EUROPE - EU member states should take a common approach to protect the union from investments out of line with standards set by the European Union, said José Manuel Barroso, president of the European Commission.

These principles also apply to investments by sovereign wealth funds, he told journalists before the start of the European Council meeting.

"We will not give a 'free ride' to those who do not respect the same standards as we do," Barroso stated. "We are not vain and not naive."

He added that Europe will "strive for global standards" and get other countries to "work with us to build a rules-based system at global level".

Investments on the part of large sovereign wealth funds like the Chinese state fund, Middle Eastern oil funds or the Russian national oil fund have worried EU member states, which are concerned about transparency and the investment principles of these funds.

However, Barroso stressed these regulations would not amount to protectionism because "protectionism does not protect. It means impoverishment and instability".

In Germany associations representing industrial employers (BDI), banks (Bankenverband) and insurers (GDV) have released a joint statement against "protectionism" in German legislation.

Legal drafts including the law against "acting in concert" might bear the risk of being "excessive, protectionist safety measures". (See IPE-article: Hermes brands German law counterproductive.)

"Germany needs foreign investors," the associations stated. They want new regulation to be considered carefully since they say various laws already protect Germany from intransparent investments.

However, the BDI, Bankenverband and GDV agree there is a problem with a lack of transparency of governance, ownership in companies and management structures in sovereign wealth funds.

"Should politicians see the need to change regulation, these must be transparent and investors need to be able to plan ahead."

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