Economic nationalism to top energy-fuelled summit

By Anna McLauchlin and Simon Taylor

Date: 16/03/06

The future of Europe's internal market will be top of the bill for EU leaders at next week's summit (23-24 March), as they gather amid clashes over energy mergers and the opening up of the services market.

Political pressure continued to mount this week over resurgent protectionism in Europe, after France tried to block the takeover of its power utility Suez by Italy's Enel and Spain made a similar move to prevent its power company Endesa being bought out by Germany's E.ON.

German President Horst Köhler told MEPs in Strasbourg on Tuesday (14 March) that weakening the internal market through protectionism was a "disservice" to Europe. Austrian Finance Minister Karl-Heinz Grasser warned on Monday (13 March) that protectionism would lead to "lower growth" in Europe.

Speaking before MEPs, Commission President José Manuel Barroso warned that this was "not the time for economic nationalism". "Defending national champions in the short-term usually means relegating them to the second division in the long-term. We don't want national champions. We want world champions based in Europe," he said.

Charlie McCreevy, the internal market commissioner said that he would launch at least eight infringement cases over national failures at the end of this month. And Economic and Monetary Affairs Commissioner Joaqu’n Almunia warned of the threat to investment in the EU if politicians gave the impression that they would not stick to the internal market rules.

But advocates of economic patriotism - a term coined by French Prime Minister Dominique de Villepin - have been sharpening their knives. De Villepin and Spanish premier José Luis Rodriguez Zapatero presented a united approach in defence of their energy companies after a meeting on Monday (13 March). The French Prime Minister denied that the government's actions were protectionist but rather "providing the necessary means for national corporations to compete in equality".

Government leaders will also debate the services directive, over which finance ministers remained divided at last week's Council. According to Polish Competition Minister Piotr Wozniak, 15 member states support Poland's desire to reinstate a rule allowing companies to apply national laws when offering services abroad, after MEPs scrapped it.

But Austrian Economics Minister Martin Bartenstein warned member states not to revisit the compromise and threaten any deal.

EU leaders will also discuss a common energy policy, after the Commission published a Green Paper last week suggesting limits on EU imports, an EU energy regulator and improved relations with Russia.

The Commission will also seek commitment to Lisbon Strategy policies on competitiveness, including a better regulatory environment for small businesses, economic reform and a more flexible labour market.

Preview of the Spring European Council, to be held in Brussels on 23-24 March 2006. EU Heads of State and Government were to discuss the recent surge in protectionism, also referred to as 'economic patriotism'. Other items on the agenda included the proposed Directive on Services in the Internal Market and a common European energy policy.