Brussels, 14/01/2008 (Agence Europe) - “We need an open Europe - open to each other but also open to the rest of the world,” said European Internal Market Commissioner Charlie McCreevy in a speech to the Council of British Chambers of Commence (COBCOE) in London on Friday 11 January. Standing against the “voices of the champions of protectionism (which) are loud and getting louder”, he said that Europe should not fear globalisation, but should “shape it”. The EU's 50 years of experience in making rules which are compatible with different cultures and legal systems provided it, he said, with a “competitive advantage”.
The commissioner reiterated his position on sovereign wealth funds. These public funds, often belonging to third countries (United Arab Emirates, Singapore, China, etc.) with considerable financial muscle, present problems for foreign investment in sectors which are of strategic economic importance for the EU, such as energy, and for the ability of European capital to invest in the countries the sovereign wealth funds come from (see EUROPE 9559). “We must not allow the discussion on sovereign wealth funds to be used as an excuse to raise unjustified barriers to investment and the free movement of capital,” McCreevy said. “We do not need any new rules for that,” he felt, since “investments which have the potential to compromise national security can already be blocked” under the European treaty. Nevertheless, he accepted that “issues relating to transparency and governance” have to be discussed with “certain” sovereign wealth funds. “We need sovereign wealth funds to be transparent in their operations, preferably on the basis of an international code of best practice,” he said. “Some broader issues relating to exchange rates which may be artificially depressed leading to massive increases in the resources of these funds” also have to be discussed. McCreevy added: “At the end of the day, what I believe most observers want is to separate the political from the economic considerations that could influence the decision of funds under government control”.
Financial turbulence resulting from the US real estate crisis caused considerable financial losses, particularly for banks which held securities backed by risky mortgages. US banking giant Citigroup may have lost between $8 and $11 billion. To bail themselves out, many banks have accepted investment from sovereign wealth funds. “We have recently seen firms on both sides of the Atlantic - for example Barclays, Citibank, Bear Sterns and Morgan Stanley - welcoming investment from sovereign funds,” McCreevy said, because such investments will allow these companies to “carry out their strategic aims or replenish losses on risky investment”. The commissioner suspects that, in the future, more companies will seek investments from such funds. (M.B.)