Brussels’s Trap to Encroach on Economic Sovereignty

On May 23, 2025, the European Parliament passed a new legislative proposal that would centralize the oversight of third-country investments across EU member states, granting broader powers to the European Union at the expense of national authority. A new analysis by a researcher from the XXI Century Institute sheds light on the real drivers behind the Brussels plan.

Although the proposal cites rising geopolitical tensions in Europe, researcher Bernadett Petri argues that it is primarily driven by French and German interests, as well as long-standing federalist ambitions in Brussels. The introduction of an EU-wide investment screening system—especially one that includes decision-making powers—could set a precedent for extending EU authority into other economic areas such as industrial policy, innovation subsidies, and capital flows. This would pave the way for a form of economic federalism historically favored by France and pragmatically accepted by Germany when it serves their economic interests. While the proposal is framed as a means of protecting European sovereignty, critics argue that real sovereignty lies not in suppressing the freedoms of nation-states, but in supporting their autonomy. True European sovereignty would require asserting independence in external relations while fully respecting national self-determination internally.

Ursula von der Leyen, President of the European Commission in Brussels (Photo: THILO SCHMUELGEN / POOL)

European Union Overreach

The issue of regulating third-country investments has been on the EU agenda in Brussels for years. The previous 2019 regulation allowed member states to decide if and how they wanted to implement investment screening mechanisms. The new 2024 draft, however, pushed through under pressure from the European Parliament’s leftist-liberal majority, opens a new front in what some see as Brussels’ campaign against economic sovereignty.

The research explores how EU institutions, overstepping their treaty-based competencies, seek to limit the economic sovereignty of member states. Critics warn that this marks another instance of Brussels encroaching on powers that traditionally belong to national governments. The full article can be accessed here.

Cover photo: The issue of third-country investment oversight has been on Brussels’s agenda for years (Photo: AFP)