After a meeting of EU foreign ministers in Stockholm in May, top diplomat Josep Borrell proclaimed that all 27 members had vouched support for de-risking. One diplomat responded, in a private conversation, that if they had all agreed, it was only because nobody really understood what de-risking actually was.
In Berlin, an early draft of the foreign ministry’s hawkish proposal was watered down by Chancellor Olaf Scholz, known to favour continued engagement with Beijing.
In Brussels, the economic security strategy is seen as the handiwork of Bjoern Seibert, the cabinet chief to von der Leyen, who diplomats and officials say is close to US National Security Adviser Jake Sullivan.
In the weeks leading up to its release, Seibert presented his plans to ambassadors from the EU’s 27 member states and was told in no uncertain terms that he was going “too far, too fast”, multiple diplomats said.
Some representing the bloc’s freest trading members worried that provisions like outbound investment controls were too protectionist. Others worried about a power grab from Brussels, due to Seibert’s citing of “national security” and promoting a “Europeanisation” of export controls, powers that usually sit in the 27 capitals.
More still told Seibert that he was flying too close to US policy for comfort. A senior official said the “cool and cautious” feedback from some the bloc’s most powerful members was: “We are Europe, not the United States.”
Last-minute edits to the strategy failed to assuage some members.
At an event hosted with trade officials and think tank members just days after its launch, ambassadors pelted experts with questions about outbound investment restrictions, which would see companies being told they could not put their own capital into Chinese tech sectors deemed sensitive, such as robotics, artificial intelligence or semiconductors.
“I think on some of the stuff that was pitched, especially on outbound investment, it seems like a political mistake. I think the Commission committed on paper to an instrument without being able to specify the risks. And so they really built this world the wrong way around,” said Tobias Gehrke, an expert in economic statecraft at the European Council on Foreign Relations.
The European Commission has said the economic strategy is not aimed at any one country, but some see the de-risking plan as the start of a decoupling process with China in all but name. Photo: Reuters
Trade officials complained that the plan was cooked up too hastily, with less than three months between von der Leyen’s announcement and the communique’s unveiling in June. “If all you want is an announcement, we can have it ready tomorrow,” one official said, adding that a substantive policy would take more time.
But von der Leyen will have been encouraged to see unqualified support for de-risking in the German strategy announced three weeks later.
“Everyone benefits from competition when it is based on fair rules. It is not our intention to impede China’s economic progress and development. At the same time, de-risking is urgently needed,” it read.
Berlin said outbound investment screening “could be important as a supplement to existing instruments”, but the fact that it was in there at all showed observers that Germany is unlikely to stymie any proposal at EU level.
“They have chosen to repeat all the buzzwords that come out of Brussels, and somewhat formulate support for that; some elements with more enthusiasm, some with less enthusiasm,” said Tim Ruehlig, an expert in EU-China geoeconomics at the German Council on Foreign Relations.
“On outbound investment screening, it’s a formula that reflects the internal divergences within the German government, but you can’t read it as Germany will certainly block anything on outbound foreign investment screening.”
The consensus among a dozen business figures, diplomats and officials spoken to in recent weeks is that events in Brussels and Berlin have set a process in motion. It is impossible now to put the genie back in the bottle, even if nobody is sure where exactly the de-risking agenda will end up.
