IHT: Europe looks at controls on state-owned investors - by Carter Dougherty

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Europe looks at controls on state-owned investors - by Carter Dougherty

European policy makers are considering imposing controls on state-owned funds that take stakes in flagship European companies. The deliberations that have kicked off in recent weeks are a reaction to the uncertain political intentions of China and Russia as they start investing vast new reservoirs of cash in Western markets.

Whether backed by China's $1.2 trillion in currency reserves, or the profits that are accruing in places like Russia and the United Arab Emirates from energy sales, such funds are posing a dilemma even for politicians with strong records of supporting foreign investment: Do the state-controlled investors simply want to make money, or might they be seeking political influence as well? "With those sovereign funds we now have a new and completely unknown elements in circulation," the Chancellor Angela Merkel of Germany said recently. "One cannot simply react as if these are completely normal funds of privately pooled capital.

France is supporting the German initiative, which could lead to restrictions, or at least careful reviews, of moves made by the varying types of state-controlled investors that have sprung up in the last few years.