The code of conduct outlined by the International Working Group of Sovereign Wealth Funds might lose its rationale if it is not vigorously implemented. The individual aspects of the principles need to be more carefully looked at.
Investors from emerging surplus capital economies no longer restrict themselves to financing the debt burden of big public and private players; they also strategically seek equity stakes in companies based in industrialized economies.
The financial interdependence that sovereign wealth funds (SWFs) created between the West and the Arab world could help stabilize multilateral relations and promote economic development and political stability in the Middle East.
Free trade agreements between the West (U.S. and EU) and Middle East and North African (MENA) countries, while containing beneficial elements, have strengthened negative perceptions of “western-led globalization” because they benefit unpopular elites and impose serious short term economic adjustment.
Arab governments tempered public anger at rising food prices by increasing wages and subsidies, but their approach is not sustainable without raising taxes. Instead they should revise agricultural policies, expand social safety nets, and curb excessive energy consumption, argues Carnegie Middle East Center economist Ibrahim Saif.
The role of Sovereign Wealth Funds, large state-owned investment vehicles, in the global financial architecture is beginning to top the political agenda in Europe and the United States. Europeans and Americans have voiced their concerns about the economic and political influence that foreign governments could exercise through their SWFs.
Recent economic growth and stabilization in Egypt has been largely fueled by external factors which may not be sustainable. During the same period, Egypt has failed to address pressing social and economic challenges, according to a new paper from the Carnegie Endowment.
Jordan’s King Abdullah II has stated that economic reform is one of his top priorities, yet it remains hindered by two major obstacles: a lack of public support, and the government’s inability to implement deep reform.
Previous attempts at economic reform have not alleviated the economic problems of Arab countries, failing to dismantle state-dominated economies with high restrictions on private investments.