ECONOMIC NATIONALISM

by RAY FLEMING l THE two-day spring summit of the European Union is meeting in Brussels in an unpromising atmosphere.
The EU president, Jose Manuel Barroso, criticised what he called the “absurd” economic nationalism taking hold in some European capitals, and his internal markets commissioner, Charley McCreevy, warned against building “useless political Maginot lines”. Mr McCreevy's analogy betrayed his age and did not make the point he wanted to get across.
France's 1940 Maginot defence line against Germany was easily outflanked by the Panzers whereas the current defences being erected against economic invaders are likely to prove more effective even though they are against EU law. France, Poland and Spain are the countries currently defying the principles and practice of the EU's single market by opposing take-over bids of some of their companies from other EU members. In the case of France and Spain energy companies are the main issue and Poland is concerned over its banks. But the immediate issues are only symptoms of a more serious malaise. France has adopted the idea of “economic patriotism” by which enterprises of national importance or prestige should be protected from take-over from outside. Unfortunately an argument which might have made a certain amount of sense in relation, for instance, to energy supply has been made to look ridiculous by the inclusion of Danone, the yoghourt-maker, among the economic crown jewels. Moves of this kind towards protectionism are of a kind with the recent watering-down by the European Parliament of a directive to increase cross-border provision of services. While it is true that a considerable degree of liberalisation has taken place in many areas of the single market and that the job market is also slowly opening up, it remains a matter of real concern if some countries can with impunity write their own rules over take-overs which actually break EU laws of which they are signatories. In other areas, too, the tendency to go it alone is growing and although the Commission in Brussels threatens or actually imposes substantial fines they are often ignored. Stronger sanctions are necessary.