Patten says the West is ‘hypocritical’ on SWFs

Western countries have been hypocritical in their reaction to the SWFs’ attempts to invest in major financial and economic institutions, he added.

Lord Patten said: “Western countries were less enthusiastic about free trade and globalisation of markets when they dealt with the SWFs issue. GCC countries were highly transparent compared to others. For example, Russia is using the Gazprom company and energy issues to press on European countries and this increased fear in the West about the impact of state-owned investments. When a Western country privatises a state-owned company and after some years it is sold to another country the situation raises political arguments in the community about reasons behind privatising companies.”

The protectionism trend among Western countries regarding their economic development is particularly troubling, he said, stressing increasing economic growth in Asian countries and other parts of the world would benefit the whole international economy and would balance fears of recession in the United States and Europe.

“There is no danger to the US or the European Union if Asian economies are achieving good growth rates. However, the real danger is the protectionism trend, which came as a result of increasing competition from Asian economies. The danger comes from the protectionism speeches we hear during the current US presidential campaigns,” Lord Patten said.

In his opinion, protectionism will affect the world economy, including in the Middle East.

“However, the liquidity in the GCC region is huge and the Gulf governments need to invest this money domestically, rather than internationally, to realise higher economic growth rates.”

Lord Patten said the US would continue to lead the world in the near future and the global economy would need American leadership because the whole international economic system is based on drive in the US.

“China and India, from economic data, were controlling half of the world’s economic output. Both countries also represent half of the world’s population, and the growth rate of the Indian population is expected to continue at high rates during the next five decades. When we compare the situation in the US and European countries, we see that China and India will be the major drivers of economic growth during the first half of this century. Their stake in the international trade is increasing dramatically while the US trade deficit reached seven per cent of its GDP. But the US economy will continue to be a major player because of the high investments in new technologies and scientific research.”

Addressing the World Insurance Forum in Dubai, Lord Patten highlighted globalisation, terrorism and climate change as the major risk factors facing the international economy. Climate change, he added, is a much bigger danger than terrorism. “There is no more argument about climate change, the world became sure of the increasing problem and discovered that it is a difficult and costly problem. It affects all, for example insurance companies are paying compensations for victims of hurricanes and floods more than they pay for victims of terrorist acts.”

He insisted the US and China should do more to reduce the emission of ozone-depleting gases.

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