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EU VISION DIMMING
Protectionism has returned to Europe
By DAVID HOWELL
LONDON -- The big idea was that Europe would do away with economic nationalism,
sweep away frontiers and stand as a shining example to the rest of the world of
free trade and open markets. That was the dream. The reality is turning out
rather differently.
Suddenly barriers seem to be going up all round in Europe in defense of national
champion industries and public-sector utilities. Several member states of the
European Union, with France most notable among them, are now making it crystal
clear that foreign takeovers are not welcome, especially where "strategic"
industries, such as energy supply, vital transport and water-supply services are
concerned, but also in service industries as well.
For example, Spain is blocking a bid by the giant German utility E.ON to take
over its electricity supplier Endesa. France is rejecting an attempt to take
over the energy and finance conglomerate Suez by the Italian combine ENEL, to
the fury of the Italian government. The leaders of tiny Luxembourg have also
made clear their dislike for the bid by the British-based steel corporation
Mittal to gobble up their "jewel" Arcelor, a global steelmaker that has plants
in Belgium, France and Spain.
Meanwhile, the hope that all European financial services would be freed so that
banks, for example, could operate under the same rules anywhere has come up
against a wall of resistance.
The one big exception in Europe to this defensiveness in face of foreign control
has been Britain. Most of London's electricity is supplied by EDF, the mostly
state-owned French company. Gas to British households, and to a third of all
power stations, is supplied mostly by foreign companies. Water for Londoners
comes from a company owned by the giant German utility RWE.
British leaders have urged their European neighbors to follow the British
example and open up their economies to all comers, arguing that, in the end,
vigorous competition from all sources benefits the consumer, whatever the
industry.
But it seems that these exhortations have fallen on deaf ears. The most vivid
demonstration of economic nationalism shows up in the current attempt to
construct a common European energy policy in face of supply uncertainties. The
attempt, initiated by the president of the European Commission, Jose Manuel
Barroso, has proved a complete fiasco -- partly, perhaps, because it was
ill-conceived and poorly developed from the start, but mainly because national
governments are determined to keep tight national control of their own energy
policies.
The rhetoric is full of aspirations about sharing Europe's energy policies and
competing freely within Europe while presenting a common front against, for
example, the Russian gas monopoly Gazprom, which now provides more than 40
percent of continental Europe's daily gas requirements (a figure projected to
rise to 70 percent by 2030).
But the reality is that nervous European governments want to cling to control
over matters that intimately affect their citizens (and voters), namely their
daily light and warmth, their transport fuel and the supply of electricity,
without which modern societies are instantly paralyzed.
No government can afford to fail in these areas. Experience has taught today's
politicians that if basic supplies of energy fail, then governments face instant
dismissal. Blaming distant "international forces" is of little help. Even a hint
of shortages sends the confidence of voters plummeting.
When things go wrong in these basic areas, the public wants someone recognizable
to blame. Whether it is a major accident at an oil depot, as occurred recently
in Britain, or a sudden gas shortage, or frequent power blackouts, or a safety
problem at a nuclear power station, people expect to be able to hold officials
to account at the highest level. Japan has harsh recent experience with this.
It is not enough to pass the blame either downward to obscure operatives, or
upward to some remote supra-national authority. The buck stops with national
governments and they know it.
This explains why the apparently attractive idea of all EU states acting
together on energy supplies has gotten nowhere. Over the half century of its
existence, the EU (originally the European Economic Community) has undoubtedly
made remarkable strides in breaking down the mini-protectionism of individual
states.
Of course in some cases, notably agriculture , this has led not to free and open
trade but merely to a larger protectionism on a Europe-wide scale, most European
governments being determined to protect the patchwork quilt of millions of
uneconomic farmers scattered across the Continent.
But the limits of surrender of powers to pan-European authority and the larger
forces of globalization now appear to have been reached. National governments
everywhere, whether in Europe, the Americas or Asia, find themselves facing a
dilemma of ever greater intensity -- between the overwhelming desire of their
citizens to have the pleasant low-cost, high-efficiency lifestyle that global
competition undoubtedly brings and the equal passion to live in safe and secure
societies inside familiar countries and cultures, with their officials and
rulers fully accountable and close by.
It is a contradiction inherent in every one of us, in national life, in
Europe-wide ambitions and in globalization itself. And it will not be settled
anytime soon, or perhaps ever.
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