European Economic Security
RUSI European Economic Security Taskforce Meeting 1: The Conceptual and the Concrete
Eliza Lockhart | 2024.10.18
Amid heightened geopolitical tensions, the concept of “economic security” has rapidly come to dominate domestic and international policy agendas. Recent global shocks have exposed the fragility of international financial systems and revealed significant security vulnerabilities in economic dependencies.
CFS is uniquely positioned to deliver this timely initiative, given its reputation as a leading research programme based in Brussels and London that specialises in the intersection of finance and global security. As part of RUSI, the world’s oldest and the UK’s leading defence and security think tank, CFS has used its cross-disciplinary expertise and multi-jurisdictional network to convene this Taskforce. The Taskforce brings together international policymakers, geoeconomic academics, and experts from security, industry and the private sector. Taskforce members contribute their expertise in a personal capacity and do not represent their organisations, which include numerous EU member state governments, the European Commission and associated institutions, NATO, and the key allies of Australia, Japan and the UK.
The first meeting of the Taskforce took place on 9 September 2024, and this report provides an overview of the main findings. To best reflect the breadth and fluidity of the discussion, the report does not provide a linear summary of the matters raised. Instead, it first outlines the economic security definition proposed by CFS to establish a conceptual foundation for the work of the Taskforce. Second, the report groups the observations, insights and consensus points that emerged during the meeting under two broad themes: the impact of ambiguity; and the importance of public–private partnerships (PPPs). These themes did not emerge in isolation from one another, but as interconnected considerations. Finally, the report concludes by summarising three key findings identified by Taskforce members when considering the case study of supply chains. As the meeting was conducted on a non-attributable basis, the names and affiliations of participants are not disclosed.
Economic Security as a Concept
The meeting began with a presentation by CFS on the history and meaning of economic security. The use of economic tools to advance security interests has been a feature of international relations for millennia. Indeed, the imposition of trade sanctions by the Athenian Empire is widely considered a causal factor of the Peloponnesian War. In the 21st century, the idea of identifying economic security as a national security priority has emerged primarily as a reaction to a series of global shocks. Over a period of 15 years, Europe has been confronted with an economic collapse after the 2008 financial crisis, the geopolitical ramifications of the 2016 Brexit vote, the cross-sectoral upheaval caused by the Covid-19 global pandemic, and an unprecedented energy crisis following Russia’s full-scale invasion of Ukraine in 2022. At the same time, China has increasingly deployed coercive economic practices with growing scale, sophistication and intensity. These events have compelled international policymakers to reexamine the security risks that arise as a result of global financial integration.
The European Commission responded to these shocks by unveiling an Economic Security Strategy in June 2023, which identifies four risk areas: the resilience of supply chains; threats to critical infrastructure; technology security and leakage; and the weaponisation of economic dependencies or economic coercion. The strategy proposes mitigating these risks via a three-pillar approach that involves: promoting competitiveness; protecting against economic security risks; and partnering with the broadest possible range of like-minded partners. In January 2024, the Commission adopted a package of five initiatives aimed at strengthening the EU’s economic security across trade, investment and research. This was followed in July 2024 by European President Ursula von der Leyen designating economic security as a central plank of the 2024–29 European Commission’s economic foreign policy, and by the creation in September 2024 of a new portfolio of Commissioner for Trade and Economic Security.
Despite this flurry of activity, the concept of economic security remains relatively undefined, with no definition provided in the European Commission’s Economic Security Strategy. This is understandable, given the complexity of the topic, breadth of policy implications, and difficulty gaining multilateral consensus. However, it was crucial to establish a common understanding of economic security among Taskforce members to avoid miscommunication. To facilitate an open and wide-ranging discussion, CFS crafted a three-layered definition of economic security, as visualised in Figure 1. The first layer addresses the security risks and opportunities that arise due to a financially interconnected and increasingly unstable world. Opportunities are considered alongside risks because it is important to acknowledge that, while international integration can create vulnerabilities, effective responses often require collaborative actions. The second layer overlays the first, and covers the tools, systems and capabilities employed by countries and alliances to manage these risks and opportunities. Inherent in this layer is how these levers and structures can be weaponised by hostile and non-aligned actors. Finally, the third layer, which overlays and impacts the first two layers, encompasses how the geopolitical context influences the relative weight policymakers place on security, sovereignty and prosperity priorities.
