Recently, French President Sarkozy, who holds the rotating presidency of the European Council, suggested that the European Parliament consider creating “sovereign wealth funds “ within the European Union as a response to the financial and economic turmoil. The main target seems to be protecting Europe’s strategic sectors (such as defence, energy or banking) by injecting cash into the struggling companies. “I don’t want European citizens to wake up in a few months and discover that European companies belong to non-European capitals,” he said. Moreover, according to Sarkozy, these funds could access cheap finance and sell back industrial stakes in the market at a later profit.

 Commission President Manuel Barrosso called the idea “extremely interesting”, provided that its main target remains to protect the European Citizens and that it does not infringe the EC rules (State aide and competition rules). Conversely, Germany reacted coldly to the proposal, suspecting its progenitor to hide protectionist targets such as helping French small companies squeezed by the credit crunch and protect French firms from unwanted takeovers.  The German Economics minister merely dismissed the project, describing it as “against the successful principles of our economic policy”.

Do you think that Sarkozy’s plan is in line with the ideas of other European nations? If not, what ideas would you suggest or how would you modify Sarkozy’s plan? Is this disguised state aid that benefits certain nations or simply governments acting in a time of crisis to prevent Europe’s economic collapse?