CAIRO, Egypt — The decision by the world's largest sovereign wealth fund to invest billions in struggling Citigroup has highlighted the growing economic power of Arab states in the Persian Gulf region, awash with money because of high oil prices.

Some U.S. officials have voiced concerns about such funds' secrecy. But the injection of money by the Abu Dhabi Investment Authority could help stabilize Citigroup Inc., the United States' largest bank, as it struggles with billions in losses from America's mortgage crisis.

The U.S. relies on capital inflows from such funds to bolster the economy, but some officials worry that foreign ownership of key U.S. companies could compromise what they see as national security.

"The investment emphasizes the complexity of the issue," said Edwin Truman, a senior fellow at the U.S.-based Peterson Institute for International Economics. Some people, he noted, "want to define national security more broadly, to cover banks or financial institutions."

Analysts said Abu Dhabi's minority investment appears to be structured to produce the least possible backlash from politicians concerned about its strategic implications.

The issue is likely to grow: Merrill Lynch estimates that the total assets managed by sovereign funds already may exceed $2 trillion — more than all the world's hedge funds combined — and could grow to $7.9 trillion by 2011.

The bank estimates the assets of the Abu Dhabi Investment Authority — a secretive government fund that gets the emirate's oil revenues and is ultimately controlled by the city-state's ruler — alone could total $875 billion.

Washington has relied on the oil-rich Gulf countries and China to fund its growing budget deficits by purchasing vast amounts of U.S. Treasury securities, propping up the value of the ailing dollar.

Record oil prices, up more than 60 percent this year, have swelled the coffers of Gulf countries such as the United Arab Emirates. That has prompted them to look for broader financial opportunities, like Abu Dhabi's planned $7.5 billion investment in Citigroup announced late Monday.

Morgan Stanley estimates the funds have spent $35 billion since the start of last year on stakes in financial organizations, with $26 billion coming in roughly the last six months.

Kenneth Rogoff, a Harvard University economics professor, said the investment in Citigroup could help eventually improve the funds' image.

"The (Abu Dhabi) fund has a very professional reputation and will probably be a good shareholder and will cast sovereign funds in a good light. But that won't happen overnight," he said.

Rogoff also warned that some people might view Abu Dhabi as buying Citigroup at a "fire-sale price." The bank's shares have lost about 45 percent of their value so far this year, wiping away $124 billion in market capitalization, as bad news about its investment losses has mounted.

Abu Dhabi's investment in Citigroup, which was expected to close in the next several days, could help stabilize the bank, which has said it will likely write down the value of its portfolio by $8 billion to $11 billion in the fourth quarter because of the mortgage crisis.