Foreign economic policy in the European Parliament and economic interdependence with foreign powers
| Published date | 01 December 2021 |
| Date | 01 December 2021 |
| DOI | 10.1177/14651165211035060 |
| Author | Sara Norrevik |
| Subject Matter | Articles |
Foreign economic policy in
the European Parliament
and economic
interdependence with
foreign powers
Sara Norrevik
Department of Political Science, University at Buffalo, USA
Abstract
What is the role of economic interdependence with foreign powers when legislators
vote on foreign policies? Foreign aid and trade are among the European Union’s most
important foreign policy instruments, over which the European Parliament has veto
power. Yet, few studies address foreign economic policy voting in European
Parliament scholarship. This study presents a new theoretical model about economic
interdependence and foreign policy positioning in the European Parliament. I argue
that economic interdependence with major foreign powers is associated with legislators’
foreign policy positions. Analysing European Parliament votes concerning aid and trade
with Ukraine, I show a statistical association between Members of the European
Parliaments with high levels of Russian Foreign Direct Investment in their electoral dis-
tricts and voting against aid and trade with Ukraine (supporting the pro-Russian policy).
These findings offer new insights on Members of the European Parliaments’position-tak-
ing in foreign economic policy decisions that have global economic and political
ramifications.
Keywords
European Union, European Parliament, foreign direct investment, interdependence,
Russia
Corresponding author:
Sara Norrevik, Department of Political Science, University at Buffalo, 515 Park Hall, Buffalo, NY 14260, USA.
Email: saramati@buffalo.edu
Article
European Union Politics
2021, Vol. 22(4) 700–720
© The Author(s) 2021
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/14651165211035060
journals.sagepub.com/home/eup
Introduction
How do Members of the European Parliament (MEPs) form policy positions on foreign
economic policy? What is the role of economic ties with foreign countries when MEPs
vote on foreign policy? Foreign aid and trade agreements are two of the European
Union’s (EU’s) most important foreign policy instruments, over which the European
Parliament (EP) has veto power. Yet, few studies address MEPs’role in foreign economic
policy.
In this article, I argue that MEPs consider economic interdependence with major
foreign powers when voting on foreign policy positions. Specifically, I analyse
MEPs’support for aid and trade with Ukraine and inflows of foreign direct invest-
ment (FDI) from Russia, a country whose outward FDI is largely state-owned or
state-influenced (Kalotay and Sulstarova, 2010). I test my predictions empirically
using a dataset on EP votes concerning financial assistance and trade with Ukraine
during the eight EP (2014–2019), coinciding with the years following the 2014
Euromaidan protests in Ukraine. Policies towards Ukraine were among the most pro-
minent foreign policy issues for the EU, as they cut against Russia’s position that
Ukraine should join the Russia-dominated Eurasian Economic Union instead of
growing closer to the EU. I find that large FDI inflows from Russia to EU
member states reduce the likelihood that MEPs vote in favour of aid and trade poli-
cies supporting Ukraine, and increase the likelihood that they take a pro-Russian
policy position. For countries that have subnational EP-electoral districts, I calculate
Russian FDI into districts. The association between Russian FDI inflows and support
for pro-Russian policies remains significant when breaking down FDI inflows to EP
electoral districts.
This article introduces an original argument to advance our understanding of how the
directly elected EP chooses policy positions on foreign economic policy. Existing scho-
larship on EP voting typically emphasises political ideology, party group belonging and
Euroscepticism to explain MEPs’policy positions. I add to these findings the argument
that MEPs take into consideration economic interdependence when voting on foreign aid
and trade. I offer a causal pathway where major foreign powers leverage economic ties,
specifically their outward FDIs, to influence public debates to support the foreign nation’s
preferred policies. Career-driven MEPs do not want to risk political backlash for approv-
ing EU policy that goes against the interests of foreign powers with high levels of invest-
ment in their districts.
Linking the effects of economic interdependence with MEPs’policy preferences,
this study makes three scholarly contributions. First, it presents a new theoretical
model about the role of economic interdependence in foreign policy positioning.
Existing accounts of MEP position-taking in foreign policy are incomplete without
attention to economic relations with major foreign powers. Second, it contributes to
the scholarly literature on one of the most consequential foreign policy issues: the
EU–Russia relationship. Third, it advances our knowledge of the EP’s role in foreign
economic policy.
Norrevik 701
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