In January 2024, the European Union revealed five new initiatives as part of its updated Economic Security Strategy. This strategy, first introduced in June 2023, marks a significant shift from traditional economic growth policies to a more geopolitical and geoeconomic approach. The EU aims to strengthen its strategic trade and investment capabilities, positioning itself firmly on the global stage.
This article is a summary. Please read the original article by Emily Benson, Federico Steinberg and Pau Alvarez-Aragones on the Center for Strategic & International Studies think tank website, here
The EU’s Geopolitical Ambitions
The strategy is designed to enhance the EU’s global influence, particularly in technology and investment sectors. While echoing similar U.S. economic security initiatives, the EU’s approach differs by emphasizing country neutrality, focusing more on Russia as a strategic threat, and upholding the rules-based liberal economic order.
Five Key Goals of the New Strategy
- Tightening Inbound Investment Screening: Strengthening rules to create greater conformity across member states.
- Advancing Export Control Conformity: Harmonizing export controls within the EU, moving away from unilateral measures.
- Outbound Investment Screening: Considering mechanisms to screen outbound investments, especially in critical technology sectors.
- Scaling Up Technology Research: Enhancing R&D in dual-use and advanced technologies.
- Protecting Research from Leakage: Preventing advanced research and technology from being accessed by strategic competitors.
Challenges and Implications
- Legislative Hurdles: National economic security remains a prerogative of member states, making EU-wide legislation challenging.
- FDI Screening Gaps: Some member states still lack robust FDI screening mechanisms, creating vulnerabilities.
- Export Control Dilemmas: The EU’s alignment with multilateral lists is challenged by unilateral control measures, particularly by the U.S.
- Divergence from U.S. Policies: While the EU and U.S. remain broadly aligned, there are notable differences in their approaches to economic security, especially regarding China.
- Outbound Investment Screening: The EU is exploring outbound investment screening, aligning with global trends but facing uncertainties in implementation.
- R&D Investment Needs: The EU recognizes the need for increased investment in technology research to maintain global competitiveness.
Transatlantic Relations and Global Responses
The strategy reflects the EU’s effort to balance its autonomy with maintaining strong transatlantic ties. It also anticipates potential challenges from China in response to stricter economic security measures.
A Unified Approach to Economic Security
The EU’s strategy represents a concerted effort to integrate trade policy with national security concerns. This requires breaking down historic policy silos and fostering greater unity and trust among member states. The strategy is not just a response to external geopolitical shifts but also an ambitious step towards enhancing the EU’s role as a significant geopolitical and geoeconomic player.