Why the EU’s economic security strategy pulls its punches

Good morning. EU energy ministers yesterday failed to approve a sweeping overhaul of the continent’s energy market after talks were derailed by disagreements between France and Germany on state aid for power producers (and whether French nuclear plants should get some).

Today, our Brussels team sets out what to expect from the EU’s new “economic security strategy” to be unveiled today, and our Nordic correspondent has interviewed Norway’s prime minister, who’s calm about Turkey’s delay to Sweden’s membership of Nato.

Shoring up

Ursula von der Leyen won widespread praise in March for her clear-eyed plans to beef up the EU’s economic response to Beijing that has become “more repressive at home and more assertive abroad”. 

But it is one thing for the European Commission president to call for Europe to develop “new defensive tools”. It will be another to convince the member states to create them, write Sam Fleming and Andy Bounds.

The commission’s new economic security strategy, which is due to be released today, will spell out the case for a strong toolkit to defend the EU’s interests, according to a draft seen by the Financial Times. But it is too soon to expect clarity as to how and when the bloc’s safeguards will actually be reinforced.

That is hardly surprising, given the sensitivity of the topic. Part of the commission’s goal is to spell out what an economic security agenda might look like, and why it is needed, at a time when more liberal member states are wary that the EU is embarking on an overly interventionist and protectionist agenda.

As the document makes clear, these are powers mainly wielded by governments. So the commission must explain the need to protect key technologies, respond to the weaponisation of trade policies, and “stress test” critical supply chains. It reflected, as von der Leyen said in her China speech in March, a push to determine “whether investments or exports are in our own security interests”. 

Two key policy questions have been hanging over the exercise: does the EU need to more strongly co-ordinate export controls in key technologies, and should the bloc police outbound investment in highly sensitive sectors? Member states have made it clear during discussions in recent weeks that they want to see a lot more evidence and analysis before moving forward in these areas.

That in part reflects a push from big capitals to ensure Brussels goes its own way in defining its relations with China, rather than being overly influenced by the US, which has called for a tougher approach to Beijing.

Draft conclusions for a summit of EU leaders next week reflect the mood of caution among member states, calling for “proportionate, precise and targeted answers” to security challenges. Today’s strategy only marks the starting point in that process.

Chart du jour: Russia’s ‘Alligator’

As Ukraine’s counter-offensive inches forward, a shortage of air defences has left Kyiv’s troops vulnerable to a new threat: Russia’s Ka-52 “Alligator” attack helicopter.

Neighbourhood watch

Only Recep Tayyip Erdoğan knows when Sweden will officially join Nato, which requires his blessing. But for the country’s Nordic neighbours, the Turkish president’s nod is a mere formality, writes Richard Milne.

Context: Sweden (alongside Finland) dropped a generations-old policy of military neutrality to apply for Nato membership after Russia’s full-scale invasion of Ukraine 16 months ago. But Turkey has not ratified its membership on concerns that Stockholm is not tough enough on terror groups.

Nato hopes that Erdoğan will come to the alliance’s summit in Vilnius next month with a green light for Sweden. But even if not, Norway’s prime minister says nobody in the neighbourhood should lose any sleep waiting for him.

“There will be no panic,” Jonas Gahr Støre told the FT. “Both Sweden and Finland were given very solid security guarantees by allies in the interim period. These guarantees still stand for Sweden.”

“This should be settled, if not before, then in Vilnius. It’s not worth speculating on if doesn’t happen,” he said. “The Nordic co-operation continues, anticipating that Sweden will become a member. Only certain formalities need to wait until membership.”

Turkey’s parliament has delayed the start of its summer recess, opening the possibility of ratification before Vilnius in response to Sweden enacting new anti-terror laws. Though Erdoğan last week suggested he still expects more from Stockholm.

Finland became an official Nato member in April, meaning that Sweden’s three direct neighbours are inside the alliance, with five more on the other sides of the Baltic.

“With Finland as a member, of course, it’s absolutely inconceivable that there’ll be any threat or attack against Sweden without Nato reacting,” Jens Stoltenberg, Nato’s secretary-general, said last week. “But of course, we continue to work hard to get Sweden in as soon as possible.”

What to watch today

1. Italian prime minister Giorgia Meloni meets French president Emmanuel Macron in Paris.

2. EU-US meeting of justice and home affairs ministers, in Stockholm.

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