Guest Blog: Sven Behrendt

Sven Behrendt

I have some second thoughts about the “sovereign” bit in the term “Sovereign Wealth Fund”. If the term “wealth” talks about the amount of money that these funds manage, the term “fund” suggests that there is an administration in place to manage that wealth, the term “sovereign” speaks to the way its owner arranges his political relations to international and domestic stakeholders. An idea how he does, provides a classic, straightforward definition of “sovereignty”, suggesting internal sovereignty to constitute supremacy over all authorities within a state’s jurisdiction; external sovereignty as the state’s independence of outside authorities.

Many of the countries that own SWFs are still comparatively young modern states. After having gone through a sometimes painful nation state building process, they have difficulties to give up their sovereign claims to manage their wealth the way they want. This makes it so tricky to develop a convincing case for SWF transparency and accountability. Who, they might ask, is the authority that believes to supersede our sovereign right to manage our fund the way we believe is best for our country?

This thought might be part of the explanation of the, in my view, slow implementation process of the “Santiago Principles”. Why should a SWF take more than symbolic steps to accept the authority of a code of principles that substantially restricts the owners of SWFs to execute sovereign rights? To “placate” SWFs’ critics, as David Murray, Chair of the International Forum of SWFs, recently claimed, might not be good enough.

It appears that a convincing case that would motivate SWFs and their owners to balance their legitimate claims to exercise their sovereignty with the legitimate concerns about broader system efficiency has not yet been produced.

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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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