CELIS Update on Investment Screening and Economic Security – October 2025
By Helene Schramm with the help of interns Parth Aggarwal and Maria-Arancha Simiuc
INVESTMENT SCREENING MECHANISMS
Croatia – Croatia Moves to Tighten Foreign Investment Rules Under Draft Screening Act
The Croatian Ministry of Finance has published a draft proposal for a new Foreign Direct Investment (“FDI”) Screening Act (“draft Act”) aimed at establishing a comprehensive national review mechanism for foreign investments. This draft aligns Croatia’s legislation with EU Regulation 2019/452 and is also viewed as meeting a condition for Croatia’s full OECD membership. The public consultation period runs until 3 October 2025, and under an expedited legislative process, the law is expected to enter into force by late October.
The draft Act proposes that any foreign investment resulting in acquisition of at least 10 % of shares or voting rights, or other effective control, in “obliged entities” operating in sectors deemed critical (such as energy, transport, health, digital infrastructure, defence, media, financial services, and research) be subject to prior notification and approval by the Ministry of Finance. Public–private partnerships, concessions, and similar arrangements fall under the same regime. Some exemptions are foreseen (e.g. for agricultural land or forests owned by the Republic).
The screening process involves multiple steps: the investor (or the obliged entity) must notify the Ministry before finalising the investment, an administrative completeness check (within 30–60 days), referral to a National Contact Point and FDI Committee, issuance of an opinion by the Committee (within 90 days, extendable by 30 days), and a final decision by the Ministry (within 120 days, or 150 days with extension). Authorities will also have powers for ex-officio review of undeclared or potentially circumvented investments, and enforcement measures include revocation of approvals and divestment orders. The draft envisages transitional provisions governing investments made prior to the law’s entry into force, including retroactive screening within three years and application to signed-but-not-closed deals.
Belgium – ISC Report Shows Belgium Ramping Up FDI Reviews Without Turning Investors Away
Belgium’s Interfederal Screening Committee (“ISC”) has released its Annual Report covering foreign direct investment (“FDI”) reviews between July 2024 and June 2025. Over this period, 100 notifications were submitted, a sharp rise from 68 in the previous year. Of these, 89 were cleared without conditions, one was approved with mitigating measures, several were withdrawn, and none were blocked. The United States and the United Kingdom maintained their positions as leading sources of filings, making up 45% and 22% respectively, followed by Japan, Canada and China. Sensitive sectors such as data, digital infrastructure, energy, health and dual-use technologies were most frequently notified.
Procedurally, the ISC has improved efficiency. Initial verification now begins within two days of filing, compared to six days previously. Average review time stood at about 31 days, aligning with the statutory 30-day limit, and only about 5% of cases required a full phase II screening. Out of those, three were completed within the reporting period and one resulted in the first-ever use of mitigating measures. These included safeguards over technology and continuity of critical functions, rather than more drastic measures like stripping governance rights or restricting activities, which remain legally possible but unused.
The picture that emerges is one of steady consolidation. Belgium is clearly screening more transactions, but almost all are still being cleared and only a handful face additional conditions. The first use of mitigating measures shows the authorities are willing to intervene when national interests are at stake, though without resorting to outright prohibitions. With further EU-level reforms on the horizon, the Belgian experience illustrates how an active yet measured screening system can coexist with a broadly open investment climate.
Ukraine – Government Submits Draft Law to Screen Foreign Investments in Strategic Industries
On 22 September 2025, the Ukrainian Cabinet of Ministers submitted draft Law No. 14062, titled “On Screening of Foreign Direct Investments”. This proposed legislation aims to introduce a mandatory screening mechanism for foreign investments in sectors deemed critical to Ukraine’s national security and economic stability. The move aligns with international practices, including the European Union’s FDI Screening Regulation, and reflects Ukraine’s commitment to safeguarding sensitive industries during a period of heightened geopolitical tension.
The draft law specifies that foreign investments will be subject to screening if directed at Ukrainian companies operating in critical infrastructure, extracting strategic minerals, or engaged in the development, production, modernization, repair, transportation, disposal, or trade of military and dual-use goods. Screening will also apply when a foreign investor acquires more than 25% of voting rights, secures governance or blocking rights, or acquires or leases assets amounting to 10% or more of the target company’s total assets. These thresholds are designed to focus scrutiny on significant transactions that could impact national security.
Under the draft law, a newly established Commission on Assessing the Impact of Foreign Direct Investments, operating within the Ministry of Economy, will be responsible for reviewing and approving foreign investments. The Commission will include representatives from various government agencies, including the Security Service of Ukraine, the Ministry of Foreign Affairs, and the Ministry of Defence. The review process is set to take up to 90 days, with the possibility of extension if additional information is required. Non-compliance with the screening requirements could result in sanctions such as invalidation of the transaction, restrictions on voting rights, denial of dividends, or fines up to 50% of the investment’s value.
