The Risks of Putting Up Barriers to Sovereign Wealth Fund Saviours; Let's Shake on It: Chancellor Alistair Darling Meets Chinese Premier Wen Jiabao to Discuss Sovereign Wealth Funds Earlier This Year

The Evening Standard (London, England), July 17, 2008 | Go to article overview

The Risks of Putting Up Barriers to Sovereign Wealth Fund Saviours; Let's Shake on It: Chancellor Alistair Darling Meets Chinese Premier Wen Jiabao to Discuss Sovereign Wealth Funds Earlier This Year


Byline: BILL CONDIE

THE credit crisis has been dragging on for a year, with no end in sight, so it's no wonder troubled financial institutions and Western governments are taking more interest in sovereign wealth funds (SWFs).

These largely anonymous and controversial government funds, which have built up tens of billions in dollars in cash reserves from oil revenues, suddenly appear to be potential saviours for companies in these credit-starved times. So it was that Barclays raised [pounds sterling]4.5 billion last month in part from the Qatar Investment Authority and just last week US giant Dow Chemical raised $1 billion from a similar Kuwaiti fund to buy Rohm & Hass.

The money is all well and good. But the big issue for many is that these SWFs are closely tied to national governments and appear to lack transparency.

That has prompted serious talk among Western governments about imposing restrictions or controls on these funds. Critics fear the economic clout of SWFs will lead to political influence in their host countries.

Now the author of a new report, the first to look in detail at the strategies and ambitions of SWFs, has warned Western politicians that protectionism could spark off tit-for-tat trade wars that could drag down the world economy for years.

"A political response, rather than one based on real economic concerns, would affect everyone," said Emad Tinawi, vice-president of the corporate advisory firm Monitor Group.

He warned that if the US curtails the fund's activities, other countries will retaliate. "That includes countries in the Middle East and others home to sovereign wealth funds. Protectionist policies in Washington in the 1930s sparked an economic crisis and the world took decades to recover," he said.

Sovereign wealth funds have been around since the Kuwait Investment Authority was established in 1953, but have become more visible as their coffers have swollen from oil revenues or massive trade surpluses.

The 29 sovereign wealth funds monitored by Morgan Stanley are worth almost $3 trillion ([pounds sterling]1.52 trillion), with the Abu Dhabi Investment Authority, the biggest, worth about $875 billion.

The IMF estimates that they will be worth $12 trillion by 2015.

The credit crunch has focused even greater attention on SWFs. It's not just Barclays but also UBS and Citigroup, among others, that have tapped foreign funds for major cash injections. The phenomenon is not limited to banking.

QIA holds diverse stakes including the London Stock Exchange and nursing group Four Seasons Health Care, plus the housing development planned near the Royal Hospital in Chelsea. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Risks of Putting Up Barriers to Sovereign Wealth Fund Saviours; Let's Shake on It: Chancellor Alistair Darling Meets Chinese Premier Wen Jiabao to Discuss Sovereign Wealth Funds Earlier This Year
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.