Given the secrecy of so many of the world’s sovereign wealth funds, it is appropriate that the details of the new International Monetary Fund (IMF) sponsored code of conduct for them remain under wraps until it has been approved. But when they are published, it will be clear that Middle East funds have little to be concerned about.
The rules are unlikely to be overly stringent and, as it is voluntary, no fund will be bound too tightly by the code. In any case, most governments already have measures in place to restrict the activities of unwanted investors or to protect strategic national assets.
The real target of the measures is not the oil-rich Gulf funds anyway. While they are opaque, they are not seen as particularly threatening to the future of the Western economies that have led the charge for a code.
This is partly due to their astute decision to invest in high-profile but largely uncontroversial assets such as football clubs, tourist attractions and real estate developments.
Instead, it is Chinese and Russian funds that are really in the sights of the West, which is worried that political as well as economic power is moving eastwards.
The details of the code are due to emerge in October. But they are unlikely to say that funds must disclose the details of their investments or anything more than the broad principles that underlie their strategy.
The criticism that has already been levied at the IMF’s code is reasonable enough. But the weaknesses that have been highlighted, such as the lack of a clear enforcement mechanism, should make it even easier for Middle East funds to sign up.
Even if there are elements of the rules that the funds dislike, they can be confident there is little anyone can do to make them adhere to them.