Throughout the week, Clay Risen, the managing editor of Democracy, will be covering economic developments for us on The Plank. 

At least the Treasury is doing something right: Yesterday the department agreed on a set of principles governing sovereign wealth funds with Abu Dhabi and Singapore. (Read their joint statement here). This is huge news. Such funds, essentially state-run investment pools boosted by export and natural-resource wealth, have been on a massive buying spree recently, scooping up stocks and debt around the world. Some, like those from Norway and Singapore, are fairly transparent and originate in largely peaceful, democratic countries. But you can understand the concern when, say, Russia or China gets in on the act.

As investment vehicles, these funds inject badly needed cash into the global market; as state-run entities, they run the risk of being used for political ends. Predictably, there has been a bubbling hubbub in the United States and Europe about regulating, or even excluding, sovereign wealth, at precisely the moment when we could really use the money--which, frustratingly, is not to say that the skeptics are wrong.

The principles elucidated in Washington are a good step beyond that pickle. They call for the funds to institute transparent governance controls, respect host-country rules, and base "solely on commercial grounds, rather than to advance, directly or indirectly, the geopolitical goals of the controlling government." In exchange, the U.S. will not raise barriers and regulate them like any other fund.

The issue now is whether these steps can be taken beyond the trilateral level. Singapore and Abu Dhabi are friendly, go-along states that have little to hide. The same can't be said of many other funds. The International Monetary Fund and the Organization for Economic Cooperation and Development are currently working on a set of voluntary multilateral principles, and yesterday's agreement will hopefully reinforce those. But (sorry to toot my own horn) as Joshua Kurlantzick explains in the new issue of Democracy, voluntary principles mean nothing to countries that won't play. The final step needs to be either a regulatory framework or an agreement among fund states and receiving states to exclude investments from those countries that won't play ball.

--Clay Risen