▲ Figure 1: Economic Security Definition Created for the Taskforce
Theme 1: The Impact of Ambiguity
The presentation of the CFS economic security definition prompted Taskforce members to consider the implications of the lack of definitional clarity at the EU level. Some participants expressed frustration that there had not been a formal discussion among member states to determine what economic security is and, importantly, what it is not. Without a definition, several Taskforce members raised the concern that “everything gets securitised”. A few policymaker participants expanded on this point, commenting that it was important to define and maintain boundaries between trade policy and national security. These participants argued that using trade instruments for national security purposes would undermine international trade regulations and jeopardise the “level playing field”. There was pushback against this assertion from a security specialist, who remarked that the playing field is already uneven precisely because of deliberate acts by hostile, non-aligned and even allied actors. Therefore, pursuing a level playing field inherently requires a strategy that involves both prosperity and security considerations.
The debate on this point exemplified the main impact of definitional ambiguity identified by Taskforce members – that a lack of clarity can encourage and exacerbate siloed thinking on economic security. Many policymaker participants pointed to the fact that economic security concerns are currently being managed within member states by a multitude of ministries, including defence, national security, foreign affairs, home affairs, finance, economics, environment, industry and trade. Despite several participants highlighting the recent creation of economic security portfolios by their governments, there was general consensus that policymaking on this topic remains disjointed. This conclusion was reinforced by the experiences of some non-policymaker Taskforce members. Academic and industry participants commented that it was almost impossible for an outsider to understand which ministry, if any, had central oversight on economic security issues. These Taskforce members each shared personal anecdotes of consulting with numerous different agencies on economic security matters, only to become increasingly frustrated when it appeared that the agencies were not communicating with one another.
There was agreement that this domestic fragmentation is compounded by the absence of EU governance structures capable of addressing economic security issues in a cohesive manner. This is largely due to a clash of competences – whereas most economic affairs fall under the authority of the EU, national security remains largely under the jurisdiction of member states. As a result, EU-level thinking on economic security is rooted in trade policy, and member states generally retain control over the enactment, implementation and enforcement of economic security measures. While Taskforce members emphasised the importance of preserving member state sovereignty, many acknowledged that institutional barriers prevent the EU from strategically addressing matters at the intersection of economics and national security. To illustrate the impact of this in practice, one policymaker participant noted that discussions on economic security issues (though often not explicitly framed as such) are occurring across multiple European Council working parties and different sectors of the EU system, yet no mechanism exists to unify these conversations. Another Taskforce member took this argument even further, to claim that the lack of an effective economic security governance framework prevents the EU from leveraging its economic power to strengthen the national security of member states, and global security more broadly.
Theme 2: The Importance of PPPs
A consensus point that emerged from the discussion was that the lack of conceptual clarity on economic security, combined with fragmented domestic and international policymaking, had led to a largely ineffective relationship between policymakers and the private sector. There was general agreement that a productive partnership with industry is vital to any economic security strategy, but it was felt by many participants that public–private engagement in Europe was less constructive than in other regions, such as North America or the Asia-Pacific. Some participants attributed this disparity to the fact that countries in those regions had faced increased incidents of direct economic coercion, which provided opportunities for policymakers to work intensively with the private sector and “learn under pressure”. One example discussed by Taskforce members was Australia’s ability to withstand the most comprehensive punitive trade measures enacted by China in recent history.
While a sovereign country can exercise greater policy decisiveness and operational agility than a multilateral organisation like the EU, some Taskforce members felt there were specific structural and cultural barriers within the EU that prevented an optimal partnership between the European public and private sectors. Several participants criticised the European Commission for constructing its Economic Security Strategy under the “promote”, “protect” and “partner” pillars without providing a framework to work across these pillars or guidance on how they interact. Other Taskforce members expressed concern that the European Commission had failed to effectively communicate to the private sector the objectives and progress of its economic security risk assessment process, resulting in confusion. These critiques were echoed by one participant, who gave the example of being told by a prominent European company that it was more concerned about economic security measures being enacted erratically by the EU and member states than about economic risks coming from China.
