and largest in the world.

The transaction is being made through Borse Dubai, a holding company 100-percent owned by the government of the Emirate of Dubai and controlled by Mohammed bin Rashid al-Maktoum, the head of the Dubai ruling family.

According to its website, Borse Dubai was created Aug. 6 as the holding company for Dubai Financial Market and Dubai International Financial Exchange in a move to consolidate the Dubai government’s two stock exchanges “as well as current investments in other exchanges, expanding Dubai’s position as a global capital market hub.”

The announcement set off a firestorm of criticism in Washington, prompting President Bush to comment today in a news conference, “We’re going to take a good look at it, as to whether or not it has any national security implications involved in the transaction. I’m comfortable with the process to go forward.”

I’m not overly concerned with this, mainly because Chuck Schumer is fired up about it.

“This deal will raise serious questions that will need to be answered”.

Still there might be the need for caution.

“Yesterday saw a burst of activity involving Mideast governments, including a battle between two Persian Gulf emirates over stakes in the London Stock Exchange and a bid by one of them for a stake in Nasdaq Stock Market Inc. A third emirate announced an investment in Carlyle Group, a Washington-based private-equity firm known for ties to political heavy hitters such as former President Bush.

The governments of the Persian Gulf — along with regional powerhouse Saudi Arabia — have seen their coffers swell to unprecedented size with rising energy prices and a regional economic boom. Yesterday crude oil topped $83 a barrel.

The deals mark a new level of engagement by an emerging group of Arab states whose leaders are generally friendly to the West and are eager to make a mark in global finance. The influence of countries such as Dubai and Qatar has grown even greater in recent months because, thanks to their cash, they are immune to the debt-market troubles that have frozen some other investors.”

Something to watch.

We’ll have to see.