Sovereignty, Accountability, and the Wealth Fund Governance Conundrum

Sovereign wealth funds – state-controlled transnational portfolio investment vehicles – began as an externally imposed category in search of a definition. SWFs from different countries had little in common and no particular desire to collaborate. But SWFs as a group implicated the triple challenge of securing cooperation between deficit and surplus states, designing a legal framework for global capital flows, and integrating state actors in the transnational marketplace. This Article describes how an apparently artificial grouping of investors, made salient by the historical and political circumstances of their host states in the mid-2000s, became a vehicle for addressing some of the hardest policy problems of the past century and a site for innovation in international law-making and institution-building. I suggest that the funds’ hybrid public-private and transnational character makes them hard to define and govern, but also makes them exceptionally apt reflections of contemporary global finance and its multiple constituents. I elaborate this character in a four-part accountability matrix. The task of governing SWFs, just like the task of governing global finance, is about negotiating among public, private, internal and external demands for accountability in the absence of a stable hierarchy among them.