The European Union, Southern Multinationals and the Question of the ‘Strategic Industries’

Much of the controversy around foreign direct investment (FDI) in European policy-making circles in the recent period has crystallized around the notion of incoming FDI (IFDI) as a potential threat to ‘strategic industries’. Definitions of what constitutes a ‘strategic industry’ vary by country (Schulz, 2008) and even by government ministry, since those responsible for finance or competition will not necessarily share the same vision as those working in defence, employment, innovation, environment, transport or energy. In the recent period, debates and usage of ‘strategic industry’ to question and even block IFDI have come to the forefront in the European Union (EU). Probably the most controversial case of a Southern Multinational in the EU is Russia’s state-owned Gazprom. Many policy-makers suspect that Gazprom has geopolitical, rather than commercial, interests in EU gas markets (Clifton, Diaz-Fuentes and Revuelta, 2010; Clifton and Diaz-Fuentes, 2010b). There have, however, been less high-profile instances where potential investors from the South have been unsuccessful in entering the EU, such as Mexican billionaire Carlos Slim’s frustrated attempt to enter the Italian telecommunications market. Identifying and quantifying EU protectionism vis-à-vis Southern Multinationals in methodological terms is a challenge, however. Firstly, this is because details of why mergers & acquisitions (M&A) are blocked are usually quite opaque.