European Economic Security Strategy

21.06.2023

The European Commission and the High Representative published a Joint Communication on a European Economic Security Strategy. This Joint Communication focuses on minimising risks arising from certain economic flows in the context of increased geopolitical tensions and accelerated technological shifts, while preserving maximum levels of economic openness and dynamism.

The proposed strategy sets out a common framework for achieving economic security by promoting the EU’s economic base and competitiveness; protecting against risks; and partnering with the broadest possible range of countries to address shared concerns and interests. The fundamental principles of proportionality and precision will guide measures on economic security.

A more comprehensive approach to risk management

Risks presented by certain economic linkages are evolving quickly in the current geopolitical and technological environment and are increasingly merging with security concerns. This is why the EU must develop a comprehensive approach on commonly identifying, assessing and managing risks to its economic security.

The Strategy proposes to carry out a thorough assessment of risks to economic security in four areas:

• risks to the resilience of supply chains, including energy security;
• risks to physical and cyber security of critical infrastructure;
• risks related to technology security and technology leakage;
• risks of weaponisation of economic dependencies or economic coercion.

The Strategy proposes a methodology for this risk assessment. It should be carried out by the Commission and Member States in cooperation with the High Representative, where appropriate, and with input from the private sector. It should be a dynamic and continuous process.

The Strategy also sets out how to mitigate identified risks through a three-pronged approach, namely by:

• promoting the EU’s competitiveness, by strengthening the Single Market, supporting a strong and resilient economy, investing in skills and fostering the EU’s research, technological and industrial base;
• protecting the EU’s economic security through a range of existing policies and tools, and consideration of new ones to address possible gaps. This would be done in a proportionate and precise way that limits any negative unintended spill-over effects on the European and global economy;
• partnering with the broadest possible range of partners to strengthen economic security, including through furthering and finalising trade agreements, reinforcing other partnerships, strengthening the international rules-based economic order and multilateral institutions, such as the World Trade Organization, and investing in sustainable development through Global Gateway.

Next steps

The Communication lays the basis for a strategic discussion with EU Member States and the European Parliament to develop a comprehensive approach to protect the Union’s economic security. The European Council will consider the strategy during its meeting of 29-30 June 2023.

The Communication lays out the following new actions:

• develop with Member States a framework for assessing risks affecting the EU’s economic security; this includes establishing a list of technologies which are critical to economic security and assess their risks with a view to devising appropriate mitigating measures;
• engage in a structured dialogue with the private sector to develop a collective understanding of economic security and encourage them to conduct due diligence and risk management in light of economic security concerns;
• further support EU technological sovereignty and resilience of EU value chains, including by developing critical technologies through Strategic Technologies for Europe Platform (STEP);
• review the Foreign Direct Investment Screening Regulation.
• explore options to ensure adequate targeted support for research and development of dual-use technologies;
• fully implement the EU’s export control regulation on dual use items and make a proposal to ensure its effectiveness and efficiency;
• examine, together with Member States, what security risks can result from outbound investments and on this basis propose an initiative by the end of the year;
• propose measures to improve research security ensuring a systematic and rigorous enforcement of the existing tools and identifying and addressing any remaining gaps;
• explore the targeted use of the Common Foreign and Security Policy (CFSP) instruments to enhance EU economic security including Hybrid and Cyber Diplomacy toolboxes and foreign information manipulation and interference (FIMI) toolbox;
• instruct the EU Single Intelligence Analysis Capacity (SIAC) to work specifically on the detection of possible threats to EU economic security;
• ensure that the protection and promotion of EU economic security is fully integrated in European Union’s external action and intensify the cooperation with third countries on economic security issues.

Background

Open, rules-based trade have shaped and benefitted the EU since its inception. At the same time, growing geopolitical tensions and greater geostrategic and geoeconomic competition, as well as shocks such as the COVID pandemic and Russia’s war of aggression against Ukraine, have highlighted the risks inherent in certain economic dependencies. Such risks – unless properly managed – can challenge the functioning of our societies, our economies, our strategic interests and our ability to act. A comprehensive Strategy – including joint-up action across internal and external policies and a cohesive set of measures at EU and Member State level – is essential for the EU to assess and manage risks while at the same time maintaining our openness and international engagement.

