Other EU Nations Lukewarm To Sarkozy's Proposal To Create A Sovereign Wealth Fund

Paris, France (AHN) - To help defend French companies from the aftermath of the global credit crunch, Paris will create a sovereign wealth fund that will financially assist French firms which require additional capital or else risk a takeover.

Aside from establishing the fund, French President Nicolas Sarkozy said the government will postpone a tax on business investments until 2010 to give local enterprises a chance to recover from the global meltdown and recession. He added the state-owned reinsurance company will be asked to insure more credits and loans which private insurers are not granting.

Sarkozy said the fund will be managed by government-controlled lender Caisse des Depots et Consignations. He defended the creation of the fund in Argonay after the proposal received a lukewarm response from other European nations.

"Europe mustn't be na?ve, mustn't leave its companies at the mercy of all predators, mustn't be the only one not to defend its interest, not to protect its citizens," Sarkozy was quoted by Bloomberg.

Germany opposed Sarkozy's proposal. France plans to come out with a law which would limit entry of foreign state funds, while Spain is even seeking investments from Middle Eastern nations.

France had already infused $13.75 billion (10.5 billion euro) into six of the largest French banks, which helped stem the financial institutions' share prices from further declining. Following the bailout, BNP Paribas shares closed on Tuesday 7.48 percent higher at $75.67 (59 euro), while that of Societe Generale climbed 10.23 percent to $62.13 (48.425 euro) a share.