KEY POINTS:
Christine Lagarde, France's Economy Minister, may establish a French sovereign wealth fund to counter the rising power of the state-owned funds from the developed world.
In a debate on French television, Lagarde called the idea "seductive" and said she was thinking of creating a French fund.
Such a move would represent an astonishing volte-face from the country that has been one of the harshest critics of SWFs, many of which are controlled by Middle East and Asian Governments in the developing world and have become increasingly active in Europe and America.
It was just a few weeks ago that President Nicolas Sarkozy was issuing stern warnings about the danger of these "extremely aggressive" funds and joining a chorus of European parliamentarians calling for the imposition of a code of conduct on SWFs. It seems now that France could take a "if you can't beat them, join them" approach.
Lagarde said a French SWF could be formed by hiving off some funds from the Caisse des Depots et Consignations (CDC), the huge state pension fund manager. The idea emerged from a report commissioned by Sarkozy into ways to increase France's economic growth.
The news comes as Qatar's Prime Minister confirmed yesterday that the emirate's fund was accumulating shares in European investment banking giant Credit Suisse as a part of a £7.7 billion ($18.8 billion) investment programme in banking stocks.
The emirate has been at the forefront of a wave of SWF investment in Europe and America that has piqued the attention of politicians on both sides of the Atlantic, worried that their investments may be motivated by political rather than commercial reasons.
In recent months, Singapore's GIC has poured billions into UBS, while Dubai and Qatar have become the two largest investors in the London Stock Exchange.
The activity in America has been even more intense, as one Wall Street giant after another has been bailed out by funds from China, Singapore and the Middle East.
- INDEPENDENT
