A number of countries have experienced capital funds owned by foreign states wanting to buy into their airports, harbours, mobile networks or utility companies.
There’s nothing necessarily wrong in that, you may say. But what if the fund is owned by a country that then uses its purchase as leverage to influence domestic policy?
This is precisely the dilemma that Denmark risks finding itself in. China in particular has been very active in this regard, having bought into enterprises in a number of countries in Europe such as Greece, Italy, Spain, the Netherlands and Belgium, reports Politiken.
No to blackmail
According to Bloomberg, China has bought into companies to the value of 2 trillion kroner over the last 10 years.
The finance minister, Kristian Jensen, feels Denmark needs a legal instrument to prevent such purchases if the government feels the infrastructure is critical to the nation.
“The fear is that there could be parties who buy up Danish infrastructure in order to put pressure on Denmark. They could either pressure us so that we can’t hold certain opinions, or try to force us into acting in a specific way or doing something else we would never have chosen to do,” said Jensen.
Yes to approved investment
Other countries such as Norway, Finland, Germany and the UK have already passed laws that require the screening of foreign investors before such transactions take place to avoid potential future headaches.
The defence minister, Claus Hjort Frederiksen, points out the new law would not be a general rejection of Chinese investment or co-operative projects but it would put politicians in a better position in future to refuse investment in certain cases.
In Greenland, a state-owned Chinese entrepreneur firm was set to put in a bid for the new airport building scheme adopted last week by Greenland’s Parliament. In this particular case, Denmark reacted by offering a loan of 700 million kroner in order to keep the Chinese firm out.
A popular measure
A proposed new law would have the backing of a number of Danish parties and Enhedslisten would like to take it even further.
“We need a mechanism to prevent our infrastructure being owned by foreign companies that threaten our national security,” said the party’s finance spokesperson Pelle Dragsted.
“It [infrastructure] shouldn’t be owned by capital interests whose main function is to earn money rather than delivering an economical service, and consumers should also be guaranteed a say,” he added.