The EU Commission vies to screen Chinese investment in Europe

Jean-Claude Juncker, President of the European Commission (on the left), receives the Chinese Prime Minister Li Keqiang at the opening of the 12th EU-China Business Summit, ‘Strengthening the pillars of global trade and investment’. (02/06/2017, Brussels – Palais d’Egmont.© European Union, 2017, EC – Audiovisual Service/Photo: Etienne Ansotte).

Last week, Jean-Claude Juncker, the head of the powerful European Commission, the executive arm of the European Union, announced a plan to screen foreign investments. The idea is to hold back or even effectively block business acquisitions or other investment plans financed by third country companies, in key sectors allegedly considered to be sensitive from a security perspective or being economically strategic. Juncker said it plainly: “If a foreign, state-owned, company wants to purchase a European harbor, part of our energy infrastructure or a defense technology firm, this should only happen with transparency, with scrutiny, and debate”.

It’s as if the President of the Commission described the Chinese investments in Greece, Spain and Portugal in details. The Chinese maritime conglomerate COSCO group has recently acquired the company operating the largest part of the port of Piraeus, the largest Greek sea harbor and one of the largest in the Mediterranean Sea. All analysts agree that the new Commission plan directly aims at controlling or even blocking the Chinese investments in the Union. The idea is to create one more layer of foreign investments checks and controls, on top of the rigorous screening schemes which 15 member states of the EU already operate.

Aiming at Chinese investments

According to Brussels sources, the new Commission scheme will be initially enforced – if ever – to foreign investments in the sectors of infrastructure, energy, transport, space, artificial intelligence, robotics, semiconductors and financial settlement. These sectors practically account for more than half the entire European economy. It’s absurd or rather deceptive to call all those business activities either economically strategic or security sensitive.

There are more problems in this respect. Under the Juncker proposal, Brussels will be challenging the sacrosanct right of private property, protected by the constitutions of all and every EU member state. When contradicting the right of the shareholders of a company to sell it to whomever they choose, the Commission will be committing a major blunder, even if it comes in the form of non binding Commission ‘advice’. There is a lot to discuss about all that in practical, historical, ethical and ideological levels. Let’s try.

Is it a liberal idea?

What Juncker indirectly accepts with this proposal is that Europe is in favor of the free economic play and the unimpeded international transactions but only in one way; Europe’s implication in overseas business activities is allowed, but not the other way around. The West has for centuries been exploiting the resources of the rest of the world. Now, however, that some third countries have achieved a high level of economic and technological development, they are impeded from operating freely in the West’s internal markets.

During the past many decades, trade protectionism options and foreign investment screening or even blocking by second and third world countries was anathema for the West. Related action was politically exorcised by Europe and the US and even militarily reversed, together with the daring government. Africa, Latin America, the Middle East and other parts of the world have bitter and bloody experience of that and still suffer from western aggression. The United States and many European countries, thirsty for natural resources, have been strongly opposing with all available political or unspeakable means – including outright military interventions – any attempt of a second or third world country to obstruct free trade or investments.

Rediscovering neo-colonialism

This colonial and neo-colonial practice was also being dressed with economic theorizing, about free trade making all the parties richer, the well known win-win rig, usually advertised as an equitable pact. As history has proved though, never has there existed such a thing as a fair contract – regarding natural resources exploitation – between the western powerful nations and second or third world countries or regions. Just count the recent destructions of Somalia, Niger, Mali, Chad, the bloody aftermath of the South Sudan ‘construction’, not to say anything about the invasions and the obliteration of Afghanistan, Iraq, Libya and Syria to mention only the recent West’s ‘interaction’ with the rest of the world.

On many occasions, where there was a blatant invasion in other people’s countries and lives, the western powers justified their multifaceted interventions on ‘democratic’ grounds or invoking local economic development needs, allegedly served only by West’s ‘growth supporting investments’ and free trade. How much the West values democracy in the rest of the world is questionable, to say the least.

