Brussels proposes tightening control over foreign investments made through subsidiaries in Europe

Brussels is beginning to deploy concrete proposals to achieve “European economic security” in a geopolitical context of growing hostility between powers.

With this objective, it has been proposed to tighten control over foreign investments to prevent strategic companies from falling into unwanted hands, mainly Chinese but also from Middle Eastern countries.

Hence, the Commission proposes, in a package of proposals that it launches this Wednesday, and to which EL PAÍS has had access, to give a twist to the existing regulation to control that this does not happen through subsidiaries in Europe of foreign investors. .

The Union Executive also insists on the need to control exports 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 mature and what the Commission proposes is to continue the debate between the Member States.

The objective of extending control to indirect investments and proposing the homogenization of current national regulations seeks to “protect the economic security of the EU with a range of policies and tools,” explains the draft of the communication that the school will study. of European commissioners.

By expanding the definition, we also try to avoid countries within the EU itself that could be used as a free port of entry to the continent, since there are Member States that until now have had little interest in deploying this type of mechanism. of control.

Sources from the European Parliament point to Cyprus and Malta, with very favorable investment frameworks.

The invasion of Ukraine, the strength of China, the explosive situation in the Formosa Strait and even the potential return of Donald Trump to the White House push the Twenty-Seven to prioritize what is called “European economic security.”

It is a concept that complements another that has also gained prominence in recent years, “strategic autonomy.”

Both are part of an objective and seek to define a strategy by which the EU tries to reduce its dependence on China - the main supplier of key technologies in the ecological transition and essential raw materials -, energy from Russia or technology from Taiwan.

The Commission already outlined its plans to achieve “European economic security” last June.

In that document, as in the current ones, China or other countries that could be considered a strategic challenge or threat are not singled out.

However, it is evident which States the focus is on.

For example, in 2016 the debate was opened by the purchase of a German advanced robotics company, Kuka, which led Berlin to lower the foreign investment control thresholds from 25% to 10% in 2018. A few months later it entered into The European regulation for 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 adopt measures against these investments continues to fall to the States.

Although that did not prevent the Commission from intervening in the Asian giant's takeover of the port of Hamburg, of which it ended up buying 25% and not the 35% initially agreed upon.

Although China's investment in the EU has decreased in recent years, the community focus is on Beijing even more than in the last decade, given the geopolitical changes caused by the invasion of Ukraine and the greater rapprochement with Russia.

According to Rodhium Group, a consulting firm specialized in the Asian giant, Beijing has gone from investing just over 45 billion euros in 2016 to 7.3 billion euros in 2022, including the United Kingdom.

However, one of the most attractive destinations two years ago was Hungary, where a battery gigafactory was installed.

This regulation is what the Commission now wants to amend, following recommendations from the European Court of Auditors, “to avoid gaps in the control of risky transactions, focus on cases that present the greatest risks and guarantee greater responsibility within the system regarding to security or public order concerns expressed by Member States and/or the Commission.”

Investment control is just one of the legs on which Brussels proposes to build this “economic security.”

It is, at the moment, the most advanced.

The others are much less so.

In June, the Commission already proposed increasing surveillance on dual-use exports (civil and military) - something now prohibited with Russia for many products due to the sanctions imposed for invading Ukraine - and taking extreme care with investments in advanced strategic technologies that are outside the territory of the Union.

In both cases, however, the approach taken by Ursula von der Leyen's Executive is cautious in proposing to “promote the debate” among the Member States with white papers to reach consensus before launching into regulation.

This care is justified by the need to seek internal unity and also to present more mature projects that will probably raise significant criticism outside the continent and even similar responses in third States.

Follow all the international information on

Facebook

and

X

, or in

our weekly newsletter

.

Subscribe to continue reading

Read without limits

Keep reading

I am already a subscriber

_