Countering economic coercion: How can the European Union succeed?

Summary:

This policy brief assesses how the European Union (EU) can bolster its response and defence mechanisms against foreign economic coercion. At its inception, the EU benefited from a world order where economics, foreign policy, and geopolitics were less intertwined than they are today. However, as a global economic power has shifted, these lines have been blurred. How can the European Union succeed? Furthermore, many global economies have decided to look after their interests outside multilateral frameworks and increasingly see multilateral institutions as outdated. Today, the long-forgotten concept of economic sovereignty is back on the agenda. The EU has been forced to become more ‘geopolitical’ instead of just an economic union.

While it is a large market, a lack of coordination among EU members makes pursuing a common foreign policy and economic agenda challenging. Nonetheless, in this paper, we present specific and realistic policy measures to defend the autonomy of EU foreign economic policy and ensure that it can pursue progressive goals abroad. The EU should recalibrate its strategic dependencies, strengthen its ability to defend against extraterritorial sanctions, and improve mechanisms for investment and export controls. While we provide links between other areas of economic policy and national security, this paper focuses on the areas where the EU is particularly exposed – sanctions and the global financial architecture.

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