U.S. Treasury Secretary Henry Paulson assured investors in the oil-rich Gulf region on June 3 that the U.S. will remain open to sovereign wealth funds. "As we seek to open new markets abroad, America will keep our markets open at home to investment from private firms and from sovereign wealth funds," Paulson said in a speech in the United Arab Emirates, his third stop in a Gulf tour.
"We reject measures that would isolate us from the world economy," he said in Abu Dhabi, whose government controls a fund worth hundreds of billions of dollars.
Paulson acknowledged concerns in the region resulting from the Dubai Ports World debacle, when U.S. congressional opposition forced the Dubai government operator to offload U.S. operations acquired through its 2006 acquisition of P and O. "Some here worry about growing protectionist sentiment in the U.S., and they also worry specifically that U.S. sentiment towards Middle East investment has been permanently affected by the Dubai Ports World case," Paulson said.
The treasury chief said some SWF managers were also concerned about a U.S. demand that the International Monetary Fund set standards for investments by the funds, but he said this was meant to counter calls for restrictions on those investments. "In order to continue to benefit from sovereign wealth fund investment, we proposed that the International Monetary Fund develop a set of credible, best practices for these funds. The IMF expects to produce these recommendations this fall," he said.
"Among some sovereign wealth fund managers, our initiative has raised concerns that we are trying to limit the scope of their activities or release privileged information. In fact, our purpose is just the opposite. We are trying to quell calls for restrictions by urging sovereign wealth funds to endorse best practices to create a dynamic rise to the top and help allay concerns about opacity and systemic risks," Paulson said.
Copyright Agence France-Presse, 2008