Stricter controls for a more conflictive and dangerous world to prevent key sectors and technologies from being used against the security of the continent. The European Union must “reinforce” its arsenal of tools to defend its “economic security” against the risks that emerge as a consequence of growing geopolitical tensions, states the communication approved today by the college of European commissioners, which proposes tightening the current mechanisms of control of foreign investments as well as strengthening restrictions on the export of dual-use technologies, civil and military, on the rise since the beginning of the Ukrainian war. The documents do not cite any country but the strategy is designed with, fundamentally, two actors in mind: China and Russia.
The strategy moves on a terrain that is by definition sensitive and that is a national competence, security and public order, as was seen for example recently in Spain with the entry of Saudi Arabia into the capital of Telefónica, which led the Government to acquire a stake. public 10% stake in the company, the first since its privatization in 1997, or with the intense debates within the German Government regarding the entry of Chinese capital into the port of Hamburg. Without questioning that final decisions on foreign investments and the adoption of possible restrictive measures are a “prerogative of the member states”, Brussels advises “developing a more coherent and impactful European framework” to “reduce risks”.
“Given the geopolitical environment, the opportunities and risks it generates, it will be necessary to proceed quickly,” advises a draft of the document, to which La Vanguardia has had access. Brussels first proposes expanding the scope of the European foreign investment control mechanism, in force since 2020, to ensure that all countries have a regime of this type in place, identifying a list of sectors to which it should be applied mandatory form and “extend it” to investments that on paper come from the Union but that, ultimately, “are controlled by individuals or businesses from outside the EU, which would also allow capital injected through subsidiaries to be examined.
The current European framework, in force since 2020, is ineffective, according to the analysis published in December by the EU Court of Auditors. There are still 5 countries that do not have their own control mechanisms for foreign investments, the definition and assessment of risks carried out in each capital are very different and not all countries notify all operations to Brussels, which, at the same time, You end up analyzing hundreds of low-risk trades instead of focusing on the most important ones. Its opinions and recommendations on possible risk mitigation measures for governments are not binding nor are they made public, but it has served to identify undetected problems at the national level and, in the case of the port of Hamburg, for example, European pressure pushed that the Chinese participation was finally 25% and not 35%. The changes proposed today would resolve some of these detected deficiencies. Furthermore, Brussels proposes to start monitoring something that is currently not monitored either at the national or European level: European investments abroad to identify “potential risks”, for example that certain technologies fall into foreign hands and end up being used against the interests of the EU.
“In a time of such profound geopolitical turmoil and rapid technological change, we must be realistic about the risks we face,” advised the Vice President and Head of Trade of the European Commission, Valdis Dombrovskis, when presenting to the press the proposals, which include measures to improve coordination of export control of “items that may have both civil and military uses”, such as advanced electronics, toxins, nuclear or missile technologies, so that used to “undermine security or human rights.”
Specifically, Brussels proposes to harmonize the controls that apply to certain products that have not been incorporated into multilateral export control regimes due to the veto of Russia or some other country. “We don’t want them to fall into the wrong hands and end up undermining the security of the EU or the world,” said Dombrovskis.
The EU is also beginning to think about better protecting its technological innovations and making the type of research that can obtain community funding more flexible. Thus, with an eye on the research and development of new dual-use technologies, the European Commission will launch a public consultation aimed at public authorities, civil society, industry and universities to determine how to maintain the competitive sale of EU on certain critical dual-use technologies. The document proposes eliminating the restrictions of the next Horizon Europe program on applications that do not have exclusively civil use or even creating a specific instrument to promote dual-use technologies. In the current complex world of the community executive, there is a risk that openness and cross-border cooperation in the area of ??R&D will be exploited by third parties and used for military purposes in third countries or to violate fundamental rights.
“Higher education and research institutes can be victims of malign influences from authoritarian countries,” warns Brussels, which warns of the risks of researchers being used by rival political forces, and advises greater monitoring and protection of their work. All research organizations in Russia and Belarus are already banned from participating in EU-funded research projects, which has also hindered China’s participation.
The new communication on economic security was announced by President Ursula von der Leyen in June, an issue that has in the past caused friction with the Twenty-Seven as some countries considered her proposals on China as too aligned with the United States and detrimental to the interests Europeans. The proposals approved today open the debate on how to advance the line set by the European Council of strengthening the strategic autonomy of the EU in a context of the need for investments and increased geostrategic tensions that will be key during the next legislature. Last week, the European Parliament approved a non-binding resolution demanding that control filters be applied to Chinese investments in “critical European assets, such as ports and transport networks.”
