Geopoliticization Through Law or Narrative: Effects on Business Lobbying

Debates on the relationship between economics and security have resurfaced in light of the Covid-19 crisis, the Russian invasion in Ukraine, the rise of China and the return of great power rivalry. Over the past decade, the EU and Member States specifically have led and coordinated a gradual expansion of rules, regulations and directives to increase control and monitoring capabilities over cross-border trade and investments, in an effort to find a new balance between economics and security. They mark government’s shifting perception of risks originating from economic interdependence, asymmetric economic dependencies and the presence of foreign state actors in critical infrastructures and strategic sectors. Yet, there is important variation in terms of how governments geopoliticize their policy instruments. Some have a very explicit security rationale codified in EU Regulation and domestic legislation, such as investment screening (Regulation 2019/452). Others, such as the Foreign Subsidies Regulation (FSR; Regulation 2022/2560), are rooted in an economic rationale, yet make subtle reference to strategic interests, critical infrastructure and innovative technologies. For the FSR, its geopolitical ‘charge’ seems to be derived more from the narrative and expectations surrounding it, than from its littera legis. This paper seeks to assess whether businesses adopt different lobbying strategies when the security rationale dominates as compared to when the policy is rooted in a market-based economic rationale. We perform a comparative analysis of business responses to the EU investment screening Regulation (including the Commission’s Proposal for its reform dated January 2024) and the FSR. Doing so allows us to assess whether geopoliticization strategies rooted in law deter firm-level opposition more so than geopoliticization strategies that are promulgated through a security narrative rather than through codification in law.