By Chris Jones - 27th March 2006
Joaquin Almunia has become the latest EU commissioner to criticise the “dead end” of national protectionism.
The Spanish economic and monetary affairs commissioner warned that protectionist rhetoric in France and elsewhere harked back to Europe’s inglorious past.
“It is no longer a case of holding back the Moors at Poitiers but keeping the Indians out of the forges in Lorraine,” he said referring to the French government’s attempts to block the takeover of steelmaker Arcelor by India’s Mittal Steel.
European commission president José Manuel Barroso, internal market chief Charlie McCreevy and competition commissioner Neelie Kroes have all criticised protectionist measures in recent weeks.
But France is not the only country to call for greater “economic patriotism”. Spain is trying to block a German company becoming a major player in the energy sector, and Italy and Poland have both recently tried to block foreign bids in the banking sector.
But while Europe’s leaders agreed not to discuss the divisive issue at last week’s summit in Brussels, the commission is determined to make its opposition clear.
“Protectionist policies do not work,” Almunia said, speaking at Sciences-Po university in Paris. “They hold back productivity and slow down the spread of technology. They slowly strangle the very industries they are meant to protect.”
He also criticised efforts to create “national champions”, such as the giant French energy company formed by the merger of Suez and Gaz de France and backed by the Paris government.
“There is no such thing as national champions – they only exist in the minds of politicians,” Almunia said.
He gave the example of French car maker Renault. More than two-thirds of its shareholders are foreign, it has production sites across the world and 86 per cent of its sales are made outside France.
“Is it enough to have an HQ in France and a French boss to be a French national champion?”
Almunia, the EU’s financial affairs commissioner, said that policies aimed at defending national champions from foreign takeovers were therefore pointless and outdated.
“They deprive countries of a vital influx of foreign capital and hamper the functioning of the European single market,” the bloc’s “greatest economic achievement”.
He warned national governments not to shy away from the difficult decisions on economic reforms prescribed by the Lisbon strategy for boosting jobs and growth.
“Reforms are always hard, and their long-term benefits are often hard to see term while their short term negative impact is often all too clear.”
“There is never a good time for reforms, but Europe needs them.”
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