For example, the US and Europe embrace the harshest dictatorship of the world in Saudi Arabia, where people are publicly beheaded just for having attended a protest rally. By the same token, they threaten Iran, where at least there are regular legislative and the presidential elections. It may be true, though, that Saudi Arabia doesn’t know and never exercised any other governance mode other than their own. In some respect, the West may be right not to question that. Europe and the US have to recognize the same right to others.

Trump’s US and Germanic Europe

Unfortunately it seems, in Trump’s America and in Germanic Europe the time has come for the West to repudiate even its sacrosanct ideas about economic freedom and equal opportunities. The US and the European Union in parallel moves are currently trying to block the Chinese and other foreign presence in their economies. For centuries, both those economic powers have been taking advantage of lagging behind countries, and now that China has acquired the means to invest all over the world, the US and the EU are erecting walls. At the same time, they accuse China of not recycling the reserves she has accumulated through exports, amidst a conjuncture when this country is actually doing exactly that in a large scale, by investing all over the world. The ‘One Belt One Road Initiative’ does exactly that.

The West argues that some Chinese companies get government subsidies or other forms of state support, so they are better equipped than others, when competing for a major business buyout overseas or plan an investment abroad. Europe and of course the US are forgetting that the wealth the Chinese businesses are creating is the product of an entire nation, based on the contributions of labor, capital and natural resources.

The Wealth of Nations

As Adam Smith taught us, the wealth of all nations is the outcome of their own historically developed way of doing business. It’s absurd to accuse the Chinese or any other nation of the world for not having had an economic, social and even political history similar to the West’s. If one accuses China of having just one political party, one shouldn’t forget what the vast majority of voters say about elections in the US and Europe; ‘if things could change with elections they would have been outlawed’.

Coming back to today’s problems, last week, Juncker in his speech about the “State of the Union” has only opened a discussion about this Commission proposal, to scrutinize foreign in all member states. As mentioned above, his scheme amounts to an additional level of screening foreign economic presence in Europe, in this case operated by the Brussels bureaucracy. Given that, it will be rather difficult for the President of the Commission, to secure a qualified majority of member states in favor of it.

Not many in favor

The reasons for that are many. For one thing, many EU countries wouldn’t accept the Brussels bureaucracy telling them how to treat foreign investments on their soil. Already, many member states have strong bilateral relations with China and in general they strongly favor foreign investments. Greece, Spain, Portugal and the central European countries would never agree to the introduction of a Brussels ‘passport’ for foreign investments. They badly need a strong foreign growth push for their economies. The second reason is that many EU countries won’t accept Juncker’s proposal in this affair, because he is clearly and openly following a ‘dictum’ from Germany and France, plus the always uncertain Italy, at times complementing the hated ‘Le directoire’ of the EU.

Stupidly enough, the three corresponding ministers of Finance rushed to noisily applaud Juncker’s ‘initiative’. The majority of the EU countries won’t accept the Brussels authority in this subject, despite that Juncker meant it as non-binding procedure. Everybody knows that the EU Commission has the redoubtable expertise, to turn a non-binding procedure into shackles for the smaller member states. The obvious source of Juncker’s idea was Berlin and Paris, and this will make things difficult to pass it through the EU Council of 27+1 member states, the highest authority of the club.

Finally, there is one more crucial reason why the Juncker proposal will be ill-fated. At the time of Brexit, the closely avoided Grexit, a reemerging Italexit and the growing resentment of the Brussels bureaucracy by the hard working and badly paid Europeans, the Commission’s authority is fading fast. The part of Europeans who feel left behind is growing and they tend to vote for centrifuge political forces. In such an environment the Commission shouldn’t be seen as vying to further strengthen the Brussels’ autocracy, and Juncker’s idea falls into this category.