This anecdote led many participants to comment that there needs to be significant improvement in the communication of economic security priorities to the private sector. One lesson from Australia that was shared with the Taskforce was the fundamental importance of a “feedback loop” between policymakers and companies to enable the effective identification of vulnerabilities. This requires coordinated action across administrative silos to provide a combined assessment of sector-specific economic, security and geopolitical risks. Companies can then be supported to make informed risk assessments, implement diversification strategies, and combat the impact of trade weaponisation. By contrast, one industry participant commented that the current disjointed communication from the EU and member states often results in company executives relegating economic security issues to their legal teams, who enact a tick-box approach. The participant concluded by arguing that if agencies “joined the dots” between themselves, a clearer, more coordinated message could be communicated to industry about its role in economic security policies.
Several Taskforce members also commented that ineffective information sharing on economic security risks is preventing private actors from accurately assessing the trade-offs they are making between efficiency and security. A key example raised by participants of an economic security vulnerability that is commonly underestimated by the private sector is the risk posed by convertible loans. While these lending structures may seem lucrative, particularly to startup companies, they can result in the loss of company equity and intellectual property to hostile states. The 2023 European Investment Bank Investment Survey appears to support the view that the private sector remains focused on optimising cost-effectiveness over risk mitigation, as it reports that less than half of firms surveyed had changed, or were planning to change, their sourcing strategy. The fact that 96% of those firms had experienced disruptions to trade reflects the view of some Taskforce members that simply increasing private sector awareness is not sufficient – companies need to be incentivised to prioritise economic security risks. Participants suggested that this incentivisation could come through incorporating economic resilience into how valuations are arrived at by the financial markets, as well as more effective enforcement of economic security-related regulations, to encourage greater compliance.
Case Study: Supply Chains
Taskforce members raised several economic security examples to illustrate their thinking on the themes of definitional ambiguity and the importance of PPPs, including technology leakage, direct foreign investment and electronic vehicles. However, the discussion predominately centred around the case study of supply chains, and this enabled Taskforce members to explore the impact of the two themes in practice. From this dialogue emerged three key findings which, although framed in the context of supply chains, have broad application.
Finding 1: Common Objectives
There was general agreement that, without clearly defined economic security goals, it is almost impossible to differentiate between supply chain risks, prioritise sectors according to their vulnerabilities, reach agreement on standards, and implement instruments coherently across the EU. One policymaker commented that this ambiguity prevents the incremental national security responses of member states from coalescing into a strategic convergence on European supply chain priorities. Another policymaker expressed the opinion that greater clarity would enable member states to understand how much weight to place on each of the three pillars of the European Commission’s Economic Security Strategy, particularly given that the “promote” and “protect” pillars often conflict in the context of supply chains.
A group of Taskforce members expanded on this point by proposing the idea that, once common goals had been established, member states would be able to construct a decision tree to navigate the three pillars. These participants suggested that such a framework could require member states to prioritise protecting the supply chain at first instance, before promoting economic resilience through innovation, diversification and other risk mitigation strategies. The final stage of the framework would involve developing an industrial policy, which would include building strategic partnerships. The discussion on this decision tree concluded with Taskforce members commenting that each stage would involve a different degree of public and private sector responsibility
On a more granular level, many Taskforce members supported the adoption of a sector-specific approach in relation to the development of economic security objectives. This would begin by identifying the main priorities for a certain sector or, where appropriate, for a strategically significant supply chain within that sector. From that analysis, the tools, systems and capabilities required to manage the relevant economic security risks would emerge, which would enable the alignment of national and European strategies. These strategic objectives could then be shared with key allies, either bilaterally or through forums such as the G7, as well as with private sector partners, and be pursued in a coordinated manner. The EU Critical Raw Materials Act and the European Chips Act were raised by many Taskforce members as two examples of how the identification of sector-specific objectives can bring clarity and cohesion to economic security policies. While the limitations of these instruments were acknowledged (such as the validity of the targets and effectiveness of the tools chosen to implement them), several participants felt they were still a useful model for achieving coordinated, strategic action on economic security.
