Global capital flow needs certainties for its investments and that explains the fact that evaluations by three US rating agencies represent a key indicator relied upon when taking such decisions by the private sector and public institutions alike.

However, these agencies have recently been criticised, especially after the global financial and the one that afflicted the euro. They were accused of taking sides with US companies against the rest of the world to draw in more foreign investments into the troubled US economy.

There were attempts to break up the US monopoly, most notably by the European Union (EU). Germany’s Toshtin Haizich, leader of a campaign calling for the establishment of a European credit agency, said, “We want to represent the EU in the credit mark.”

Russia too is striving to create its own credit rating agency with an international character. But there are complementary efforts being made by countries like Japan and emerging economies in Asia, Africa and Latin America, where economic difficulties have been exacerbated by the ratings assigned by US agencies and leading to reluctance to invest there. The US economy has been granted the highest rating in the world (AAA) by these agencies in spite of the difficulties being experienced by the economy and the high levels of public debt, which exceeded GDP by more than $20 trillion. However, stable economies such as Germany as well as those of Scandinavian countries get lower ratings.

In fact, all attempts to break free from the US monopoly on ratings are yet to succeed as businesses and investors alike sticking with the traditional agencies in spite of the great disparity in many cases.

This means the rating process of each agency is interest-oriented rather than objective and associated with attempts to channel a lot of investments to serve their own goals and profits. Therefore, establishing rating agencies in more than one country is a substantial issue for the global economy given the fact that if there are prestigious European, Russian, Chinese, and Japanese agencies (and even Arab ones), it will only help gain greater credibility.

The resultant competition between agencies would result in more realistic status reports on global economies and institutions. Will we see soon a European rating agency? Especially as the EU possesses all the necessary human, professional and material capabilities to make it work.

This can be made possible in spite of all difficulties and absolute dominance of existing rating agencies, which will not be thrown off course due to their broad experience and immense support by the US.

Interestingly the existence of a European rating agency becomes possible now more than ever. Germany is determined to press ahead with its endeavours to create a rating agency (or even more than one) not only to break free from the US monopoly but also to curb the damages caused by US rating agencies.

The agencies’ recent ratings of Greece deeply affected its economy and those of the EU in general.

The emergence of new rating agencies is a strong possibility, and that would only enhance the credibility of the industry as a whole. The existing players have committed multiple mistakes, none more so in the high ratings assigned to Lehman Brothers before the 2008 crisis.

The world needs new rating agencies that serve the interests of a global economy.

Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.