Each EU country should, “if necessary”, be able to block foreign investments carried out via state-owned vehicles, state the conclusions of the European Council, which also confirmed member states’ support for an internationally-agreed code of conduct for sovereign wealth funds.
Meeting at the Spring Summit on 13-14 March, EU leaders fully endorsed the Commission’s forceful proposals to tackle the perceived problem that countries like Russia and China could be using investments in EU nations for industrial and technological espionage or to obtain political influence in strategic sectors, such as energy and defence.
They confirmed their support for Commission proposals for an internationally-agreed voluntary code of conduct governing sovereign wealth funds rather than introducing fresh legislation or prejudicial barriers. However, they also strongly insisted that governments should be allowed to “make use of national and EU instruments if necessary” to counter foreign investments not justified for commercial reasons.
Sovereign funds “have so far played a very useful role”, but “the emergence of new players with limited transparency regarding their investment strategy and their objectives has raised some concerns,” reads the conclusions of the European Summit.
Leaders also noted that the difference between sovereign funds and other state-owned and private funds, which have thus far been allowed access to all of Europe, “is not always clear cut”. New actions against other forms of foreign investments therefore appear not to be excluded.
Nevertheless, leaders insisted that Europe must remain committed to “an open investment environment,” saying a voluntary code of conduct for sovereign funds should be negotiated at international level. In this respect, they reiterated the EU’s “support for the ongoing work in the International Monetary Fund (IMF) and the OECD”.
They further stressed the importance of a common European approach on sovereign funds during this debate at international level. However, the conclusions also remind that any common action “has to take into account national prerogatives”.
Sovereign funds are estimated to control assets for a value between 1.5 and 2.5 trillion dollars, and have registered a surge in their resources over the last few years. More than 30 countries have established sovereign wealth funds since the early 1950s, most of those in the last eight years. The biggest funds are sponsored by China, Kuwait, Norway, Saudi Arabia, Singapore and the United Arab Emirates, according to EU estimates.