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The Senate Foreign Affairs Committee held a full committee hearing on “Sovereign Wealth Funds: Foreign Policy Consequences in an Era of New Money.” The Chairman of the committee, Senator Joe Biden (D-Del.), said that although rising oil prices and the housing crisis are top concerns, there is also cause for worry in the use of sovereign wealth funds to accomplish political goals. Biden mentioned Saudi Arabia and China as having huge sovereign wealth funds from their export economies. He said that the possibility of those funds being used to make political changes is “a real problem.”

Jagdish Bhagwati, professor of law and economics at Columbia University, said that Biden’s concern was not unwarranted. He explained that a rapid reversal of roles put the U.S. in a position of dependency on foreign funds, which is cause for anxiety. But, Daniel Drezner, professor of international politics at Tufts University’s Fletcher School of Law and Diplomacy, said that sovereign wealth funds are generally benign in their effects and that most are only used for maximizing rate of return, rather than for political tasks.

David Marchick, managing director and global head of regulatory affairs at The Carlyle Group, said that investments through sovereign wealth funds should be welcomed, but that any investments that may be threatening to national security should be heavily scrutinized.