Brussels: On Thursday, Members of the European Parliament (MEPs) adopted revised rules to address potential security risks associated with foreign investments. The new regulations, which were passed with 378 votes in favor, 173 against, and 24 abstentions, mandate that member states conduct mandatory screenings of foreign investments in sectors such as media services, critical raw materials, and transport infrastructure. The goal is to identify and mitigate any security or public order risks that may arise.
According to Cyprus News Agency, the updated framework will harmonize the procedures for national screening mechanisms and grant the European Commission the authority to intervene, either on its own initiative or in cases where there is a disagreement between member states concerning potential risks. The new regulations will also extend to transactions within the EU if the direct investor is owned by entities or individuals from outside the EU. If a screening authority deems a foreign investment project likely to negatively impact security or public order, it must either authorize the project with mitigating measures or prohibit it entirely.
Rapha«l Glucksmann, Parliament’s rapporteur, highlighted the significance of the new rules. He noted that the current system is fragmented and costly for investors, failing to effectively mitigate risks. He emphasized that leaving critical sectors open to foreign takeovers could compromise the EU’s security and economic sovereignty. The streamlined procedures aim to protect industries while enhancing competitiveness and maintaining an attractive single market. The European Commission will have the final say in cases of disagreement, ensuring a unified approach across the EU.
The existing foreign direct investment screening framework, in place since October 2020, was established to address concerns about foreign investors acquiring control of EU firms supplying critical technologies or infrastructure. The new proposal, submitted by the Commission in January 2024, builds on this framework to further safeguard security and public order.
With the adoption of the report in plenary, negotiations with member states will commence to finalize the law. Both the European Parliament and the Council must adopt the legislative act before it can be implemented.