Doug Rediker in Harvard Political Review | 'Sovereign Wealth and Private Equity Funds are Here to Stay'

Communications — Tue, 22 Apr 2008 08:27:00 -0400

New America in the News:

Full article

. . . The new kids on the block, in terms of economic might, are sovereign wealth funds. Clouding their speedy rise are questions raised by Western media and governments about their management and purposes. Do they pose a threat to political stability? “That’s the three-trillion dollar question,” said Douglas Rediker, Co-Director of the Global Strategic Finance Initiative at the New America Foundation, in an interview with HPR. Sovereign wealth funds have never been this big before, or grown at such a pace. The International Monetary Fund has estimated that sovereign wealth funds could account for $12 trillion dollars by 2012.One problem that belies handy analysis of sovereign wealth funds, however, is their sheer diversity. Countries from Norway to Botswana operate sovereign wealth funds, and generalization about their aims or activities is difficult. But uncertainties about the motives of these funds are growing. . .

“The potential to use this finance as a political tool exists,” said Rediker. . . “There have been few if any instances where you can point to political influence having been part of an investment decision,” said Rediker. And it’s difficult to single out sovereign wealth funds for reform, for an important practical reason. Rediker noted that they disclose just as much information as private equity or hedge funds, and since giving up information can mean giving up market advantages, sovereign wealth funds are not keen on it. . . .