Benjamin Cohen has just published a paper in Chatham House’s bi-monthly journal, International Affairs. (For those like me that do not have access to Chatham House, an early stage draft is available.) The article, which is entitled ‘Sovereign Wealth Funds and National Security: The Great Tradeoff,’ juxtaposes the geopolitical concerns created by SWFs against their economic benefits:
“…a Great Tradeoff between, on the one hand, the world community’s collective interest in sustaining the openness of capital markets; and on the other hand, the legitimate national security concerns of individual host countries.
Cohen asks: “Can some balance between the two be found that will be both stable and acceptable to all concerned?”
The article suggests that balance has not yet been achieved, and the drift into protectionism is likely to continue. Indeed, while the article seems to have been written before the GAPP was formally released, Cohen is antagonist to the idea that GAPP could actually work at stemming Western anxieties.
In this respect, his conclusion fits with my experience: the optimistic Western policymakers I’ve spoken to tend to argue that GAPP is simply a work in progress. The pessimistic policymakers are, well, very pessimistic about its usefulness. A lot depends on what the new International Forum does with GAPP.
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