The European Union (EU) once began as project for peace by economic means. To avoid Germano-French conflicts, the two countries and some neighbours started a common market for coal and steel. Eighty peaceful years later, the group has grown into an ever-closer Union of 27 members with, until not long ago, a staunch confidence in the benefits of economic interdependence. Alas, recent events have dented the EU’s conviction, as it witnessed how the rise of China led to fierce competition with the US and how Russia, a neighbour and trade- and investment partner, invaded Ukraine. As a consequence, European decision makers have adapted their policy and institutions to the new geoeconomics era. A new survey of Eurobarometer on trade and investment allows us to examine whether the geoeconomic turn is reflected in the opinions EU citizens on economic interdependence.

In this blog post I will focus on foreign investment, since it is the pinnacle of interdependence. Foreign investments are subject to the sunk costs and therefore not easy to shift, so once the investment is made, investors are locked in with the country where their investments are located. There are generally two ways[1] of thinking about the role of foreign investments in international politics. The first is called (neo)mercantilism and starts from the assumption that the relation between countries is conflictual and that multinationals corporations are under the control of the home economy. Therefore, multinationals investing abroad should be considered as political instruments of the home country. The second is called (neo)liberalism and starts from the idea that foreign investments bring countries closer together and therefore create more peaceful relations between the home and the host country. In this view, multinationals should be seen as independent actors and are not mere instruments of the home economy. Following the geoeconomic turn, the EU’s public opinion can be expected to shift towards a more mercantilist stance on foreign investments by showing more support for EU multinationals abroad and less support towards inward foreign investments.

The Eurobarometer report indeed reveals a fallback in approval of inward investments. Compared to 2019, the support of EU citizens for incoming investments and the purchasing of EU businesses by foreigners both decreased with 2 percentage points. 70%, an overwhelming majority, still supports foreigners investing in their country. On the other hand, foreigners buying up domestic businesses and thereby getting a say over the day-to-day operations of these domestic businesses, only enjoy support from 47% of EU citizens. The acquisition of European businesses is also a form of investment, so the remarkable difference might indicate that Europeans welcome the influx of capital but worry about foreign control. This observation fits a more mercantilist perspective.

Yet at the same time, EU citizens have also become more critical of European investments abroad. The share of Europeans supporting EU foreign investments has decreased with two percentage points to 64%. The general support for Europeans buying up businesses abroad remained at 60%, but 2-percentage points shifted from ‘strong support’ to a ‘tendency to support’. Although Europeans still broadly support in- and outward investments and Europeans buying up businesses abroad, support has decreased since before the Covid pandemic. These observations suggest that EU citizens have become more suspicious of international investments in general. A shift towards mercantilist visions would have shown an increased support for EU foreign investments.

A similar scepticism towards foreign investments can be found in opinions on the EU’s investment policy. Europeans believe that the EU should make sure that foreign investments do not harm EU interests in the first place and are aligned with EU interests in the second place. Only in the third place respondents assert that the EU should ensure that foreign investors are protected from unfair treatment and creating new opportunities for foreign investments has the lowest priority. European citizens seem more warry their compatriots investing abroad than they are encouraging of them. In a mercantilist vision, outward investments provide an instrument of foreign policy and a display of international power, but EU citizens seem to be more worried about wayward multinationals than about their geopolitical heft. The opinions on the role of trade policy, where the preservation of health is the top priority over national security and the protection of sensitive technologies, seem to confirm this analysis.

Europeans put a lot of trust in the EU when it comes to trade and investments, despite its history of defending open economic policies. 65% of its citizens trust the EU to conduct its trade policy in an open and transparent manner and 74% find it is more effective to defend trade interests on the EU-level than on the members state-level. Nevertheless, Europeans believe that the Union should be more assertive. 29% of citizens believes that the EU is too soft on unfair practices, while only 26% believes the EU to be effective in dealing with such issues.

In conclusion, there seems to be little evidence in the Eurobarometer’s survey of a general mercantilist shift within the EU’s population. Europeans are increasingly distrustful of foreigners gaining control of EU assets and a significant share believes that the EU should be bolder in enforcing the level-playing-field, but they also seem to be more sceptical of multinationals and foreign investments in general. So, for EU citizens, European multinationals are not by default instruments for the EU’s foreign interests.

[1] Sometimes at third one, imperialism, is added. However, this school of thought, which is based on Marxist principles, shares a lot of principles with the mercantilist school. The biggest difference between the two is that for imperialists the MNCs serve not the national interests of the whole home country, but only of the capitalist class.