We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Wed 17 Oct 2007 04:28 PM

Font Size

- Aa +

EU urged to take common stand on sovereign funds

European nations should take same approach to state investment funds, EU chief says.

The president of the European Commission said on Wednesday he will propose to EU leaders this week that they take a common approach to dealing with investment funds controlled by foreign governments.

"Regarding sovereign wealth funds, we favour a European approach to it, not necessarily a European regulation but a European approach," commission chief Jose Manuel Barroso told reporters ahead of the October 18-19 summit in Lisbon, Portugal.

Separate national policies towards the investment funds of countries such as Russia, China or Saudi Arabia could lead to distortions of the EU market and weaken Europe's hand, he said.

"Different member states could, and in fact some of them are thinking about it, have their own national regulations and that could create problems in terms of the integrity of the [EU] internal market," he said.

He added it was too soon to say what kind of common approach was needed, noting that finance ministers of the Group of Seven industrial countries were also expected to discuss the issue this week.

Asked whether a so-called reciprocity clause for third countries, such as the EU executive has proposed for state-owned foreign energy companies wishing to buy European networks, was a possible precedent for other areas, he said that was a special measure for a specific sector.

"It is clear that we are also working with our member states about the ways [in which] we can protect the European interest, at the same time defending the rules of competition and the internal market," he said.

Germany is considering whether to introduce national legislation giving the government the power to restrict investment in sensitive sectors by foreign wealth funds.

Britain has expressed concern that the emergence of such funds could cause political tension and pressure for protectionism.

Arabian Business: why we're going behind a paywall

Real news, real analysis and real insight have real value – especially at a time like this. Unlimited access ArabianBusiness.com can be unlocked for as little as $4.75 per month. Click here for more details.