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Gulf sovereign funds should set down principles

Dean White
PA Consulting Group
Financial Times
5 May 2008


Sultan bin Sulayem is right to cast doubt on the merit of European constraints on foreign investment (“Gulf investor warns of EU over-regulation”, April 30). The challenge is to ensure that everyone in the international community realises the need to identify an acceptable compromise to sustain free trade as opposed to engaging in “posturing” based on past behaviour and unilateral preferences.

We believe that, while we are witnessing a significant shift in the balance of power, “symbiosis” between sovereign wealth funds and their investment hosts will take different forms. We sense that neither “western supremacy” nor “sovereign wealth fund diktat” are sustainable in the medium term.

We are convinced that there is merit in the SWFs of the Gulf Co-operation Council proactively establishing their own principles to underpin their engagement in the global financial system, rather than having the wishes of established western nations imposed on them. These need to cover a number of factors, namely: philosophy (what are our aspirations, motivations and the scale of our ambition?); performance (what are our investment criteria?); positioning (what do we want to achieve and what are our reporting commitments?); and process (what operational capabilities are critical to success?).

This will go a long way to dispelling host countries' concerns which, far from being based on past transgressions, are more concerned with what may transpire, exacerbated by xenophobic sentiment.

Calls for “transparency” from those that are in financial disarray are at best ironic and at worst wrong-headed because they are asking for both too much and too little!

Dean White
PA Consulting Group
London SW1W 9SR

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