Vulcan Insight | EU Commission publishes first European Economic Security Strategy

In an attempt to provide the EU with a more comprehensive approach to economic risks, the European Commission has published its first European Economic Security Strategy. This Strategy focuses on minimising risks originating from particular economic flows in the context of increased global geopolitical tensions and accelerated technological shifts, while maintaining high levels of economic openness and dynamism.

The proposed Strategy outlines a framework which seeks to achieve economic security by promoting the EU’s economic base and competitiveness.  Through this, the EU aims to partner with third countries to better address shared concerns and interests.  In light of the current geopolitical environment, the strategy will help the EU identify, assess and manage risks to its economic security. Under this Strategy, the Commission is proposing to carry out assessments of risks to the union’s economic security in the following four areas:

• Risks regarding the resilience of energy supply chains
• Risks to physical and cyber security of critical infrastructure
• Risks in relation to technology security and technology leakage
• Risks of weaponization of economic dependencies or economic coercion.

The proposed strategy also reveals a methodology for the risk assessment, which would be carried out by the European Commission and member states, and “should be a dynamic and continuous process.” The strategy outlines how to mitigate risks as follows:

• Supporting the EU’s competitiveness by strengthening the Single Market, supporting the economy, and investing in EU’s research and technological skills
• Protecting the EU’s economic security using a range of policies and tools.
• Strengthening EU relations with partner countries through finalising trade agreements, reinforcing partnerships and strengthening the international rules-based economic order and multilateral institutions.

While the Strategy does not mention China or Russia, it is clear they are the core targets of the EU’s latest move to encourage member states to reduce their economic dependencies on a third countries, particularly in relation to critical products like gas, AI and chips.  The proposal builds on ideas discussed at the most recent G7 summit, where discussions around “de-risking China” occurred. Announcing the Strategy, Ursula von der Leyen, President of the European Commission highlighted that the EU is the “first major economy to set out a strategy on economic security.” Meanwhile, Commission Foreign Affairs chief, Josep Borrell, said that the EU is “not in a confrontational mood with China”.

Next steps include the development of a comprehensive approach to protect the EU’s economic security using this communication as a basis for strategic discussions among member states and the European parliament. EU leaders will also consider the Strategy at the next European Council Summit on 29-30 June 2023.