Those new punk SWFs
The IMF announced “preliminary agreement” on a voluntary code of conduct for sovereign wealth funds yesterday. The indispensible SWF Radar has a roundup of links. For me, Krishna Guha’s story in the Financial Times provides the most revealing detail: The International Working Group of Sovereign Wealth Funds had to bridge significant differences between funds with ...
The IMF announced "preliminary agreement" on a voluntary code of conduct for sovereign wealth funds yesterday. The indispensible SWF Radar has a roundup of links. For me, Krishna Guha's story in the Financial Times provides the most revealing detail: The International Working Group of Sovereign Wealth Funds had to bridge significant differences between funds with different histories, domestic political environments and mandates. People familiar with the discussions say some funds are more sophisticated and politically savvy than others, with differences surfacing between more established funds and relative newcomers. Some funds were also more resistant to financial transparency than others, a divide that did not necessarily tally with how long the funds had been in operation. Some saw value in formalising transparency regimes in order to reassure their domestic audiences that the money was being wisely invested and accounted for. Others wanted to retain a greater degree of secrecy. This cleavage among SWFs doesn't surprise me -- what surprises me is that it took so long for this schism to be reported in the press. My impression had always been that older, more established funds -- the ones based in Abu Dhabi, Singapore, Kuwait, etc. -- were pretty steamed that nouveau riche funds from China and Russia were bringing so much negative press attention onto them. It doesn't surprise me that the older funds were willing to commit to standards that would placate recipient countries. [So, does this agreement mean anything?--ed. Since the actual Generally Accepted Principles and Practices (GAPP) for Sovereign Wealth Funds won't be released until October at the earliest, it's hard to say. One would think a voluntary code of conduct would not matter so much, but compliance with principles on transparency and governance are pretty easy to observe and monitor. This, combined with the fact that the biggest recipient countries and the largest SWFs have a big incentive for the GAPP to work, leads me to think that this will mean something.]
The IMF announced “preliminary agreement” on a voluntary code of conduct for sovereign wealth funds yesterday. The indispensible SWF Radar has a roundup of links. For me, Krishna Guha’s story in the Financial Times provides the most revealing detail:
The International Working Group of Sovereign Wealth Funds had to bridge significant differences between funds with different histories, domestic political environments and mandates. People familiar with the discussions say some funds are more sophisticated and politically savvy than others, with differences surfacing between more established funds and relative newcomers. Some funds were also more resistant to financial transparency than others, a divide that did not necessarily tally with how long the funds had been in operation. Some saw value in formalising transparency regimes in order to reassure their domestic audiences that the money was being wisely invested and accounted for. Others wanted to retain a greater degree of secrecy.
This cleavage among SWFs doesn’t surprise me — what surprises me is that it took so long for this schism to be reported in the press. My impression had always been that older, more established funds — the ones based in Abu Dhabi, Singapore, Kuwait, etc. — were pretty steamed that nouveau riche funds from China and Russia were bringing so much negative press attention onto them. It doesn’t surprise me that the older funds were willing to commit to standards that would placate recipient countries. [So, does this agreement mean anything?–ed. Since the actual Generally Accepted Principles and Practices (GAPP) for Sovereign Wealth Funds won’t be released until October at the earliest, it’s hard to say. One would think a voluntary code of conduct would not matter so much, but compliance with principles on transparency and governance are pretty easy to observe and monitor. This, combined with the fact that the biggest recipient countries and the largest SWFs have a big incentive for the GAPP to work, leads me to think that this will mean something.]
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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