Western politicians, business leaders and commentators seem paranoid about
state-owned sovereign wealth funds (SWFs), particularly those from the
Middle East and China. They fear that SWFs follow strategic political
objectives -- investing in Western companies and banks to secure control
of strategically important industries such as telecommunications, energy
and banking -- rather than commercial interests.
A protectionist backlash against sovereign wealth funds is fast emerging:
the US, Canada, Australia and Germany have introduced substantial
legislative changes to screen and restrict investments by SWFs and other
state-owned entities. European Parliaments are considering regulations to
curb the potential impact of SWFs on financial markets, corporate
governance and security.
Are such fears based on facts or assumptions? Is the "invasion of
sovereign wealth funds" real? Do SWFs pose a direct threat to financial
stability? Do they have hidden agendas? Are SWFs driven by political
considerations? Are governments really using SWFs to pursue nefarious
foreign policy objectives? Should anyone be afraid of sovereign wealth
funds? Are SWFs providing long-term investments and stability to ailing
businesses and economies?
This paper examines these questions in order to understand the potential
impact and implications of sovereign wealth funds in a rapidly-changing
global political economy.
Frequently Asked Questions About Sovereing Wealth Funds
