The Wall Street Journal reports on how rising nationalism has provoked a trade backlash and may hinder global environmental negotiations.
“Some of the world’s biggest new investors are government-run investment funds. In the Middle East and Russia, sovereign wealth funds are powered by oil revenue; in Asia, they’re fed by other export earnings. In all, the funds have a total of $3 trillion in revenue and have used the money to buy stakes in Citigroup Inc., Merrill Lynch & Co. and other battered Wall Street firms. While the infusions have been lauded by the U.S. Treasury and capital-short Wall Street firms, they also aroused suspicions here and internationally that the investors could have political agendas.
Now, many national governments are raising barriers against such foreign investment. The U.S., Canada, Germany, France, Japan, South Korea, Australia, Hungary and Greece are proposing or enacting restrictions on investment by state-owned firms from other countries, according to a forthcoming study by the Council of Foreign Relations. China and Russia, which have sovereign wealth funds, are staking out ‘strategic sectors’ where foreign investment would be restricted, say the study’s authors, investment-law specialist David Marchick and Dartmouth economist Matthew Slaughter.”