EU plans code of conduct for sovereign wealth funds[fr][de] 

The move represents the bloc's first attempt to influence the way these controversial funds are being used within the EU, although a number of member states, including the UK, France and Germany, have already introduced legislation allowing them to fend off sovereign wealth fund (SWF) investments (EurActiv 31/10/07). 

A key aim of the code of conduct will be to set out basic transparency and good governance standards to prevent countries holding SWFs from using investments in EU nations to obtain political influence in strategic sectors, such as energy and defence, rather than for commercial purposes. 

"The fact that SWFs are controlled by states suggests a different motivation from normal private sector decisions, potentially privileging national interests over shareholder values," says a draft version of the document to be considered by the Commission on 27 February and debated by member-state finance ministers on 4 March, according to Reuters. 

The rules would be voluntary rather than binding, according to the EU's trade chief Peter Mandelson, who explained that a legislative approach would more likely lead to a "divisive debate" over enforcement and sanctions. 

Mandelson further insisted the aim was not protectionist. "We should welcome such investment from China and other wealth funds and not reject it […] But we need everyone to agree a code of conduct and principles governing the behaviour of these wealth funds," he told the Financial Times and AFP, adding: "The emphasis should be on commercial motivations, not national or strategic considerations." 

Following a boom in the past five years as mainly oil-rich countries seek to re-invest excess foreign currency reserves into bonds, stocks, property and commodities in order to reduce the volatility of government revenues and build up savings for future generations, SWFs are now said to control assets worth US-$2.5 trillion worldwide. 

More than half of those are controlled solely by the Abu Dhabi Investment Authority, while roughly 20 other countries, including China, Russia, Alaska, Dubai, Kuwait, Qatar and Norway – whose SWF has been cited as a model of transparency to be followed by others by Internal Market Commissioner Charlie McCreevy – have similar funds. 

Mandelson said he ultimately hoped to obtain a global pact, in agreement with the sovereign wealth fund holders.