Foreign Investment, Market Structure, and NATO Economic Security
Russia’s invasion of Ukraine marked a turning point in how NATO understands economic security. The immediate response was necessarily focused on energy: securing supply, diversifying imports, and hardening critical infrastructure against disruption. These efforts were essential. They reflected a growing recognition that dependence on hostile or unreliable suppliers can constrain political autonomy, economic stability, and military readiness in moments of crisis. Europe’s reliance on Russian energy was no longer an abstract vulnerability embedded in trade flows; it became an operational liability with direct geopolitical consequences.
At the same time, the post-2022 response exposed a quieter challenge. Infrastructure can be physically protected, diversified in terms of inputs, and resilient against disruption, yet remain strategically vulnerable if control over its governance, operation, or long-term investment decisions rests with actors whose interests diverge. In such cases, the central risk is not whether infrastructure functions on a given day, but who shapes how it evolves, how capacity is prioritized, and how systems behave under stress.
This distinction matters, because influence rarely takes the form of overt coercion. More often, it is embedded in corporate governance, information access, investment timing, and market structure. Ownership determines who appoints directors, who has visibility into sensitive operational data, and who influences long-term capital decisions. In concentrated infrastructure markets, even minority ownership or governance rights can translate into durable strategic leverage.
NATO’s strategic documents increasingly reflect this broader understanding of vulnerability. The alliance’s 2022 Strategic Concept identifies coercion, strategic dependencies, and hybrid threats as defining features of the current security environment, recognizing that risks now arise across economic and civilian domains alongside military ones. Likewise, NATO’s work on resilience and civil preparedness, rooted in Article 3 of the North Atlantic Treaty, treats the continuity of essential services and infrastructure as a collective responsibility.
What remains less fully integrated into this resilience agenda is the role of ownership and market structure. NATO discussions of economic security continue to emphasize supply chains, physical protection, and cyber defence, while paying comparatively little attention to who owns strategic assets, under what governance arrangements, and in what kinds of markets. Yet these factors often determine whether infrastructure strengthens resilience or quietly embeds strategic exposure.
Foreign investment screening and competition policy therefore matter not as secondary economic regulation, but as core tools of NATO economic security. This becomes clearest when viewed through a concrete example: port and logistics infrastructure.
Ports, Logistics, and Latent Influence
Ports are often treated as commercial assets assessed primarily on efficiency and throughput. In reality, they are strategic nodes that enable trade flows, military mobility, and alliance reinforcement. Their dual-use character means that ownership and governance arrangements carry implications well beyond local markets, particularly during crises when logistics capacity becomes a strategic asset rather than a neutral service.
European experience over the past decade illustrates how even minority ownership stakes can raise security concerns when they intersect with logistics infrastructure. Investments by Chinese state-owned enterprises in ports across Greece, Belgium, Spain, and Germany were initially framed as benign capital injections into underutilized assets. Over time, however, policymakers began to reassess whether cumulative ownership positions, especially when paired with governance rights, could translate into influence over assets integral to national and allied logistics. The European Parliament Research Service has documented how these investments prompted a broader reassessment of strategic exposure.
Germany’s handling of COSCO Shipping’s proposed stake in a Hamburg port terminal illustrates this shift. The transaction proceeded only after the stake was reduced and governance rights were removed. The concern was not immediate operational disruption, but the possibility that long-term influence over investment priorities, information flows, or operational decision-making in a critical logistics hub could shape outcomes over time.
Similar dynamics are visible in Greece’s Port of Piraeus, where COSCO’s controlling stake reshaped operational priorities and labour relations, prompting wider debate within Europe about strategic infrastructure ownership and economic sovereignty.
Canada faces comparable issues. Its Pacific ports are gateways for trans-Pacific trade and could play a role in military logistics during a contingency. At the same time, Arctic port proposals are attracting renewed attention, as climate change alters shipping routes and intensifies geopolitical competition in the North. Analysts have cautioned that foreign capital involvement in northern infrastructure can shape governance and operational priorities in strategically sensitive regions, particularly where projects rely on long-term public-private partnerships.
Taken together, these cases illustrate a broader point: Strategic risk does not require ownership in the traditional sense. In concentrated infrastructure markets, minority stakes, governance rights, or control over key interfaces may be sufficient to generate lasting influence. Market structure amplifies that influence by reducing redundancy and limiting alternatives. From a security perspective, who owns an asset and the market in which it operates are inseparable questions.
Why Canada’s Legal Framework Matters
Canada is relatively well positioned to address these risks because its legal framework is designed to assess influence rather than formal control alone. The Investment Canada Act permits national security review of investments that could be injurious to national security, including minority investments where governance rights, operational involvement, or strategic dependency may arise.
Recent updates to Canada’s National Security Review Guidelines explicitly integrate economic security considerations, directing attention to critical infrastructure, sensitive supply chains, and long-term dependency rather than short-term disruption.
Canada’s Competition Act addresses a complementary dimension of risk by focusing on market structure—concentration, dominance, and control of chokepoints. In infrastructure sectors, where redundancy and substitutability underpin resilience, market structure is not security-neutral.
Competition policy therefore operates alongside investment screening as a structural resilience tool rather than a purely economic one.
Together, these regimes allow Canada to manage strategic exposure without abandoning openness. Investments can be approved subject to conditions that limit governance rights, protect sensitive data, or preserve operational autonomy. Concentration can be scrutinized where it risks entrenching dependency. The objective is not exclusion, but calibrated risk management.
Implications for NATO
The port example highlights a wider alliance challenge. NATO’s infrastructure systems are deeply interconnected, supporting mobility, communications, and economic continuity across borders. Yet ownership and investment decisions remain nationally fragmented, governed by regimes that vary in scope and thresholds. This creates opportunities for investors to structure transactions toward jurisdictions with lighter scrutiny, even as the underlying assets continue to function as part of an alliance-wide system.
NATO does not need (and is unlikely to accept) a supranational investment regulator. It does, however, need shared principles that recognize ownership and market structure as upstream determinants of resilience. NATO’s existing resilience framework already provides a foundation for this approach, emphasizing that civil systems must be able to support military operations under stress.
A coordinated approach focused on influence, governance, and concentration, rather than formal ownership alone, would reduce the risk that strategic dependency is built incrementally, transaction by transaction, within systems the alliance relies on in crisis.
Conclusion
The lesson of recent years is not that openness has failed, but that openness without attention to ownership and market structure creates blind spots that adversaries can exploit. Infrastructure security today is not only about supply or protection. It is about governance, incentives, and dependency—and about how market outcomes shape strategic behaviour over time.
Foreign investment screening and competition policy are therefore not peripheral economic tools. They are central to how states (and alliances) manage resilience in a contested environment. Canada’s experience demonstrates that it is possible to remain open to capital while still treating ownership and market structure as matters of security relevance.
In today’s strategic environment, who owns the infrastructure increasingly shapes who secures the alliance.
Cover Photo: “Pipeline” (2012), Jason Woodhead via Flickr. Public domain.
Disclaimer: Any views or opinions expressed in articles are solely those of the authors and do not necessarily represent the views of the NATO Association of Canada.
