Geopolitical Challenges Beyond the European Union: The Evolution of FDI Screening Mechanisms and the Quest for European Security
Federica Marconi*
In recent years, the European Union (EU) has been confronted with a series of unprecedented global crises, including the Covid-19 pandemic and the Ukraine war. These events have had a profound impact on the geopolitical and geo-economic landscapes. Concurrently, the rapid advancement of technology has increased global interconnectedness, thereby blurring the lines between the economic importance and security implications of goods and services.[1]
This dynamic has prompted governments worldwide to focus more on FDI and its control, particularly in sectors critical to technological innovation and national defence. A discernible shift towards the reinforcement or establishment of novel frameworks for the screening of FDI has been identified, including within the EU.
This paper aims to examine two key aspects of the role of FDI that may indicate a shift in the European project in the context of great power rivalry. Firstly, it considers the potential conflicts between national and supranational authorities in overseeing FDI control, with a stronger role for European institutions. Secondly, it analyses the shift from national security to a shared concept of European security that encompasses economic considerations and goes beyond the borders of the single Member States.
To provide the necessary context for understanding the importance of FDI in the pursuit of open strategic autonomy within the European context, the paper begins with an analysis of the changing landscape of geopolitical competition. Subsequently, the paper traces the evolutionary path that has led to the current division of competences between the EU and Member States in the field of investment and its control, with particular emphasis on the evolving stance of EU institutions. Finally, the paper examines the conceptual shift from the traditional notion of national security to a broader, more comprehensive concept that integrates economic concerns.
A Changing Geopolitical Landscape and the growing reliance on geo-economics tools
The 21st century has been characterised by a series of shocks affecting a wide range of policy areas, which have fundamentally altered the global order. In the context of these events, two major driving forces prove valuable in unravelling the intricacies of the current scenario. Firstly, globalisation has led to greater economic interdependence. Secondly, shifting power dynamics have intensified competition among major powers, particularly between the United States and China, and strained relations between Russia and the West.
In consequence, a new era is emerging in the evolving world order, characterised by the prominence of geopolitical considerations and the heightened intensity of geo-economic competition.[2] The intertwining of economic interests with geopolitical ambitions has led to the growing use of trade and investment for strategic competition between global superpowers.[3] This has underscored the importance of safeguarding national security, critical infrastructure and economic interests in the face of evolving global dynamics and emerging threats.
Evolution of FDI Screening Mechanisms: National vs. Supranational Control
In response to the evolving challenges currently facing the EU, the concept of “open strategic autonomy” has been introduced with the objective of reducing the EU’s strategic dependencies in critical sectors, to prevent exploitation while maintaining an open stance towards international business opportunities. To achieve this, the EU has reinforced several instruments, including FDI screening mechanisms. These mechanisms are designed to address the mounting concerns surrounding FDI, due to its central importance as a catalyst for growth and competitiveness, but also as a carrier of new vulnerabilities.
As Member States retain significant authority over their national regimes, particularly on the ground of national security and public order, the EU has worked to establish a cooperative framework for FDI control with the adoption of the Regulation (EU) 452/2019. The FDI Regulation identifies security and public order as the key interests that can justify the use of special powers and the implementation of restrictive measures in the context of the control of FDI [4]. Nevertheless, the Regulation (EU) 452/2019 does provide for a definition, leaving it to be determined by each Member State.[5]
Towards a broader Concept of Security
In the context of great power rivalry, the traditional concept of national security – historically focused primarily on military and defence concerns – is now evolving to encompass also economic considerations. This reflects the growing recognition that economic vulnerabilities, such as trade dependence, critical infrastructure, and technological advances, have a profound impact on a country’s overall security and well-being.
The European Commission’s 2023 Work Programme placed economic security at the forefront of its priorities. The European Economic Security Strategy of June 2023 and the Communication “Advancing European Economic Security” of January 2024 further confirmed this new approach, culminating in the expressed equation of the concept of national security with that of economic security.[6] Accordingly, the Communication put forth a proposal for the revision of the current FDI Regulation with the intention of achieving greater regulatory convergence among Member States.
The ongoing evolution of FDI screening mechanisms illustrates the EU's endeavours to navigate the complexities of the current geopolitical landscape. The interplay between national and supranational competences in FDI control, along with the shift towards a comprehensive European security framework, will shape the future of EU trade and investment policies in an increasingly competitive world. Balancing national sovereignty interests with a unified European security framework is a challenging task, but at the same time presents an opportunity to advance European integration by identifying European security as a common public interest and addressing the dynamic global economy.
The full text can be found in Fechter/Wiesenthal (eds.), The Age of Open Strategic Autonomy (2025)
*Researcher Fellow in the Multilateralism & Global Governance Programme at the Istituto Affari Internazionali (IAI) and Ph.D. in Theory of Contracts, Services and Markets at the University of Roma Tor Vergata.
[1] Clara Weinhardt, Karsten Mau, Jens Hillebrand Pohl, The EU as a Geoeconomic Actor? A Review of Recent European Trade and Investment Policies, In Milan Babić, Adam Dixon, Imogen Liu (eds) The Political Economy of Geoeconomics: Europe in a Changing World. International Political Economy Series. Palgrave Macmillan, Cham., 2022.
[2] Scholvin, Soren/Wigell, Michael, Geo-economic power politics. An introduction, in Wigell/Scholvin/Aaltola (eds.), Geo-economics and power politics in the 21st century: The revival of economic statecraft, London, 2018, p. 1.
[3] Sophie Meunier, Kalypso Nicolaidis, The Geopoliticization of European Trade and Investment Policy, in JCMS, 2019, p. 103.
[4] Recital nos. 3 and 4 of the FDI Regulation.
[5] Elvire Fabry and Micol Bertolini, Covid-19: the urgent need for stricter foreign investment controls, 2020, https://institutdelors.eu/en/publications/covid-19-lurgence-dun-controle-renforce-des-investissements-etrangers/,
[6] Ursula Von der Leyen, An EU approach to enhance economic security, 2023, https://ec.europa.eu/commission/presscorner/detail/en/IP_23_3358; Anna Vlasiuk Nibe, Sophie Meunier, Christilla Roederer-Rynning, Pre-emptive depoliticisation: the European Commission and the EU foreign investment screening regulation, in JEPP, 2024. https://doi.org/10.1080/13501763.2023.2258153.
