The existence of a political problem is well-known. Europe is on the alert, Europe is thinking about it. The institutions of the EU have acknowledged that the problem exists and that it is a serious one. I refer to investments whereby the sovereign funds of countries such as China, Russia, the Gulf States and others become the joint owners of European groups and companies of strategic importance. I raised this problem in this column last week (bulletin 9469), within the context of the global monetary and financial situation. Two days later, a declaration by German Chancellor Angela Merkel led Commissioner Charlie McCreevy to announce via his spokesperson that the European Commission was considering the issue and that it shared the concern of its Member States (see our bulletin 9472).
Mr McCreevy laid emphasis on the liberal principles which underlie the European single market, whilst acknowledging that certain sovereign fund investments cannot have the sole objective of financial viability. In his view, a response must be found that will invite no accusations of protectionism. Certain Member States, whilst agreeing on the need not to compromise the opening-up of the markets, make no attempt to hide the fact that other concerns, for them, take priority. Ms Merkel spoke explicitly about the “political motivations” of a number of investments and their strategic repercussions, and she called for the issue to be included on the agenda of the EU, in order to define the European approach. This will be easier said than done, if we bear in mind the position of the British Chancellor of the Exchequer… For the time being, the main thing is that the existence of the problem has been acknowledged.
Already a situation to cause concern. You don't need privileged access to confidential information; the specialist press and a few company press releases already tell us much of what we need to know. Russia's second-largest bank, JSC Vneshtorgbank, holds 5% of EADS (which is not only the owner of Airbus, but Europe's largest group active within the aerospace and defence sector). The investment body set up by the Chinese government, with funds of 200 billion dollars, owns 10% of the world's largest private equity firm, Blackstone, which has stakes in 43 western industrial groups in the fields of energy, the pharmaceutical industry, and more, including Deutsche Telekom and the Hilton hotels group. The Dubai Financial Centre appears to be active mainly in the Scandinavian countries, Singapore in BI-Invest. The list goes on. Investors are particularly interested in western companies possessing significant know-how.
I would like to point out that the financial resources available to certain sovereign funds continue, and will continue, to increase, for as long as the countries which own them finance the ongoing deficit of the United States, by accumulating billions of dollars by means of the mechanism I spoke of in the above-mentioned edition of this column. It is true that in an open global financial market, liberty is reciprocal: European or American companies freely take on stakes (or total control) of foreign companies. The difference emphasised by Angela Merkel involves the political objectives of certain operations carried out by institutions or companies controlled by States. Does anybody believe that Gazprom is politically autonomous? I read recently that in Moscow circles, the Gazprom/Total agreement (whereby the Russian colossus grants the preference to the French company to take part in the development of the gas reserves known as Shtokman, the largest in the world) is interpreted “as a welcome present for Nicolas Sarkozy”, with an eye to future Franco-Russian relations.
Problematic control mechanisms. The governments of the countries of the EU and the European institutions cannot turn a blind eye to the growing presence, within industries of strategic importance, of bodies which depend directly on foreign governments. According to Angela Merkel, Europe should, at the very least, follow the example of the United States, which has set up the Committee on Foreign Investments, making it possible for the authorities to block investments which are considered harmful. It wouldn't be quite so straightforward in the EU! A more flexible formula, put forward by European Commissioner Peter Mandelson, would consist of making golden shares, or shares which grant special powers to the holders (which could be governments or regional or local authorities), legal in certain cases. How would we go about defining the sectors in which a system of this kind should be brought in, and control its use?
Everything is up for discussion. The main thing is that we are starting to do so.
(F.R.)