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Sovereign Wealth Funds and the Santiago Principles: Where Do They Stand?

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Paper
Malcolm H. Kerr Carnegie Middle East Center

Sovereign Wealth Funds and the Santiago Principles: Where Do They Stand?

The Santiago Principles and the commitment of their sponsors—some of the biggest sovereign wealth funds—are an important test for the viability of new forms of global governance.

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By Sven Behrendt
Published on May 5, 2010

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The Middle East Program in Washington combines in-depth regional knowledge with incisive comparative analysis to provide deeply informed recommendations. With expertise in the Gulf, North Africa, Iran, and Israel/Palestine, we examine crosscutting themes of political, economic, and social change in both English and Arabic.

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Managers of Sovereign Wealth Funds (SWFs) gathering for their annual meeting in Sydney this week will likely note real progress on implementing the Santiago Principles—a voluntary code of conduct for SWFs designed to promote good governance, transparency, and accountability. In fact however implementation is highly uneven. There is still far to go if SWFs are to be responsible members of the global economy, concludes a paper by Sven Behrendt.

Map: Sovereign Wealth Funds

Map: Sovereign Wealth Funds

Key Conclusions:

  • Only four of the 26 SWFs which signed the Santiago Principles are close to fully implementing all principles. As a voluntary agreement, it is at risk of failing if it does not gain wider support.
     
  • A country’s level of democracy correlates significantly with how fully its SWF has adopted the principles. But there is no strong correlation between a country’s level of economic development and its overall adherence.
     
  • At the upcoming G20 Summit in Toronto, leaders should acknowledge progress but urge SWFs to more aggressively comply with the Santiago Principles.

“The G20 wants to make progress on financial regulatory reform. The Santiago Principles are a test case for how broad the commitment to reforms in global finance is,” writes Behrendt. “The G20 should urge all signatories to the Santiago Principles to fully comply with them.”

About the Author

Sven Behrendt

Former Visiting Scholar, Middle East Center

Behrendt is an expert in global issues, international negotiations, conflict resolution, and corporate strategy. He previously served at the World Economic Forum in various management positions.

    Recent Work

  • Article
    Sovereign Wealth Funds: The Governance Challenge

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  • Article
    The G20 and Saudi Arabia’s Changing Foreign Policy Agenda

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Sven Behrendt
Former Visiting Scholar, Middle East Center
Sven Behrendt
EconomyTrade

Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

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