US agrees on principles for sovereign funds with Abu Dhabi, Singapore

Wahington: The US Treasury Department on Thursday said it agreed with Abu Dhabi and Singapore on a set of principles for sovereign wealth funds that specifies politics should not influence their decisions. The foreign-controlled funds, many based in the Middle East but also in Asia, Russia and China, have aroused US lawmakers’ concern because they have poured billions of dollars into large stakes in Wall Street firms and other businesses and fanned fears the US was losing control of its destiny. But Treasury Secretary Henry Paulson, in a statement after meeting government officials from Abu Dhabi and Singapore as well as some individual funds, said they were welcome in the United States and set out principles that also guide the behavior of countries that are getting the funds’ money. Paulson said the principles the Treasury made public should guide efforts by the International Monetary Fund and the Organization for Economic Cooperation and Development, which also are working on developing a set of « best practices » for the funds. The first principle said funds should make investments « solely on commercial grounds, rather than to advance … the geopolitical goals of the controlling government. » Countries that are getting the money « should not erect protectionist barriers » to foreign investment, according to another principle that reflects the Bush administration’s determined bid to ward off restrictions on the funds, especially at a time when their money is badly needed. At a briefing for reporters later, Treasury’s assistant secretary for international affairs, Clay Lowery, said there was no attempt to single out the Abu Dhabi and Singapore wealth funds as specially desirable partners for an agreement. Source: Agencies