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Similarly, as demonstrated by current US economic problems, one or two false moves and an unexpected turn of events can drastically change one's good fortune. In international economic and political relations, few steps are as damaging to that fortune as those taken with little foresight and a great sense of impunity.
Increasing transparency
Conversely, increased transparency, sensitivity, and trust will promote strong and growing global financial relations. Norway's sovereign fund (identified as a national Pension Fund) is often sited as a model to be emulated by others, due mainly to its transparency and excellent governance.
Another example is the Irish National Reserve fund which adheres to an international code of best practice by publishing an annual report informing the public of its investment plans and strategies.
As oil prices and trade imbalances grow in favour of SWFs, their opportunities to make positive and lasting change in their respective countries and on the global scene increase. An important objective for fund managers should be to expose the key advantages they provide institutions and states that engage in business relations with them.
Operationally, what facilitates such an outcome is to clearly communicate their objectives, take the needed steps in adhering to international standards, boost their strategic decision making capabilities, and increase their emphasis on longer term planning and profitability.
Likewise, by potentially allocating a percentage of their assets to global infrastructure and development projects (including some in the West), owners of SWF will greatly enhance their international standing and goodwill. While such projects can still generate normal profits, their overall contribution in terms of helping build trust and breaking down unnecessary barriers will be significant.
Staff
