FIRB, EU FDI Screening and the Global Regime

The United States built the template, but investment screening is now a global system, and its spread is one of the clearest signs that the compute contest has reorganised how capital moves. Australia and the European Union offer the two most instructive comparisons, one a long-established national gatekeeper sharpened for the technology age, the other a novel supranational experiment in coordinating twenty-seven sovereign screening regimes at once.

Australia's Foreign Investment Review Board predates the current contest by decades, having long vetted foreign purchases of land, housing, agriculture and major companies. What changed was its orientation. As Canberra's relationship with Beijing deteriorated and as awareness grew of Australia's position astride the world's critical-minerals supply, FIRB became a front line of technology and resource security. The government lowered monetary thresholds for review during the pandemic, sharpened scrutiny of sensitive sectors, and grew markedly more willing to block or unwind Chinese acquisitions of mines, particularly lithium and rare-earth projects, and of critical infrastructure. Australia matters here out of proportion to its size because it holds some of the largest non-Chinese deposits of the very minerals the West is scrambling to secure. Who owns those deposits is a question with global consequences, and FIRB is the body that answers it.

The European Union's regime is a different creature entirely. The EU FDI Screening Regulation, which became fully operational in 2020, did not create a single European screener. Sovereignty over investment remained with member states, some of which had robust screening systems and some of which had none. What the regulation created was a cooperation mechanism: a framework requiring members to share information about inbound investments, allowing other members and the European Commission to comment on deals that might affect security or public order across the bloc. It is coordination without centralisation, an attempt to prevent an adversary from exploiting the weakest link, the member state most desperate for capital and least equipped to scrutinise it.

The European experiment reveals both the necessity and the difficulty of collective screening. The single market means capital that enters through one member can move freely to others, so a lax screener in one capital is a vulnerability for all. Yet member states guard their sovereignty over investment jealously, and their threat perceptions diverge. Some see Chinese investment in ports, energy grids and technology firms as a strategic danger; others see it as welcome capital for regions that need it. The Commission has pushed for stronger, more harmonised screening, precisely because the patchwork leaves gaps, and the direction of travel is toward tighter coordination. But the tension between collective security and national economic interest is the same collective-action problem that bedevils coalition export controls, transposed into the investment domain.

Beyond these two cases, screening regimes have proliferated across the developed world, in the United Kingdom with its National Security and Investment Act, in Japan, Canada and beyond. The common thread is a shared list of sensitive sectors that reads like a map of the AI economy: semiconductors, artificial intelligence, quantum, critical minerals, data infrastructure, telecommunications and dual-use technologies. The convergence is not accidental. Allies have compared notes, aligned their categories and, through forums like the Trade and Technology Council, begun to coordinate so that an investor rejected in one jurisdiction cannot simply shop the deal to a more permissive one.

Faraday's read is that the global spread of screening completes the enclosure of the compute base. Export controls, coalition tool restrictions and investment screening together form an integrated system for sorting technology and capital along geopolitical lines. The screening regimes are the perimeter fence, and their gradual harmonisation across allied jurisdictions means the fence is becoming continuous rather than patchy. For an adversary, the number of open doors is shrinking. For an ally, the challenge is to keep the fence permeable to trusted capital while sealed against hostile capital, a distinction that requires constant coordination to maintain.

The consequence for the world's capital markets is a quiet but profound reordering. Money now carries a passport, and the passport determines which assets it may own. A sovereign fund or corporation from an aligned state can acquire a chip firm, a mine or a data centre that the same institution from a rival state cannot. This sorting reshapes the flow of investment into AI infrastructure, channelling it toward owners deemed safe and away from those deemed suspect. It is a less visible mechanism than an export ban, but its cumulative effect on who finances and controls the compute economy may prove just as decisive. The map is being redrawn not only by what crosses borders but by who is permitted to own what lies within them.