Can Transatlantic Dialogue Smooth the Path for Investment in Western Defense?
Introduction
Recent shifts in global security have thrust foreign direct investment (FDI) in the defense sector back into the spotlight. A closed-door CELIS Salon, convened policymakers, practitioners, and industry voices in Washington DC on the 13th of January to take stock of how transatlantic investors can navigate the Committee on Foreign Investment in the United States (CFIUS) while still bolstering European defense capabilities. Although the conversation was held under Chatham House Rules, several themes emerged that merit broader reflection. The Salon contained three sessions focused on the following: (i) CFIUS policy outlook, (ii) European defense spending regulatory requirements, and (iii) an interactive discussion between regulators and defense industry practitioners. Here, we highlight some of the interesting discussions that were held, and some of the key insights that flowed from the discussions.
The importance of existing compliance regimes
A first, unmistakable takeaway was the call for deeper collaboration between regulators, the CFIUS bar, and industry. Participants stressed that dialogue - early, candid, and technical - remains the surest route to resolving national-security concerns without derailing strategically valuable deals. CFIUS has a statutory mandate to protect critical technologies, sensitive personal data, and critical infrastructure, but the Committee is equally mindful of the economic costs of uncertainty. CFIUS is signaling that well-prepared investors who demonstrate an understanding of the specific national security risks raised by a transaction, and who arrive with a concrete mitigation roadmap, will find the government’s instinct is to “get to yes”.
Importantly, that roadmap need not be drawn from scratch. CFIUS attorneys are increasingly pointing to compliance frameworks that companies already implement under export controls, cybersecurity standards, or sector-specific licenses. Salon participants urged CFIUS to give explicit weight to such third-party standards when assessing mitigation. If a company can certify adherence to recognized protocols -whether ISO-based data handling rules or NATO supply-chain requirements - regulators should be able to close residual gaps more quickly. That approach reduces duplication, increases predictability, and frees agencies to focus on genuinely novel risk profiles.
Value allied supply chains and known investors
The discussion also spotlighted the strategic value of investments that reinforce allied supply chains. In an era of contested access to raw materials, propulsion systems, and advanced semiconductors, fostering on-shore or allied-shore production is no longer a mere economic objective; it is a defense imperative. Transactional lawyers can play a decisive role by mapping how a proposed deal will enhance resilience -for example, by considering domestic industrial base and supply chain capabilities. Deals that clearly strengthen resiliency stand a better chance of securing rapid clearance. The U.S. recognizes it cannot have an unlimited domestic supply chain and is open to partnerships that reinforce critical capabilities. Such investments not only enhance national security but also create jobs and support local communities, underscoring the need for a holistic approach to risk and opportunity.
Looking ahead, CFIUS is piloting its “Known Investor Program”, designed to streamline reviews for parties with a proven track record of compliance. The pilot is expected to run through 2026, during which it will evolve based on public feedback. Salon participants welcomed the initiative but encouraged broader outreach. Educating foreign acquirers especially small and medium-sized enterprises - about how the program can shorten timelines and decrease transaction costs will, in turn, encourage early filings and richer pre-clearance consultation.
The importance of positive signaling
Salon attendees also underscored the importance of signaling. Regulators consistently repeat that —despite headlines about prohibitions— CFIUS is not an obstacle course meant to deter capital. Rather, it is one safeguard within a larger system aimed at ensuring that investment enhances, rather than erodes, U.S. national security. By publicizing successful examples of mitigated transactions and recognizing existing compliance efforts, authorities can reinforce that narrative and expand the pool of high-quality investors.
Participants for example noted that investment by U.S. companies in Europe, when it involves the creation of economic activity and employment, may represent a strategic opportunity for both businesses and European authorities. By responding directly to European demand and contributing to local industrial development, such investments should, in certain cases, be taken into account by national screening authorities as corrective or mitigating measures in the context of FDI screening.
Inter-governmental information sharing
While participants recognized that relevant data is often intelligence-heavy and subject to heavy sharing restrictions, information sharing across regulatory regimes could be beneficial (e.g., when a transaction triggers multiple reviews), and is worthy of additional consideration. However, participants also highlighted a number of potential complications over the longer term: In particular, the obligation for information-sharing and coordination between FDI authorities across member states, combined with differences in national sensitivities toward U.S. investments - especially in the defense sector - could lead member states to adjust their positions in screening cases in order to avoid political tensions. This evolution may affect the consistency and predictability of decisions at the European Union (EU) level and create additional uncertainty for investors.
Buy European?
Finally, unsurprisingly, the EU preference criterion in new EU procurement projects and regulation was met with the expected degree of skepticism by some. Several participants observed that, at present, the EU does not have the necessary capacity and remains dependent on the U.S., notably with respect to the ITAR regime. This dependence raises questions as to the practical implementation of EU preference in procurement, particularly in light of current industrial constraints.
Conclusion
CELIS events, like the CELIS Salon in DC, are designed precisely to capture these nuanced insights and share them with a select audience in a small room-high trust environment. The frank, off-the-record nature of the exchange allows practitioners to surface practical pain points and propose realistic fixes. For stakeholders - whether in boardrooms or ministries - such forums illuminate the path forward: collaborate early, frame the national-security upside, leverage established standards, and keep an eye on forthcoming programs that reward a history of responsible investment. Getting to “yes” is possible, and the transatlantic defense community is determined to prove it.
