Taming Sovereign Wealth Funds, Again
Peter Mandelson, European Commissioner for External Trade, has pondered aloud whether the perceived threat of Sovereign Wealth Funds buying up controlling interests in strategic or 'sensitive' sectors might be countered by reviving the use of the 'golden share'. A 'golden share' in an enterprise gives the government that holds it the right to veto strategic decisions involving the enterprise, including its falling into the clutches of an undesirable new owner.
If the cure is not to be worse than the problem it aims to correct, the wielding of the golden share by national governments in the EU should always be subject to approval by the European Commission. That way we avoid the risk that golden shares will be used for national protectionist purposes, the creation and defense of national champions and other continental Colbertist voodoo.
It would not, of course, eliminate the risk that the Commission could abuse its role in the golden share process to pursue a protectionist strategy at the level of the EU and to create European champions. While there is little chance of that happening with the current crop of Commissioners, who are about as market-friendly a bunch as Brussels has ever seen in one place, that could change when the incumbents turn over in the key directorates of Competition, Internal Market, External Trade, Transport and Energy . A further safeguard would be to allow all those who fall foul of the exercise of the new golden share the automatic right to appeal to the European Courts of Justice. If the ECJ too were to become Euro-protectionist, it would be time to think of emigrating.
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