Operationalising the EU’s New Economic Security Strategy

Article

February 4, 2026

Executive Summary

A Break from Traditional EU Trade Policy

When the European Commission and the High Representative for Foreign Affairs and Security Policy issued their Joint Communication in December 2025, they made an unusually candid admission: the EU, its Member States, and industry must be prepared to accept economic costs in order to reduce strategic vulnerabilities.

Economic security is no longer a theoretical concern.
It is now a condition of market access, funding eligibility, and procurement participation.

This acknowledgement marks a clear departure from decades of EU trade policy built primarily on openness, efficiency, and comparative advantage. While the EU remains committed to open trade and investment, it is now pursuing what it describes as strategic selectivity—maintaining openness only where it does not deepen critical dependencies or expose the Union to coercion.

For global enterprises, the implications are immediate and far-reaching. Decisions once treated as commercial—supplier concentration, minority investments, research collaboration, technology sourcing—are increasingly viewed through a security and resilience lens.

The End of the Box-Ticking Era

The strategy identifies six areas requiring intensive intervention:

1. Supply chain resilience in critical goods and services
2. Inbound investment screening to prevent deepening dependencies
3. Defence, space, and dual-use industrial capabilities
4. Critical technology leadership and prevention of technology leakage
5. Protection of sensitive information and data
6. Security of critical infrastructure

Across these domains, the EU has reached a common conclusion: economic dependencies can be weaponised. Heavy reliance on single-country suppliers—particularly in critical raw materials, semiconductors, clean energy systems, pharmaceuticals, and digital infrastructure—is now framed as a strategic vulnerability.

This reframing matters. It sets the foundation for new regulatory thresholds, funding conditions, and procurement rules that directly affect how companies structure their operations.

Supply Chains: No Longer a Passive Exercise

One of the most consequential shifts introduced by the strategy concerns supply chain visibility. The EU is explicitly targeting industries where 60 per cent or more of supply originates from a single country, especially where that country has demonstrated a willingness to restrict exports or apply economic pressure.

The response combines continuous monitoring requirements with incentives for diversification through trade agreements and EU funding instruments. Over time, the EU also intends to align economic security standards with G7 partners, beginning with critical raw materials and semiconductors.

Supplier concentration is no longer just an operational risk.
It is becoming a regulatory exposure.

For industry, this represents a fundamental change. Multi-tier supply chain visibility—once a best practice or audit enhancement—is fast becoming a baseline expectation. Companies that cannot demonstrate visibility beyond Tier 1 suppliers will increasingly struggle to meet procurement and funding requirements.

Investment Screening Moves Beyond Control

While reaffirming openness to foreign capital, the EU is recalibrating what constitutes “value-adding” investment. New guidance aims to ensure consistent screening across Member States, with explicit attention to cumulative risk, where multiple small investments combine to create strategic exposure.

More significantly, the strategy introduces the concept of investment conditioning. Where investments originate from countries that actively undermine EU economic security interests, requirements related to technology transfer or domestic value creation may be imposed.

The scope of oversight is also expanding. Portfolio investments below traditional FDI thresholds—particularly in batteries, electric vehicles, quantum computing, and AI—are now recognised as potential vectors for access to sensitive capabilities.

For organisations already navigating U.S. investment screening regimes, this creates a more complex, cross-jurisdictional compliance environment—one that cannot be managed through static due diligence alone.

Research Security and Technology Leakage

The strategy places renewed emphasis on protecting publicly funded innovation and critical technologies. For sectors such as quantum computing, AI, semiconductors, and biotechnology, the focus is squarely on preventing leakage through acquisitions, partnerships, or research collaboration.

The establishment of the EU’s new Centre of Expertise on Research Security formalises expectations that universities, research institutes, and private-sector R&D programmes will conduct enhanced due diligence on international partners.

Research collaboration is no longer presumed to be low risk.
It is now a regulated surface of exposure.

This has direct implications for funding eligibility under programmes such as Horizon Europe and the Digital Europe Programme, where compliance with economic security objectives will increasingly be assessed.

For a deeper look at parallel U.S. policy developments, learn more about the U.S. government’s new 50% ownership rule for export controls.

Data, ICT, and Operational Resilience

The strategy also addresses third-country access to sensitive data and systems via ICT components embedded in connected vehicles, 5G networks, energy infrastructure, and bio-data platforms.

Cybersecurity risk assessments will be required to identify high-risk suppliers, with the forthcoming review of the Cybersecurity Act enabling EU-level restrictions on their access to critical infrastructure. These measures intersect directly with existing obligations under the Digital Operational Resilience Act (DORA) and the Cyber Resilience Act (CRA).

Fines for non-compliance can reach €5 million, and enforcement is expected to rely increasingly on continuous monitoring rather than periodic audits. Notably, the EU’s approach is now closely aligned with U.S. ICTS authorities, creating parallel compliance expectations for organisations operating in both jurisdictions.

Building an Economic Security Apparatus

To operationalise the strategy, the EU is establishing what amounts to a dedicated economic security infrastructure. This includes a central Economic Security Information Hub, enhanced coordination mechanisms with Member States, and the recommendation that governments appoint senior-level economic security advisers.

The creation of a Trusted Adviser Group reflects an important recognition: effective economic security cannot be delivered by regulation alone. It requires sustained public–private collaboration and shared intelligence.

From Compliance to Capability

The most important lesson of the EU’s new strategy is one of timing. Key requirements began taking effect in January 2026, with further guidance on funding eligibility, high-risk entities, and supply chain information adequacy following throughout the year.