In a geopolitical context of growing hostility between powers, Brussels is beginning to put forward concrete proposals to achieve “European economic security”. With this aim, it was proposed to tighten control over foreign investments in order to prevent strategic companies from falling into unwanted hands, primarily from China, but also from Middle Eastern countries. Therefore, in a package of proposals that it is presenting this Wednesday and to which EL PAÍS has had access, the Commission proposes to give a twist to the existing regime in order to prevent this from happening through subsidiaries of foreign investors in Europe. The union executive also insists on the need to control the export of dual-use technology (civil and military) and monitor European investments in advanced technologies in third countries. In these last two cases the proposal is not fully developed and the Commission proposes to continue the debate between Member States.
The aim of extending control to indirect investments and proposing a homogenization of current national regulations aims to “protect the economic security of the EU with a series of policies and instruments,” explains the draft communication that the school will study . the EU Commissioners. By broadening the definition, we are also trying to avoid countries within the EU itself that could be used as a free port for entry to the continent, as there are Member States that have so far had little interest in using such a control mechanism. European Parliament sources point to Cyprus and Malta as having very favorable investment conditions.
The invasion of Ukraine, the strength of China, the explosive situation in the Formosa Strait and even the possible return of Donald Trump to the White House are leading the Twenty-Seven to prioritize so-called “European economic security.” It is a concept that complements another concept that has also gained importance in recent years: “strategic autonomy”. Both are part of a goal and aim to define a strategy through which the EU seeks to reduce its dependence on China – the main supplier of key technologies for the ecological transition and essential raw materials -, energy from Russia or technology from Taiwan.
The Commission outlined its plans to achieve “European economic security” last June. This document, like the current ones, does not highlight China or other countries that could be viewed as a strategic challenge or threat. However, it is obvious which states the focus is on. For example, the debate was opened in 2016 by the purchase of a German advanced robotics company Kuka, which led to Berlin lowering foreign investment control thresholds from 25% to 10% in 2018. A few months later it entered the European regulation The law on the control of foreign investments in the EU comes into force, which allows the Commission to give its opinion on this type of corporate movements if it considers that they pose a risk, although the ability to take action against these investments remains limited. However, this did not prevent the Commission from intervening in the takeover of the port of Hamburg by the Asian giant, of which it ended up buying 25% rather than the 35% originally agreed.
Although China's investment in the EU has declined in recent years, the bloc's focus on Beijing is even greater than in the last decade, given the geopolitical changes caused by the invasion of Ukraine and closer rapprochement with Russia. Beijing has increased its investments from just over 45 billion euros in 2016 to 7.3 billion euros in 2022, including the United Kingdom, according to Rodhium Group, a consultancy specializing in the Asian giant. However, one of the most attractive travel destinations two years ago was Hungary, where a battery gigafactory was installed.
The Commission now wants to amend this regulation in line with the recommendations of the European Court of Auditors “to avoid gaps in the control of risky transactions, to focus on cases with the greatest risks and to ensure greater responsibility within the system in terms of safety or security. “public policy concerns expressed by Member States and/or the Commission.”
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Investment control is just one of the pillars on which Brussels wants to build this “economic security”. It is currently the most advanced. This is much less the case with the others. In June, the Commission already proposed increased monitoring of exports of dual-use goods (civil and military) – something that Russia has now banned for many products due to sanctions imposed over the invasion of Ukraine – and extreme caution when investing in advanced ones strategic technologies outside Ukraine's Union territory. In both cases, however, the approach of Ursula von der Leyen's executive is cautious, proposing to promote debate between member states through white papers in order to reach a consensus before starting regulation. This care is justified by the need to seek internal unity and also to present more mature projects that are likely to provoke significant criticism outside the continent and even similar reactions in third countries.
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