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need all to clearly. The critical question is how to generate the leverage to ensure that the codes of conduct gain widespread adoption. Here the omens are not auspicious. Brazil, for example, is setting up its Sovereign Wealth Fund with no input to or from the discussions now taking place at the International Monetary Fund in Washington. Moreover, despite a communiqué from the OECD to accompany a ministerial meeting in June highlighting support for the IMF discussions and the need to for recipient countries to implement a code of practice governing investment principles, there is no formal coordination between the working groups in Washington and Paris. Such an approach is not only misguided; it is likely to preordain conflict.


There are a number of sound policy reasons to request greater disclosure from Sovereign Wealth Funds. Greater disclosure could provide an early warning system of volatile build-ups of capital within particular sectors. Greater oversight reduces the potential of sudden capital withdrawals causing or amplifying financial crises. Thirdly, it serves broader public aims, including a hoped for increase in the transparency of overarching domestic fiscal policy. Fourthly, requiring Sovereign Wealth Funds to render explicit their investment strategies reduces perception that foreign policy objectives trump commercial ones. This, however, is a subjective judgment, which, if applied, could intensify rather than ameliorate tension. The critical but as yet unresolved policy question remains, therefore, how to ensure compliance to a substantive code that has the potential to deliver meaningful transparency and accountability. Success in this endeavour can only be vouchsafed if clarification extends to foreign investment review processes that guarantee commitment to long- standing principles governing equity of treatment. Notwithstanding tentative agreement in Santiago, resolution of political contestation requires that adequate attention is placed on this dimension of the equation. There is, however, an unacceptable degree of ambiguity in the proposals emanating from Brussels, Washington and Canberra. Each maintains political discretion over ill-defined ‘strategic interests’.

At a more fundamental level, the crisis in global markets requires an acceptance by recipient countries that financial liberalisation has generated players more adroit at playing global markets. This is not to suggest that power has migrated fully; rather it is to argue that saving Wall Street requires cognisance of the limitations of pursuing a losing geo-political and economic strategy. The forced expansion of financial liberalisation in the 1980s and 1990s through the conditionality criteria associated with the Washington Consensus did much to undermine the authority of global institutions such as the IMF and the OECD. How they respond to the issues raised by the transfer of capital from south to north and east to west will determine not only their own legitimacy and authority but also the capacity to engender stabilisation.

The search for accountability is therefore a symbiotic process that requires careful sequencing. Sovereign Wealth Funds need to address deficiencies in their own governance. How the sector responds will speak volumes about commitment to the principles of free trade or narrow mercantile capitalism. As Daniel Cohen, has preceptively observed, ‘the principal problem with… globalisation is that it does not keep its promises…It creates an image of new closeness between nations that is only virtual not real’.112 If, however, proposals to regulate Sovereign Wealth Funds are


Daniel Cohen, Globalisation and Its Enemies (2007), 165-166.


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