SWFs According to Peter Mandelson, EU Commissioner for External Trade

By Brett Keller

Public Affairs Asia has an informative new interview up with Peter Mandelson, EU Commissioner for External Trade. (More on Mandelson here)

When asked about investment strategies for Chinese and Gulf sovereign funds investing in Europe and the US, Mandelson stresses the importance of dialogue between the nations controlling the sovereign wealth funds and the nations being invested in:

I appreciate that SWF managers are not the type to court publicity. However, I do believe it is useful to have a constructive dialogue between countries receiving SWF investment, on the one hand, and SWFs and their origin countries, on the other. When travelling to SWF countries, I have therefore sought to reach out to SWF managers and their principals, just as fund managers have come to Brussels to dialogue with the European institutions and to national capitals to talk to governments…It is important for SWF managers not to underestimate how important reassurance about systems of transparency and governance is. Like it or not, they are operating in a political environment.

What should SWF managers do to reassure regulators and legislators? Mandelson sees promise in a voluntary code of conduct:

…Such anxiety has been expressed not so long ago in relation to hedge funds and private equity funds. These have responded by providing reassurance in the form of a voluntary code of conduct. SWFs can learn from this.

And more on the perceived threat to the EU of “state capitalism”:

State capitalism requires the EU and other states to be vigilant; it requires that state-owned enterprises that want to compete in our markets meet our competition and monopoly rules, and it may require us to defend our own companies and workers from unfairly subsidised imports. It requires that we take a hard-headed approach to tackling barriers to our exports in their markets so that our businesses get a fair deal and our voters see the two-way benefits of openness.

Discussion on the definition of transparency, the prevention of acquisitions in areas such as national defense, US-EU support for the IMF working group, and more at the complete interview. For similar materials, please see the archive of Q&A’s on SWFs conducted by the Oxford SWF project.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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