Strategic Assessment

Over the last decade, China and the EU have strengthened their economic ties. At the same time, the EU is unhappy about some aspects of the trade with China, in particular, issues relating to fair competition, intellectual property, and market access. Furthermore, the EU is troubled by China’s political influence over Europe, due to the Chinese government’s control over European critical infrastructures. Consequently, the EU is currently setting up a mechanism to screen foreign investments, and some EU nations have already passed national laws in this context. China is also buying critical infrastructures in Israel, making the EU’s concern about political and security influence relevant there too. Israel, which is considering a foreign investments screening mechanism, can learn from the EU experience in establishing such a mechanism and can concurrently propose legislation similar to what some EU nations have enacted. Such laws include capping the control a foreign company may have over a local one, expanding the list of sectors subject to an investment screening process to include, among others, technology and infrastructures, and enforcing a close examination of foreign government investments in Israel.