French Economy Minister Christine Lagarde said Thursday it would be a good idea to hold a meeting of sovereign wealth funds to help clear suspicions about their role and send a signal they were welcome in Europe.
The minister was responding to a report urging what it termed a "dialogue of confidence" with the funds, sometimes suspected of pursuing political rather than financial objectives.
Lagarde said that when France holds the presidency of the European Union in the second half of this year would be an opportunity "to reflect on the best way to integrate these new players."
She described as "very good" an idea in the report that a meeting of sovereign wealth funds should be held in Paris "to put an end to the current climate of reciprocal questions and to send a strong signal that these investors are welcome."
The Group of Seven leading industrialised nations has already asked international organisations, such as the International Monetary Fund and the Organisation for Economic Cooperation and Development, to draw up principles of good practice for the sovereign funds and for the countries in which they invest.
The report to the minister was written by the managing director for European affairs of a US investment fund, Alain Demarolle, who also has an elite French public administration qualification of finance inspector.
The report said "France has specific advantages to put forward with regard to sovereign funds."
Sovereign wealth funds are investment vehicles created by states to invest surpluses arising on their balance of payments. Middle East oil producing countries have created such funds, as has China and some other countries in Asia.
Demarolle told a press conference that foreign investors in general owned about 40 percent of the top French companies listed on the CAC 40 stock index "but we don't have the details of the share held by sovereign funds.
"For sovereign funds, France is one investment destination among others and so we are in competition with our main partners to attract these investors."
The main weakness which France faced was one of perception because "it is still reticent about receiving financial investors and notably sovereign funds."
In his report, Demarolle urged rejection of "any discriminatory treatment of sovereign funds as investors.
"France needs long-term investors and we have many sectors of excellence in which the funds could be very useful investors."
One suggestion in the report was for an entity called France Investissement, which would bring together public-sector and private bodies to finance small and medium companies, to be opened up to sovereign funds.
Demarolle said the questions raised about sovereign funds were "legitimate" but he also considered that their rise was inescapable.
He suggested that there should be a principle of reciprocity for French and European access to countries in which sovereign wealth funds were based.
Copyright 2008, by
AFP
. All rights reserved
OPEC unhappy with oil price surge: El-Badri
India trade minister rejects new WTO texts 