The US has signed a landmark deal with Abu Dhabi and Singapore, holders of two of the largest sovereign wealth funds (SWFs) in the world, to free inward investment into the country.
In very much a quid pro quo agreement the US receives assurances that foreign governments will not use their funds for political ends, while countries receiving investment from such funds accept any protectionist barriers to foreign direct investment should be dismantled.
There is also an acknowledgment that funds should disclose more information, particularly financial information, while recipient countries should also have predictable investment frameworks and should not discriminate among investors.
The set of voluntary principles, signed last Thursday, comes as the US economy looks to attract new investment into its economy, with exisitng investors withdrawing liquidity across asset classes amid a crisis of confidence and as fears of recession begin to bite.
Analysts see SWFs as a means to restore some of that liquidity back into the US market.
"As long term players with little or no leverage, [SWFs] play a constructive and stabilising role in global financial markets," said Singapore's Ministry of Finance in a statement. "SWFs will continue to grow in significance."
The agreement also represents an acceptance of the US administration that it can no longer afford to be so sensitive as to where investment is coming from.
Just two years ago ports operator Dubai Ports World (DP World), part of state-owned conglomerate Dubai World, agreed to sell off US port terminal operations acquired through the purchase of UK-based P&O to defuse political opposition to a foreign government-owned company acquiring "strategic US assets".
According to the UK's Daily Telegraph, the trio will now work with the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD) and other governments to push for an international code to ensure the principles laid out will operate on a more global basis.
Abu Dhabi moves to soothe US fund fears
Emirate writes letter to US Treasury pledging not to use sovereign wealth funds for political ends.
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