Sarkozy calls for EU sovereign wealth funds
Europe is divided over the use of state-owned investments in companies to support industry.22 October 2008
STRASBOURG - French President Nicolas Sarkozy on Tuesday backed the creation of sovereign wealth funds, or state-owned investment funds, in Europe to support industry during the financial crisis.
"I'm asking that we think about the possibility of creating, each one of us, sovereign funds and that perhaps they could be coordinated to provide an industrial response to the crisis", he told members of the European Parliament.
Sovereign wealth funds are typically controlled by oil-rich countries like Russia or Gulf nations with trillions of dollars to invest abroad.
Sovereign wealth funds began in the early 1950s but their use increased in recent years.
However, their increase was accompanied by fears in some European countries and Washington that the governments controlling funds could use them to advance their own political and strategic aims.
"I am well aware of disagreements among certain countries" on this subject, Sarkozy said, "but I cannot imagine being told that a united European response was needed for the financial crisis, but not for the economic crisis".
Sarkozy, whose country holds the European Union's rotating presidency, said it was important for the 27-nation bloc to coordinate economic policy as it responds to the crisis.
"Our duty is to ensure that in Europe we can continue to build ships, aircraft, cars", he said.
Still, Sarkozy's various proposals for responding to the economic crisis -- some of which he outlined in Strasbourg -- sparked criticism among some EU members Tuesday.
Germany's economy minister denounced the French president's call for EU governments to invest in companies and for an "economic government" for the eurozone area.
"The French proposal that the state should take stakes in European industry so as to protect it from foreign state takeover goes against the successful principles of our economic policy", minister Michael Glos said in an interview to appear in Wednesday's edition of the daily Frankfurter Allgemeine Zeitung.
Czech President Vaclav Klaus described Sarkozy's proposals to change the financial system as "old socialism".
At a press conference in Strasbourg, Sarkozy said the sovereign funds proposal would allow European governments to invest in industry they consider to be of "strategic" interest.
"There are a number of big French or European groups whose market value today is a third of what it was six months ago. Yet there exists in the world sovereign funds with considerable means", he said.
He said the EU could take advantage of the funds to buy "strategic assets which have depreciated, until the crisis passes, and then when the market rises again, put the shares back on the market".
European Commission chief Jose Manuel Barroso cautiously welcomed the idea.
"I am not, in principle, against sovereign wealth funds", he told reporters, but added that the EU "must find common rules if possible" to deal with them.
[AFP / Expatica]