Finding 2: Quality Data
To develop economic security objectives, it is necessary to have access to relevant, accurate and timely data. However, there was consensus among Taskforce members that the current level of information on supply chains is insufficient to enable EU policymakers to identify and prioritise economic dependencies. One participant commented that it was an immense challenge, if not impossible, for EU institutions to receive trade data of consistent quality and granularity across the different member states. This is supported by a report on economic security practices requested by the European Parliament’s Committee on International Trade, which found that: “Data that would allow for a comprehensive understanding of exposures is often lacking (e.g. intra-EU firm level trade data) or incomplete (e.g. Eurostat production data or data on multinational corporations’ geographic distributions of revenue, assets and profits)”. Another Taskforce member expressed concern that China has much greater access to this type of data, which gives it a sophisticated understanding of economic dependencies. This participant cited China’s export controls on critical minerals as an example of how China effectively uses trade data to exploit European economic vulnerabilities, without creating unintended consequences for its own manufacturing sector.
Many participants noted that any attempt to gain information on supply chain patterns and detect potential pinch points that are vulnerable to weaponisation would be pointless without private sector cooperation. Despite some policymakers arguing that there was an entrenched corporate aversion to sharing commercial data, other participants commented that companies are much more aware of the impacts of economic security risks than they were even 10 years ago, and that there was an increased appetite for information exchange. Indeed, one Taskforce member referenced a recent BusinessEurope report on economic security, which calls for greater intelligence sharing between the public and private sectors because it would “empower companies to better identify and address security risks through effective mitigation measures, while it will also help authorities to better calibrate policies”. There was general agreement that to enable empirical, data-driven risk identification, more efficient PPPs on economic security information sharing need to be developed.
Finding 3: Analytical Capacity
Once policymakers and companies are in possession of quality data, they need the capacity to analyse and assess it effectively. However, most participants agreed that there was insufficient investment in economic security analytical competencies, both within and between the public and private sectors. Some Taskforce members commented that addressing this deficiency requires the integration of security expertise with economic analysis, citing the whole-of-government approach adopted during contingency planning in the defence sector as an example. A security expert elaborated that applying national security logic could enhance economic security policymaking, specifically the “acquisition, analysis, assessment, decision” framework used to make security decisions in pursuit of a strategic concept. This framework involves gathering intelligence, analysing the information, and producing an agreed statement of the situation, which is presented to the decision-maker. The expert acknowledged that tasking a multilateral agency to produce an agreed statement on an economic security situation would be significantly more challenging and politically contentious than a traditional national security assessment. However, the meeting was characterised by a shared desire among participants for greater precision and practicality on economic security issues, which some Taskforce members suggested could be achieved by drawing lessons from the defence and security communities.
The Australian experience with Chinese economic coercion illustrates why the analytical capacity needed to manage modern economic security threats requires the convergence of economic, trade and national security competencies. Traditionally, assessments of supply chain weaknesses have focused on economic and trade dimensions. However, an Australian representative shared with the Taskforce that China frequently weaponises supply chains not only because they are economically significant, but also to send a political message. For instance, while the scale of Australian beef, barley and wine exports to China does not match that of the iron ore industry, these products are symbols of Australia’s agricultural prowess and represent its success in establishing a profile within the Chinese consumer market as a producer of premium goods. Beyond the symbolic, China’s targeting of these industries has significant electoral implications, because many Australian politicians, particularly those from rural constituencies, rely heavily on support from the agricultural sector. As tensions between Europe and China are expected to escalate over the coming decade, it will be crucial for policymakers and companies to develop the analytical capacity needed to accurately map their risk exposure to politically motivated economic coercion.
Conclusion
The inaugural meeting of the RUSI European Economic Security Taskforce highlighted the conceptual and concrete impacts of the lack of clarity, common priorities, and cohesive strategy on economic security within both member states and the EU. At the close of the meeting, one participant commented that the discussion “only emphasised the importance of initiating this Taskforce”, as it was a reminder that Europe is at the very beginning of designing and implementing the data-sharing mechanisms, analytical capacity, and PPPs necessary to achieve a more resilient and secure economy.
A second meeting of the Taskforce will build on these findings by examining how unstable geopolitical conditions and escalating geoeconomic threats influence the security, sovereignty and prosperity trade-offs that policymakers must navigate when developing domestic and multilateral responses to economic security risks.
Eliza Lockhart is a Research Fellow at the Centre for Finance and Security at RUSI. Her research examines matters at the intersection of law, finance and global security. Eliza is a lawyer and legal policy expert with experience advising on economic security, hybrid/state threats, electoral integrity, risk and compliance, and disruptive technologies.