By Dr Chris Armstrong, Politics & International Relations
Dozens of countries have established Sovereign Wealth Funds (SWFs) in the last decade or so. In most cases those Funds are used to manage the massive revenues gained from selling resources such as oil and gas on a tide of rapidly rising commodity prices – money which is then invested in a wide portfolio of foreign stocks and real estate. From one point of view this makes perfect sense: saving money for the future may be wiser than splurging it today, which would in any case have unwanted macro-economic effects.
But the existence of these Funds has raised a series of ethical questions. How can we make sure SWFs are transparently and accountably governed? Should they avoid investing in ecologically-damaging or otherwise dubious industries overseas? When foreign SWFs invest in countries like the US or the UK, should this raise concerns about national security and political independence? Those questions are, as they should be, attracting more and more attention.
But much more interesting – at least for political theorists – is the question of what the money contained in SWFs should eventually be spent on. What is it for? And more to the point just who is it for? Strikingly, the money contained in most SWFs has been gained through selling valuable stocks of natural resources (or, in some cases, simply selling exploration rights) – but national claims over natural resources are often, from the point of global justice, thought to be very weak. It is a fact of international law, to be sure, that individual states get to exercise considerable control over the natural resources which happen to fall within their borders. But can that principle be morally defended? If it can’t, doesn’t this have the implication that the money contained in SWFs is actually ripe for some old-fashioned redistribution?
In a new paper, I answer in the affirmative. Using the example of Norway’s very large SWF – derived from selling North-Sea petroleum over recent decades, and now the second-largest SWF in the world – I show that national claims over the money in SWFs are often very weak indeed. Saving the massive sums of money involved may be admirable. What is open to question is why it should be saved for Norwegians as opposed to anyone else. I also offer some guidance for how the money contained in such Funds could best be spent if our intention was to uphold not purely national interests but truly global ones.