The Gulf States are looking round to spend their money and Ireland’s banks are looking good value right now.

A few years ago, one of Ireland’s best known bankers indicated to me just how important it was that the Irish banks remained Irish-run in a downturn. His nightmare scenario was an Irish property market slump, coincident with a change of management in Ireland’s major banks. He feared that, at a time of crisis, the head office of one or more of our major banks might be in London on somewhere outside Dublin, run by non-Irish executives for whom Ireland was only a region in their eurozone banking portfolio.

He believed that, in a downturn, Irish executives who might have children here, who understood the importance of the banking sector to the economy and the importance of the economy to the psyche of the nation would move mountains to maintain liquidity in the country.

In a crisis, he envisaged a response that was almost a type of a financial war-cabinet, where bankers would have a direct line to the governor of the central bank and the Minister of Finance.

Clearly, this was a man who, back in 2005, saw the potential for a serious property recession. Now that recession is upon us. Worse still, there is a very serious possibility that foreign investors will take over one of the major Irish banks. This is now becoming a distinct probability.

In the past few weeks we have seen Arab money bail out the major US banks that are now in post-property bubble problems. The Arabs buoyed up by oil-money are buying up banks all over the world.

For example, in the past three weeks, $30 billion from Arab countries’ sovereign funds (which are national funds set up by the Gulf States to invest their money) have been invested in some of the biggest banks on Wall Street including Citigroup and Merrill Lynch, while a Chinese state fund has pumped $5 billion into Morgan Stanley.

Obviously, the Arab funds are now in the banking business, so what would prevent them from picking up an Irish bank as part of their Euro portfolio? Look at the Irish banks, all of them are now trading at half the price they were 12 months ago. They will probably get cheaper, but not much. So why not take them over, particularly if you have the cash?

The Arabs have the cash because the higher the price of oil, the more cash they have and the more they need to spend. This is what globalisation means. It is a huge circular flow of taking advantage of financial opportunities where nations and national interest are not of any importance.

So, in the same way as Irish investors bought apartments abroad, particularly in eastern Europe, snapping up bargains which might have upset locals who could not afford to buy houses in their own countries, suddenly Ireland is now a target for Arab cash, much of it coming from the petrol we buy in the west.

When you fill up at the pump, do you ever think about where the cash goes? Obviously, much of it ends up in the hands of the oil producer after all the others take their cut, particularly the tax man.

Since the attack on the Twin Towers and particularly since the occupation of Afghanistan and Iraq, the price of oil has increased from $23,peaking above $100 a barrel. It is now somewhere around $90. Arab oil producers benefit from a huge windfall as millions of western drivers hand over cash to the Sheiks.

The best way to gauge just how much of your cash has ended up in the Gulf is to look at the foreign reserves of the region. The IMF calculates that the balance of payments of the Gulf went from a $30billion surplus on the eve of September 11 to $212 billion last year. The crucial oil trade balance has rocketed up from $159 billion to $451 billion. This is your cash – but it is now being used to buy your assets.

Because the Gulf States have pretty modest economies (Saudi Arabia is a smaller economy than Denmark), the bulk of the petro-cash, as happened in the 1970s, has gone back out into the world economy, looking for a profitable home.

All this recycled cash has had the effect of keeping world interest rates lower than they would otherwise be. As well as having old Germans to thank for our lower interest rates, Osama bin Laden has had a big role in the liquidity bonanza of the past few years. His attack on the Twin Towers, triggering the invasion of Iraq, has ensured that a Tsunami of oil money from the Gulf is currently washing over us.

Up to recently, this was a boom for Irish banks that have gone out in the past two years and borrowed Arab money to lend here to finance the last phase of the property boom, which has now peaked. Figures from the Central Bank reveal that our dependence on this foreign money is now verging on the addictive.

Over four euro in every ten lent to you and me is now borrowed directly by the Irish banks from foreigners. But now the worm has turned. The banks are in trouble and the Arabs still have a limitless well of cash based on oil money.

Why wouldn’t they buy Irish assets? Three years ago, Arab money tried to buy the port of Los Angeles and the US authorities said no way. The port was a national asset which should not be sold to foreigners, particularly Muslim foreigners. Today, the US is a fire sale, everything has a price and the bidder takes the prize.

Now consider the conversations going on in Arab sovereign funds headquarters inKuwait, Dubai or Jeddah. They have to diversify their portfolios. They need Euro assets to counterbalance their dollar exposure.

What country is the easiest to invest in? Why not Ireland? It’s a cheap version of America in Europe and its banks are dirt cheap.

In the next year, there is a good possibility that one of our banks will be bought by some foreign sovereign fund. The Irish banker’s worst nightmare might come to pass.

That’s globalisation for you. You’ve got to take the rough with the smooth.

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