BEIRUT, Apr 3—Sovereign wealth funds (SWFs) could contribute to global economic recovery by reinvigorating international investment, if they first responded to the reservations of recipient governments by increasing transparency and improving their public image. Ahead of the April 5-6 meeting of the International Working Group of Sovereign Wealth Funds (IWG), Sven Behrendt offers a twelve-point blueprint for implementing and expanding upon the Santiago Principles.

The 12-point blueprint:

1. Establish deadlines for implementing the Santiago Principles.
2. Create a peer-review mechanism to monitor implementation of reforms.
3. Publicly disclose any non-financial factors considered when making investments.
4. Coordinate investments in projects that further the common good, like sustainable development.
5. Engage recipient governments in a dialogue to address their misgivings about SWFs.
6. Reach out to the public in recipient countries to avert a populist backlash against SWFs.
7. Develop policy recommendations for the G20 as it seeks to stabilize world markets.
8. Establish an advisory group of policymakers and investment professionals to provide insight into governance, investment strategies, risk management, and public relations.
9. Increase public knowledge about SWFs through cooperation with researchers and analysts.
10. Broaden IWG membership to include all government-owned investment funds.
11. Clarify and publicize the IWG’s goals, strategies, and structure.
12. Appoint a professional IWG secretariat to coordinate oversight and outreach.

Behrendt concludes:

“Given global market volatility, SWFs have been less active in past months. The public debate about their impact on the national interest of recipient economies has calmed down. However, the IWG should take a medium- to long-term perspective and proactively pursue its reform agenda to be prepared when the global economy picks up and SWFs seek global opportunities again.”

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NOTES

• Click here for a direct link to the PDF

• Sven Behrendt is a visiting scholar at the Carnegie Middle East Center. He is an expert in global policy issues, international negotiations, corporate strategy, and diplomacy. Prior to his appointment at Carnegie, he served in various management positions at the World Economic Forum and the Bertelsmann Group on Policy Research. He is a regular commentator on television and in the press on corporate strategy and globalization.

• The Carnegie Middle East Center based in Beirut, Lebanon, aims to better inform the process of political change in the Middle East.

• The Carnegie Middle East Program provides analysis and recommendations in both English and Arabic that are deeply informed by knowledge and views from the region.

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