“Global integration and open economies have been a force for good for our businesses, our competitiveness, and our European economy. And that will not change in the future. But we also have to be clear-eyed about a world that has become more contested and geopolitical. This is why the topic of economic security has become a priority for us and for many of our partners. And today, Europe becomes the first major economy to set out a strategy on economic security. It will ensure Europe’s sovereignty, security and prosperity in the years to come ” Ursula von der Leyen, President of the European Commission

EC AV PORTAL (europa.eu) press conference by:

Margrethe VESTAGER, Executive Vice-President of the European Commission in charge of Europe fit for the Digital Age, and Commissioner for Competition

Valdis DOMBROVSKIS, Executive Vice-President of the European Commission in charge of an Economy that works for People, and Commissioner for Trade

Josep BORRELL FONTELLES, High Representative of the Union for Foreign Affairs and Security Policy

Economic Security: College read-out by High Representative Josep Borrell

It is important to note that security and defence are a competence of Member States. And as Margrethe Vestager, Executive Vice-President in charge of Europe fit for the Digital Age and Commissioner for Competition said, we are not here through this Joint Communication to engage in a battle of competences – certainly not – but it is important to know who can do what and in which basis, in which legal basis the different European institutions act. 

And certainly, it is a Joint Communication [in which] we have to put together the competences of the European Commission and the Member States. 

This is my role.

So, I am going to speak more as High Representative for the Security Policy because the point of view of the Commission has already been explained. First, by the President [of the European Commission, Ursula von der Leyen] herself, and afterwards by my two colleagues [Margrethe Vestager and Valdis Dombrovskis]. 

So, allow me to complement the point of view of the Commission with the point of view of the Member States.

It is clear that – everybody – all Member States are fully aware that security is a concept that has new and multiple dimensions. 

Until recently, security was related to armies. The armies provide defence and you secure yourself through the capacity of fighting. 

But now, security has multiple new dimensions, and the economy is one of these dimensions.

The traditional concept of security is being redefined. We can say that war can today be conducted by other means, apart from guns. And among the means to conduct war, aggression, is the economy. 

That is why we speak about economic security. Even, I would prefer to say ‘security through economics’. This is what it is about: how to secure ourselves through economic tools. 

And we need to do because we have had the COVID-19 [pandemic], Russia’s war of aggression against Ukraine and increasing strategic, technological competition between the major economic powers. I do not have to name them. 

But it is clear that all of that has exposed us to excessive dependencies that can threaten our security in the broader sense.

Remember, during the pandemic, suddenly we realised that not a single gram of paracetamol was being produced in Europe. And today, I can tell you that to increase the capacity of production [for] ammunitions, we lack critical materials that we are no longer [have] available inside Europe and has to be imported. So, this weakens our strategic autonomy. It poses economic risks and threatens our security. 

And through this Joint Communication – joint between the Commission and me, as representative of the Council –, we are seeking to balance our traditional [international] openness with instruments that secure our prosperity. 

These dependencies could be used by some as a leverage for coercion measures that could affect our strategic sectors in a very critical manner. So, it is important that we get prepared for that and at the level of the European Union, for the European Union as a whole, we should develop our own strategy, driven by our own interests and objectives, based on a long[-term] view of the world economy and with our relations with the rest of the world, because this strategy may affect clearly the relations with some countries. 

And I know that you have been asking about China. It is not about China, and I am sure you will give me the opportunity to explain why. 

We do not start from scratch. The European Union – and mainly, the Commission – has [already] done a lot.

But now, the moment has come to build [a strategic and foresight approach]. And the core of this approach – as my colleagues have explained – is de-risking. I will not repeat their very good explanations.

I only want to say that we have to deter and protect ourselves from external threats to our economy. For that, we have already quite a lot of tools, but we need new tools. 

We need new tools to address more effectively these emerging threats. 

Allow me to clarify also from a foreign policy point of view that we do not want to limit the development or prosperity of other countries, but we must be equipped to protect our economic security and our economic interests from the actions of some other countries. 

The objective is to assess security [issues] at the European Union level and in doing that, when we talk about European level [and] security, we are entering fully the realm of the Common Foreign and Security Policy (CFSP). 

The Common Foreign and Security Policy has clear instruments that we can use to this end.

We can explore the targeted use of CFSP instruments, including restrictive measures – what we call colloquially ‘sanctions’. ‘Sanctions’ do not exist in our treaties; they only talk about restrictive measures. 

We can use the Hybrid and Cyber Diplomacy toolboxes. We will use our Single Intelligence Analysis Capacity (SIAC).

And more generally, we have to ensure the promotion of economic activity at the European level, integrating in our foreign policy agenda, and increasing the cooperation with third countries on economic security issues. 

Today, this Communication marks the first step, as you have said. The first step of a process.

It is a conceptual framework that will include further reflection, analysis, discussions and, above all, consensus building among Member States.

I will take personally care of that in my capacity as High Representative for Foreign Affairs and Security Policy. 

The Council will discuss this communication to take a stock of the proposals and see how and when they can be implemented. 

I want to signal that others states in the world have taken years in developing an elaborated approach to economic security and to put in place a complex institutional framework for its governance.

It is of paramount importance that our partners understand our message and [that] they do not see this economic security strategy as a protectionist move. It is not.

It is just a first step towards developing a European framework for economic security, to secure our economy. This will be a new paradigm for shaping our foreign policies in the years to come.