Economic and Financial Aspects of National Security

The national security dimensions of economic and financial relations have received relatively little attention in the post-Cold war period. Rules-based market competition was perceived as an area that can hardly be exploited to gain inadequate leverage and ultimately achieve foreign policy objectives. 

In Europe and other NATO countries, this perception has changed in 2016 with the purchase of German robotics maker Kuka by Chinese company Midea, which raised concerns that China was gaining too much access to key technologies. In addition, one of Theresa May’s first actions as prime minister in July 2016 was to pause the multibillion pound Hinkley Point nuclear power plant project. Being built by French EDF and which China is helping to finance, she ultimately approved the deal but said her government would take a more cautious approach over similar foreign investments. 

Given these two most publicly known examples, the EU member countries began to worry about a possible sell-out of European expertise because there are no effective instruments in place and lack of reciprocity. 

In early 2017, France, Germany and Italy urged rethink of rules on foreign investment into the EU. A few months later during annual state of the union address, president Jean-Claude Juncker stated: „If a foreign, state-owned, company wants to purchase a European harbour, part of our energy infrastructure or a defence technology firm, this should only happen in transparency, with scrutiny and debate.“ 

While Czechia has one the most open investment frameworks in the EU, it currently has no effective foreign investment screening mechanism that would take into account possible security concerns. This is important because in some cases foreign investor might seek to purchase strategic assets that enable them to control or influence businesses whose activities are critical to security and public order. 

PSSI has long recognized this reality and runs a dedicated E&F Threat Program. But in order to raise greater situational awareness, since July 2018 it began to produce a monitoring newsletter in Czech to highlight this often subtle and sophisticated form of power projection. This monitoring also serves the function of following the discussion on strengthening foreign investment mechanisms in the EU and other NATO countries.