Economic Crisis Exacerbates Tensions
The economic crisis is exacerbating tensions across the EU. President Sarkozy has done his bit, stating on television that while French manufacturers can make cars in India which are for sale to Indians, they should not make cars in the Czech Republic which would then be sold in France. He apparently called for the repatriation of car manufacture to French soil.
Sarkozy’s remarks could not have come at a worse time for the Czechs. The last thing you want when unemployment is rising and your currency is under pressure is any threat to the new investments which are so vital for your economy. Nor is it helpful when your country still has to ratify the Lisbon Treaty and you depend on a sceptical parliament to vote it through.
An angry Czech prime minister Mirek Topolanek warned of the spectre of protectionism, which could prolong and intensify the downturn. On February 9 he announced plans for a European Council to discuss protectionism, while on the very same day Sarkozy and Chancellor Merkel issued a joint (rival) statement calling for an informal European Council “to prepare the spring summit”.
It has now been agreed that everyone will lunch together in Brussels on March 1. Will protectionism be mentioned at all, I wonder.
Protectionism can take many forms. Who can resist a headline? “British jobs for British workers” said Gordon Brown at the 2007 Labour Party conference, only to see his rallying call spelled out on strikers’ placards earlier this month as British workers complained that Italians and Portuguese were carrying out a contract at a British oil refinery (owned by Total). Right-wing parties made hay of it and we will no doubt see the slogan again during the European election campaign although not, I imagine, in the hands of Labour candidates.
The president of Italy’s Cofindustria expressed her dismay at the phrase, complaining of “protectionist tendencies and raw nationalistic instincts” in an article in the Financial Times.
The French bail-out plans for the car industry have put the European Commission on the spot. Competition Commissioner Neelie Kroes was quick to condemn Sarkozy’s original remarks. When the plan itself was unveiled, the Commission asked for further details to ascertain whether state aid conditions were being met. Commission president Barroso was rather defensive of the French, saying that if regional aid was proposed it would clearly relate to investment within France.
There is another interested party to this debate on protectionism: the United States. The €800bn emergency bill which was passing through Congress contained some significant “Buy American” clauses for public contracts, with particular relation to steel. It seems that President Obama was quick to amend this to say that any such moves must be compatible with international trade obligations, but you can be sure that the small print of the 1,000 page document will be rigorously scrutinised by trade officials across the globe.
As the April G20 meeting comes closer, where the role of international institutions such as WTO, IMF and World Bank will be discussed, everyone will be scrutinising everyone else’s actions for any moves towards the erection of trade barriers in the face of the worldwide recession. European solidarity has rarely been more essential.