ECONOMIC SECURITY STRATEGIES
European Union – New EU Working Paper Calls for Bold Social Reforms to Address Economic and Geopolitical Risks
The Joint Research Centre of the European Union released its Working Paper titled “Enhancing Economic Security in the European Union: Three Strategies to Tackle Emerging Economic and Social Challenges“, which argues that the European Union’s integration model is currently being weakened by a range of socioeconomic, technological, and geopolitical disruptions. The report states that the EU must urgently redefine its strategy to adapt to economic decline and geopolitical uncertainty, necessitating a prioritization of economic security and industrial autonomy. This urgency is fuelled by a widening productivity and income gap with the U.S. and China, coupled with vulnerabilities exposed by heavy external reliance for raw materials, energy, and key technologies. The paper asserts that enhancing economic security requires fundamentally adjusting social protection systems to align with these new, complex challenges.
To address these vulnerabilities, the report proposes three strategic pathways. The first pathway calls for strengthening and better coordinating existing national safety nets, arguing that the divergence and inadequacy of current last-resort systems across Member States make them insufficient to manage emerging security challenges. The second pathway promotes social innovation through the creation of a partial basic income at the EU level. This benefit is proposed as a vital tool to mitigate the growing social needs associated with industrial automation, technological change, and the decline of stable employment. The third pathway advocates for placing greater emphasis on strategic social investments such as in early childhood education or vocational training, which would be led by the European Commission to boost cohesion, stabilize household incomes, and enhance productivity.
The paper further dedicates a section to addressing the considerable fiscal constraints on implementing these strategies, noting that the partial basic income and new social investments would incur substantial costs that are difficult to finance within the current framework of economic slowdown and budgetary conservatism. The report suggests that innovative reforms, such as implementing a minimum tax of 2% on the wealth of centi-millionaires, could raise an estimated €67 billion and neutralize the regressive nature of European tax systems. However, the analysis concludes that political inertia and resistance from elites pose significant barriers to implementing the ambitious tax reforms necessary to finance a more resilient social protection model.
India & Israel – India and Israel Sign Historic Investment Agreement, Deepening Strategic Economic Ties
On 8 September 2025, India and Israel signed a new Bilateral Investment Treaty, marking a significant step towards increasing trade and mutual investments. The current annual bilateral trade volume amounts to approximately USD 3.9 billion, while cumulative mutual investments totalled roughly USD 800 million between 2000-2025. Following the agreement, investment flows are expected to increase in the coming years, further strengthening the strategic partnership and economic ties between the two countries. India is already among Israel’s most important trade partners. For India, Israel functions as a strategic link in its trade with the Middle East and Europe, as illustrated by the, currently stalled, India-Middle East-Europe Economic Corridor project. Israel has now become the first OECD member to sign a treaty with India under its new investment treaty model.
The agreement includes several safeguards for investors. These encompass the minimum standard of treatment, provisions on transparency, protection from expropriation, as well as compensation for losses. The treaty further establishes an independent dispute resolution mechanism through arbitration.
On the occasion of this agreement, the finance ministers of India and Israel emphasized the shared commitment to advancing economic cooperation across key sectors. The focus was placed on cybersecurity, defence, innovation, and high-technology sectors.
Global – New OECD Report Highlights Urgent Need to Rethink Economic Security
On 15 September 2025, the OECD released its report titled “Economic Security in a Changing World” which defines economic security as a nation’s capacity to protect and sustain its economic stability and growth by building resilience against both external and internal threats. The report positions economic security as integral to national security, encompassing the ability to safeguard key economic assets, maintain critical infrastructure, and ensure access to essential resources like energy, food, and technology. The key dimensions explored include the protection of strategic industries, enhancing supply chain resilience, maintaining stable trade and investment flows, and cybersecurity, with recent global events, such as the COVID-19 pandemic disruptions and geopolitical conflicts, highlighting the urgency of these concerns.
A central focus of the report is the inherent vulnerability created by the concentrated production and trade of specific, strategically important goods and technologies, such as critical raw materials (“CRMs”), semiconductors, and primary energy. The report notes that while this specialisation boosts productivity, it simultaneously creates “choke points” within complex international supply chains. These choke points can amplify micro-shocks, which, in turn, raise geopolitical risks and threaten economic stability. The report further emphasises the deeply interconnected nature of these risks, noting that a single disruption (for instance, in energy supply) can quickly cascade across various sectors, impacting the overall functioning of critical infrastructure and amplifying cybersecurity risks.
The report’s later chapters pivot to specific areas where policy responses are deemed most critical, focusing on vulnerabilities in international supply chains, the imperative of energy security in the context of the green transition, the management of international investment security, and the crucial role of cybersecurity in an increasingly digital world. Policy interventions are considered essential for mitigating these risks, yet the report strongly cautions that poorly designed or protectionist measures could inadvertently undermine the significant benefits derived from open markets and international trade. Ultimately, the report aims to help policymakers balance pressing national security needs with the goal of continued economic stability and global resilience.
