...but not your politics. Or so says Germany, which has just passed a new law making it easier to block investments that would lead to foreign (non-EU) investors owning more than 25% of German firms. This is clearly a shot across the bow for sovereign wealth funds (SWFs) based in politically unsavoury countries like Russia, China and Saudi Arabia, where opaque investment guidelines and fear of political leverage has raised public attention on the issue. Nor is Germany the first country to make a move on this issue: Australia beefed up its foreign investment screening criteria earlier this year, and many other wealthy countries are reviewing their current policies. For a very detailed and thoughtful analysis on current trends regarding SWFs and foreign investment criteria, see Rachel Ziemba here.
Given the number of classmates that just spent their summers researching the IPE implications of SWFs, I'm expecting a flood of comments/emails explaining to me what Germany's new law means for the relationship between investment, trade, and politics. While I'm waiting on that, I will point you to two editorials on the subject: the first by Paul Maidment over at Forbes, the second by the Economist. The cartoon in the 2nd link alone is worth the jump.
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