(*This opinion / analytical article was written by Ivan Dikov for The European Views website.)

The EU should rethink its state aid rules when it comes to foreign competition, and the EU multinationals – their approach towards the Union’s home turf.

After many months of eager expectations and behind-the-scenes competition, it has recently become clear that German carmaker Volkswagen has chosen Turkey over Bulgaria, Romania, and Serbia as the site for its new car factory, a massive investment worth over EUR 1 billion (USD 1.010 billion).

Countries compete for large-scale investments from big multinational corporations literally all the time so the case of Volkswagen’s new factory in Turkey should be nothing to dwell on from that point of view.

Except there are also other points of view, and in this particular case with Volkswagen choosing the location of its new European factory, there have been layers upon layers of politics involved, especially with respect to the European Union, not to mention the wider social, economic, and political ramifications of the German carmaker’s decision.

The moral from the saga with Volkswagen’s new factory in Turkey is twofold, and it is a sad one for the EU in both of its dimensions.

The first part of that bitter lesson is that, given roughly equal opportunities, the largest EU-based companies such as Volkswagen are prepared to ignore the home turf of the EU in favor of countries with questionable democratic records, higher degree of political risk, and even fiery anti-EU and anti-Western rhetoric – in essence rewarding that type of behavior instead of strengthening their some of their own.

The second part of the lesson is that the EU competition rules regarding state aid to private enterprises – which are designed to ensure fair play in the EU’s internal market – can cause the EU itself to lose major investment competitions with outside players which have no such fair play scruples but unabashedly seek to promote themselves precisely with state aid…

Read the rest of this article on The European Views website here

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