When did France Fall in Love with SWFs?

Ashby Monk

Less than two years ago, France was leading the charge against sovereign wealth funds. Recall this statement by President Nicolas Sarkozy in 2007:

“We’ve decided not to let ourselves be sold down the river by speculative funds, by unscrupulous attitudes which do not meet the transparency criteria one is entitled to expect in a civilised world. It’s unacceptable and we have decided not to accept it.”

Things have changed. To begin, France is itself now a sponsor of a SWF. So, it clearly sees the benefit of state run financial institutions. However, given that the new French SWF was designed to thwart the influence of other, foreign SWFs over the French economy, this may not be the best signal that France has accepted the role of SWFs in the global community.

Nonetheless, some new evidence suggests this acceptance is forthcoming. France’s Minister of Economy, Industry and Employment, Christine Lagarde struck a tone recently that signaled a positive outlook about SWFs:

“Of course we welcome those investments. France is very much open to foreign direct investment. It is the second destination for FDI in the world after the United States. So it comes before the UK before Germany. It’s open…Foreign direct investments by sovereign funds are welcome. We’re not afraid. We don’t regard them as a threat.”

Lagarde is in the UAE to sign a cooperation agreement between the Strategic Investment Fund of France and Mubadala. Basically, the two will work together to make investments in France.

In short, it appears that France is comfortable with a model that sees foreign SWFs clubbing with the French SWF on French investments. So, in a matter of two years, France has gone from viewing SWFs as a threat to signing a deal that ensures foreign and domestic SWFs will be key players in France economy.

La France change d’avis comme de chemise…

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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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