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

A new European banking space is born this year

COP21 Breaking News_12 December: Another sleepless night for the negotiators before Indaba meeting

Refugee crisis update: Commission still in panic while Turkey is to be added in the equation

Draghi’s ‘quasi’ announcement of a new era of more and cheaper money

When is Berlin telling the truth about the EU banking union?

Will ECB win against low inflation by not following Quantitave Easing?

Does the EU want GMOs and meat with hormones from the US?

European Union: More taxes out of less income

Is there a chance for the West to win the war on terror?

European Youth Forum welcomes establishment of new Youth Intergroup in the European Parliament

Press coverage of migration crisis in Europe: a call for collaborative action

Convincing the Germans to pay also for the unification of Eurozone

Scotland and First Minister Salmond enter the most challenging battlefield for independence: Europe

Refugee crisis update: Commission is struggling alone with little help from EU or G7 leaders

New skills needed for medical students in Industry 4.0

JADE May Meeting last call for participants – join us in Zagreb

Who really cares for the environment?

Yes, together we can make a change! YO!Fest and EYE 2016

“The winner is who can accelerate the transition to a new digital era”. The Sting reports live from EBS 2015: a Digital Europe 4.0

Eurozone: Retail sales betray economic frailty

Britain in and out of the EU

Does the Greek deal strengthen the Eurozone? Markets react cautiously

JADE visits Lithuanian Junior Initiatives

Greferendum: the biggest political gaffe in western modern history to tear Europe apart? #Grexit #Graccident

Why the ECB suddenly decided to flood banks with money?

European Sting Cookie Policy

JADE Spring Meeting 2015: a step forward for Youth Entrepreneurship

Draghi left alone with no hope of boosting EU growth as Merkel just focuses on next elections

More state aid to big firms, no special provisions for the SMEs

Germany and France only care about keeping their borrowing cheap

The refugee crisis brings to light EU’s most horrible flaws and nightmares

Youth unemployment: No light at the end of the tunnel

The EU slowly exits from “Excessive Deficit Procedure” and hopefully from ‘Excessive Austerity Procedure’ too

Access to ‘affordable’ medicines in India: challenges & solutions

Arlington, USA: kick-off of the fifth round of the EU-US boxing match

We are close yet so far…

Cloud computing under scrutiny in the EU?

YO!Fest back in Strasbourg for the 2nd edition of the European Youth Event – 20-21 May 2016

Neelie Kroes at the European Young Innovators Forum: Unconvention 2014

The 28 EU leaders show contempt for the European Elections results

Will Europe be a different place this Monday?

EU is now giving Google new monopolies to the detriment of European citizens and Internet companies

We’ll succeed together

Will Merkel ever steer the EU migration Titanic and restore her power in Germany?

SCADA Security Conference 2017 in Prague, Czech Republic

MWC 2016 LIVE: Telenor CEO calls on operators to embrace Mobile Connect initiative

China’s stock markets show recovery signs while EU is closely watching in anticipation of the €10bn investment

IMF’s Lagarde indirectly cautioned Eurozone on deflation

Who is to lose from the 6-month extension of the EU economic sanctions against Russia?

Counting unemployment in the EU: The real rate comes to anything between 16.1% and 20.6%

G20 LIVE: G20 leaders reaffirm OECD’s role in ensuring strong, sustainable and inclusive growth

Maros Sefcovic Canete European Commission Energy

Better late than never? Commission runs now to fight energy dependency on Russia with the sustainable energy security package

US, Russia oblige each other in Syria and Ukraine selling off allies

The historic accomplishment of a seamless EU patent and intellectual property space

Greece did it again

The European Parliament wants to stay in one place

How to test if Kiev’s ‘Maidan’ was an authentic revolt or a well-planned operation

A Sting Exclusive: why the environment is important to your health, by UNEP’s Head for Europe

Tsipras imposes more austerity on insolvent Greece; plans to win new early election soon

The Europe we want: Just, Sustainable, Democratic and Inclusive

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s