29 March 2023

Considerations on potential EU measures to “prevent covert foreign interference”

Careful assessment is needed when drafting potential measures to “prevent covert foreign interference” in the European Union: This is the core message Philea and other key civil society organisations conveyed to Commission Vice-President Jourova at a meeting on 17 March in Brussels about the EU’s “defence of democracy package”.

In her 2022 State of the Union address, President von der Leyen announced an initiative to defend democracy from covert foreign influence. In mid-February 2022 the European Commission, in the context of the “defence of democracy package”, suggested creating a legal instrument (directive) to introduce “transparency for interest representation services directed or paid from outside the EU”. A call for evidence has been opened within an EU consultation, which runs until mid-April 2023. Philea is now analysing the package, including potential (unintended) negative impacts of such an initiative on the philanthropic sector, and is preparing its contribution to the consultation as well as liaising with the wider civil society sector about the matter.

At the 17 March meeting with Vice-President Jourova, Philea Head of Policy Hanna Surmatz and other civil society representatives stated concerns around the idea of a directive on “transparency measures to prevent covert foreign interference” including the following:

  • Recalling that defending democracy, rule of law and fundamental rights is very important and must be done through measures that take these very same EU principles into account.
  • The EU should lead by example to ensure that its envisaged policy to prevent “covert foreign interference” is risk-based, proportionate and fit for purpose, and that it takes into account fundamental rights and does not unduly restrict legitimate cross-border funding to civil society organisations that engage in interest representation.
  • In the context of clear statements coming from the EU level to condemn recent attempts to introduce foreign funding restrictions at the national level in Georgia and Hungary (where these restrictions were suggested via a law to introduce more transparency on foreign funding), caution needs to be taken when the EU now considers adding more transparency into foreign funding flows (see below for specific actions taken and statements made by the EU on the situations in Hungary and Georgia).
  • A thorough impact assessment should be undertaken. A careful assessment of potential conflicts of such a legislative initiative with fundamental rights such as the Freedom of Association/Freedom of Expression must be carried out. The Freedom of Association includes the right for civil society organisations (be they associations or foundations) to access resources from different sources (public as well as private/philanthropic). It also includes the right to use resources and to act/give grants across borders.
  • Access to finance for civil society organisations across borders must not be unduly restricted: Civil society organisations receiving foreign funding, as well as those non-EU philanthropic organisations that give grants and support to EU-based organisations, must not be stigmatised or put under suspicion.
  • If the legislative initiative goes beyond public foreign government funding/interference to also include private philanthropy foreign funding, it would have a chilling impact on cross-border philanthropy, and potential conflicts with the free flow of capital and freedom of association must be carefully assessed. Such an initiative would likely lead to fewer resources for civil society organisations, and would affect funding from EU allies.
  • Questions arise as to whether it would even be effective in protecting the democratic sphere, and whether in fact it would divert attention and energy from true malicious interference.
  • Where threats to our democracy imply criminal behaviour, these actors will likely find tools to channel funding through other means. Criminal behaviour should be addressed through criminal measures, and attention is needed to not put bureaucratic red tape imposed on legitimate actors who are working for the public good and who are already under national level regulation and checks.
  • Such an initiative could even contribute to the restriction of civic space and democratic participation, which would be in the interest of foreign authoritarian countries. It could potentially lead to a snowball effect and lead to governments in other parts of the world copying these measure.
  • Furthermore, since a Directive requires transposition in Member States, some EU countries could also use it to close down civil society space and to stigmatise civil society organisations in their countries.

There has already been some concern flagged in the media about this new initiative.

Philea will continue to monitor this situation.

On foreign agent laws in Hungary, Georgia and the US:

  • The European Court of Justice actually ruled against the Hungarian LexNGO in June 2020 (C-78/18) In this landmark judgement, the Court set out a substantive element of freedom of association—the right to access funding (including foreign funding).
  • The EU has condemned the proposal by the Georgian Government to introduce a similar provision: “The proposed draft law on ‘transparency of foreign influence’ raises serious concerns. Creating and maintaining an enabling environment for civil society organisations and ensuring media freedom is at the core of democracy. It is also key to the EU accession process and part of the 12 priorities, notably priority 7 on media freedom and priority 10 on the involvement of civil society. The European Union is supporting Georgia in its reform efforts, responding to the country’s own aspirations for continued development and EU membership, as enshrined in Georgia’s Constitution. The draft law’s adoption would be inconsistent with these aspirations and with EU norms and values.”
  • The US FARA, dating back to the 1930s, has been contested by civil society in the US because it includes vague definitions of what constitutes a foreign agent and political and other activities, and even collection of funds that would basically encompass all CSOs’ activities. It also creates a negative labelling of CSOs funded through foreign funding. Also it creates obstacles to philanthropy. Finally the law includes sanctions and penalties including imprisonment.

EU consultation on “Transparency of covert interference by third countries”
Transparency of covert interference by third countries
Deadline: 13 April 2023
Topic: Home affairs
Type of act: Proposal for a directive


Hanna Surmatz
Head of Policy