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Tuesday 16.07.2019 | Name days: Hermīne, Estere
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MEP: there may be dishonest players hiding behind innocent EU investments

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«I we want to know the actual inflow of investments and their influence from third countries, as well as survey possible risks, we have to know how to find out what happens in other EU member states, and understand that there may be dishonest players hiding behind visibly innocent investments,» says MEP Roberts Zīle.

On Tuesday, 27 March, members of Committee on European Parliament’s Economic and Monetary Affairs voted in favour of a proposal to create a framework for evaluation of direct investments in the European Union. Zīle is generally satisfied with the outcome. One of the main improvements was the expansion of the existing definition of the foreign direct investor, said Zīle’s assistant Edgars Zīverts.

The MEP says the committee’s initial definition for foreign direct investor was too wide, and if the legislative draft were approved in this redaction, it would mean that Russian investors, for example, could hide behind companies based in Malta or Cyprus. «We have managed to improve this, which is especially important for Latvia. As proven by our country’s example, a great deal of investments officially comes from EU member states, not third countries. Many of them put NGOs among so-called tax oases,» says the MEP.

He says that statistic data from 2017 speaks for itself. «Dutch investors have secured the largest investments, while money from Cyprus and Luxembourg are on 3rd and 4th place. The recent developments with Latvian companies confirm and increase concerns. As it is known, an Austrian company won in the auction for the sale of KVV Liepājas metalurgs metalworking. The company is 100% owned by another company based in Cyprus. We don’t know the people who are behind the Cyprus company. This is only one example. It is important to make sure we know the origin of the money that flows into Latvia and elsewhere in Europe,» says Zīle.

MEPs also expanded the definition of countries whose investments are subjected to evaluation. MEPs voted in favour of making sure investments that end up in member states’ exclusive economic zones are also subjected to screening. «Expansion of this definition is important if we take into account third countries’ activity in member states’ territorial waters. If we look at Nord Stream 2, Russia often says that EU legislation should not apply to this project because it does not pass through member state’s territory. This is absurd, and we cannot allow other foreign investors or member states to use this excuse,» says Zīle.

The MEP also voiced his satisfaction with the fact that his colleagues supported his proposal to add media to the list of critical infrastructure. «Independent mass media represent the cornerstone of democracy. If we do not know who they belong to and do not consider owner structure an important condition for their independence, it could potentially cost a lot – regardless if we’re talking about Latvia or any other country. Still, considering geopolitical developments, it is important for Baltic States to know who the media belong to and what are the interests of their owners.»

At the same time, Zīle is disappointed that his colleagues in the European Parliament did not take into account another correction: that the European Commission or member states abstain from requesting information regarding third countries’ supported or financed investments from NATO member states intended for defence or security purposes.

«It is sad that a large number of committee members do not see the importance of security and defence. The fact that member states would be able to request information about transparent investments in defence and security fields could potentially lead to misunderstandings among countries or even potentially threaten security priorities of member states. Baltic States and Eastern Europe are part of NATO – they provide the region’s security. The committee’s position that investments in EU should be monitored could oppose EU’s own priorities for security,» said Zīle.

He adds that Article 346 of the treaty on the functioning of the EU states that member states do not have to provide information, disclosure of which can be considered a threat to their security interests.

«Germany already uses this article in its legislation in relation to screening of direct foreign investments and potential sharing of information. Latvia will also be able to apply Article 346. However, because there is no mention to NATO investments, it could mean that small countries will not withstand the pressure from European Commission or EU and be forced to share information regarding investments intended for security,» said Zīle.


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