Insurance of Foreign Investments from Political Risks In EU Countries: Imperatives of International Development

Thе article examines the specifics of the EU countries’ practices of insuring foreign investment from political risks through the lens of international development agenda. It consecutively identifies the institutional aspects of relevant activities, objectives and conditions of foreign investment insurance or guarantees, scale and geographical scope of coverage, as well as the trends that have emerged over the last years. The research demonstrates that almost all EU countries insure outward investments ignoring the 2030 Agenda for Sustainable Development. Most export credit agencies (ECAs) pursue commercial goals and hardly coordinate their activities with international development agencies and development finance institutions, cover exclusively the investments from the companies connected to the home country and do not maintain preferential conditions for the projects in the least developed countries. Against this background only Germany stands out – in its institutional separation of export credits and investment guarantees, in the participation of the Federal Ministry of Economic Cooperation and Development (BMZ) in the decision-making; in linking its activities with the SDGs, and in improving conditions of coverage for the climate-friendly projects. The sheer volume of the coverage in the EU countries – except for Germany and Italy – is very limited, whereas the actual geographical distribution of the investment guarantees and insurance unveils the prevalence of the projects in the higher income countries. Over the next 5 years other EU members might seek to “developmentalise” political risk guarantees and insurance – through “greening” of covered investments. However, the trend towards securitisation of such instruments will likely have a greater impact.

foreign direct investment, political risks, insurance, investment guarantees, export promotion, international development cooperation, Sustainable Development Goals, EU countries, Germany, Ukraine