July 22, 2007	Sunday	Rajab 06, 1428

ROME, July 21: The EU should consider creating a 'golden share' system to protect strategic sectors from takeover by foreign state-controlled investment funds, Trade Commissioner Peter Mandelson was quoted as saying in a Saturday newspaper.

In an interview with Italy’s Il Sole 24 Ore, the European Union’s top trade official said the EU had to strike a balance between maintaining free movement of capital and protecting itself from wealthy so-called sovereign funds.

“Maybe we could create European golden shares. But the aim must always be reciprocal market openness not reciprocal protectionism,” Mandelson told Italy’s main business daily.

The trade commissioner was weighing into a debate which has seen the leaders of both Germany and France express fears about the motives of state-run investment funds. Concerns about political motives and money laundering have led EU officials to start to look into ways of better handling investments by third countries into EU companies, officials said this week.

Golden shares have been used in the past by EU governments to give them controlling voting rights in companies they have largely privatised -- a practice usually condemned by the European Commission which aims to guarantee a free market.

Mandelson said an EU-wide system would be better than allowing individual member states to apply their own ways of protecting strategic sectors like defence. But he said it would be difficult to create a system acceptable to all.

“I think you would need to have a shared competence between the European Commission and member states. You cannot leave it simply in the hands of a member state which is pursuing its own national interests.

“These shares must reflect the European interest, not the national one,” he said.

Mandelson said he could not envisage the EU setting up an equivalent of the US Committee on Foreign Investments which vets foreign takeovers as, he said, the US approach had often been to impede investment, something he wanted to avoid.

He denied a golden share policy would be aimed at nurturing ‘European champions’.

“I would prefer that they are born and grow thanks to their own competitiveness, their conquest of global market share, innovation and management ability, rather than from bureaucratic decisions,” he said.—Reuters