Europe and the screening of foreign investment


Chief executive, Confrontations Europe

Germany has just decided to strengthen its screening of foreign investments in strategic sectors, such as defence and energy. Why? What is at stake?

The German government has approved on December 19 a draft law to examine and if needed block all investments in sensitive industries if a foreign business wishes to take even a 10% minority stake (the former threshold was 15%). This follows several Chinese attempts at strategic investments in Germany -among others- over the last few years: for instance, an innovative SME in robotics was bought back by Chinese to copy technologies and catch up more rapidly. However, a Chinese attempt to take over one of the main power network players has been fought back this year.  It is typically a « critical infrastructure »: energy, telecommunications, media, with potentially an impact on the country’s national security.

And what about Europe?  

The United States of America do have since a very long time such a mechanism of foreign investment screening and have considerably strengthened it. France has also reinforced its national investment screening on January 3, enlarging the list of specific sectors to aerospace, cybersecurity, IA, robotics, additive manufacturing, chips, hosts of sensitive data. But it is at the European level that we need one, and the political agreement reached on November 20 between the European Parliament, the Council and the Commission is welcome. Typically, the Chinese, but also the Russian, the Turks… don’t hesitate to try and divide us Europeans. They invest first where Europe is weak as it doesn’t invest enough, in Greecz for instance with the Piraeus port, the Balkans, Hungary, their new Chinese silk roads… or even in Africa. It is thus imperative that Europeans agree on their common strategic interests, promote and defend them.

What is at stake is not closing ourselves to foreign investors. They bring capital and create jobs, and all the better if it is in Europe rather than elsewhere. We have a strong interest in being attractive, as claimed by the campaign “Choose France”. But Europe can’t be naïve: it has to distinguish between strategic and commercial investments.

It also has to adopt a real European industrial policy. We need to reindustrialize our territories. To consolidate at European level, as Chinese and Americans take advantage of their vast integrated domestic markets. Last but not least, as we will be stronger together, we need to request more reciprocity for a better world.

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