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Tuesday March 4, 1:50 AMFrance, Britain set to spar over sovereign fundsBRUSSELS, March 3 (Reuters) - France and Britain differ over whether the European Union needs its own response to sovereign wealth funds as well as a globally agreed industry code of conduct, an EU diplomat said on Monday.The bloc's finance ministers will discuss on Tuesday the role of state-backed funds that invest about $2.5 trillion built on their booming commodity and energy exports. The EU's executive European Commission said last week that legislation was not needed and put forward principles it wants included in a voluntary code of conduct being drawn up by the International Monetary Fund. "The British are fairly wedded to seeking an international solution. The French would like more intervention at EU level to clarify provisions available in the EU treaty," the diplomat said. France wants to clarify how rulings by the European Court of Justice affect how EU countries can respond to SWFs, the diplomat said. The EU's top court has ruled that investments from third countries should benefit to some extent from the bloc's rules on the free movement of capital or establishment. German Finance Minister Peer Steinbrueck welcomed the Commission's policy paper on SWFs, saying it should be part of wider international initiatives. "We have to combine all these efforts to find a common basis, a set of best practices regarding these sovereign wealth funds," Steinbrueck told reporters as he arrived for the meeting of finance ministers. EU states such as Germany and France worry that funds from Russia, China and elsewhere may invest in Europe to influence strategic companies such as utilities rather than for purely commercial reasons. This worry is compounded by difficulties that EU firms face in investing in countries like Russia and China. "The compromise could be to try for a code of conduct first and if does not work then go for an EU solution," the diplomat said. The Commission's policy paper last week said SWFs should be welcome to invest in the EU but need to be more open about their motives and methods. EU finance ministers this week are set to endorse the Commission's policy paper, which will be sent to a summit of EU leaders later this month. Many SWFs have said they will abide by a code but the Commission has warned that unless a code works, it reserves the right to restrict direct investments through legislation. (Reporting by Huw Jones, editing by Chris Pizzey/Dale Hudson) |
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