International Forum of Sovereign Wealth Funds to Meet in Sydney, Australia on May 6-8, 2010The International Forum of Sovereign Wealth Funds (IFSWF) will convene its second meeting in Sydney, Australia on May 6-8, 2010, hosted by the Future Fund of Australia.The meeting of senior representatives of Sovereign Wealth Funds (SWFs) from more than 20 countries across the world, together with representatives from government agencies and multi-lateral organizations, will review and discuss recent developments in the global economy and challenges in the investment environment going forward.The IFSWF will issue a short communiqué and hold a press conference at the conclusion of the Sydney meeting.
As an ‘unnamed SWF source’ explains in the FT today:“That was the issue that gave rise to the whole thing…We responded by adopting the Santiago Principles and now we want to see what the rest of the world is doing about [providing] open, non-discriminatory investment markets.”What? Hold your horses just a second, unnamed FT source. You are confusing the adoption of the Santiago Principles at the level of the IWG and the Forum with the implementation of the Principles at the level of the SWFs. The two are quite different.While I think we’d all agree that developing and “adopting” the Principles was a remarkable feat of diplomacy and negotiation at the international level, their long-term success will depend on SWFs’ compliance with them. In other words, I don’t think you can claim to have “adopted” the Santiago Principles just because the IWG agreed on a framework. The funds themselves have to use this framework.
there remains quite a bit of work to be done to move from “adoption” at the level of the IWG / Forum to “compliance” at the level of the SWFs. In fact, Sven finds that there are literally zero (!) SWFs that are 100% “Santiago Compliant” – i.e. not a single SWF has managed to implement all the principles and practices that they themselves crafted and agreed to adopt. While some funds are quite close (such as the New Zealand Superannuation Fund), most fall under the 60% compliance range. Remarkably, some signatories (e.g. Iran) are literally 0% compliant.
The Santiago Principles were meant to reassure host states that these projections of public power in private markets were not threatening. Yet their adoption,without more, amounts to mere gesture. Their implementation would involve something considerably more substantive--Ashby Monk's principal point. Like SWF states, host states have also adopted graet principles for the preservation of open private markets. Indeed, most have done that and more. It becomes perversely ironic, in that context, to consider the SWF home state complaints about gesture.