The Impact of Economic Nationalism on Investment Arbitration - A Central European Perspective
15 Pages Posted: 6 May 2020
Date Written: November 14, 2019
The paper indicates a correlation between the investment dispute resolution crisis and the rise of populist movements in the example of Central Europe. Central Europe perfectly exemplifies the sources of the current global crisis of liberal democracy. Both in Central Europe and the larger world, the rise of populist movements reflects the frustrations of social groups that suffer from globalization and laissez-faire trends in the global economy. An increase of inequality fosters feelings of social exclusion among the “have-nots.” Rising antagonism between social groups is proportional to the expanding economic gap between them. In Central European Countries the problem was intensified when states opted out of redistribution policies of communist regimes. The rising antagonism fuels social polarization which is a vital element for populist movements. Economic nationalists will maintain their allegations that foreign tribunals favour foreign investors with detriment to domestic competitors and domestic social development. It is worth mentioning that this narration attracts not only the less-educated portion of the electorate, but also domestic small and medium businesses and sometimes even environmental activists. In parallel have-nots blame “elites”, neoliberal economic processes and globalization for their social degradation and grant their support to those who challenge this status quo. Current investment policy which focuses mainly on the protection of single foreign investor might be effective for these investors in the short term perspective, but it fails in the longer period. If the investment protection goal continues to be treated as paramount, economic nationalism will continue its triumphant march. The paper indicates modifications in investment treaty philosophy necessary to neutralize rising popularity of economic nationalism. In this context the text is strongly linked with current discussion on investment arbitration reform.
Keywords: Central Europe, investment arbitration, economic nationalism, globalization, foreign investors, democracy crisis
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