Despite Europe's purported desire to become a single market that welcomes collaboration among all its members, it has yet to convince its most solid members that protectionism is not a path to unity.
While Spain is opening its doors entirely to Poland after much heated debate on the labor movement, the Commission of the European Union (EU) has targeted France for possible future protectionist regulations in the energy sector.
The energy sector has in fact dominated the headlines in Europe for the past few weeks, as a product of the controversy that arose over Italian energy giant Enel's bid for the Franco-Belgian utility SUEZ. Judging by the fact that Enel has already arranged for financial backing from several major banking institutions, this bid now looks similar to the proposed merger of German competitor, Eon, with Endessa, a Spanish energy utility.
As a result, France and Spain - the two nations targeted by Enel and Eon, respectively - have championed protectionist steps in order to retain control over their national energy companies. France's prime minister, Dominique de Villepin, justified SUEZ's intentions of possibly merging with Gaz de France as a measure of economic patriotism.
However, as mentioned by James Kanter in the International Herald Tribune, there is a seeming paradox in the interference of the French government over the past few years. Not only is France home to a high proportion of workers employed by foreign companies, compared with other European nations; it has also accumulated one of the highest European rates of foreign investment.
Hostile takeovers differ across nations due to varying investment requirements; it is therefore difficult to compare protectionist tendencies in European nations. Looking at England, France might not have allowed as many foreign business takeovers, but in terms of invested capital, it has outweighed its British counterpart.
Nevertheless, it is clear that the involvement of the French government will deter foreign investors while placing constraints on French investors abroad. Not only has the whole controversy over Enel's bid on SUEZ soured the relations between the French and Italian governments, but it has also stirred debate in the European community. In effect, Europe has begun a new battle on mounting protectionism and is searching for partners who support free-market initiatives.
Deputy German Economics Minister Joachim Wuermeling sees no cause for concern. "Different economic philosophies have always co-existed in the EU," he told the Financial Times. "But until now, there was an understanding they should compete, not protect themselves against each other."
While Germany has not challenged Spain or France on its economics philosophy, it has recently expressed concern about a growing industrial protectionism trend in Europe.
As France and Germany plan to meet for their first biannual joint cabinet meeting since Angela Merkel's election as German chancellor, the two countries that are deemed by most to be the engine of European integration are about to clash over this very issue.
Merkel's government, which has yet to build a strong relationship with its counterpart in France, might take the side of the European Commission in its struggle to curve the growing protectionist drift. It is clear that the German stance on the matter, expressed by German Economic Minister Michael Glos at a meeting of business executives in Berlin, is that "foreign investors should be welcomed with open arms, not just tolerated."
If Germany or the European Commission impose new regulations on protectionism and decide to confront countries like Spain and France, such interferences will manifest the true reluctance that older members within the EU harbor when it comes to opening their borders to the community.
France, which has clearly expressed its desire to protect its national gems, might soon be forced to stop interfering in possible mergers such as the Italian bid on SUEZ. But any person familiar with French politics and the country's ruling elite will know that most leading figures in the government have kept personal interests in national companies within the public sector, and therefore will be reluctant to change their stance on the matter.
Hence, this debate will likely bring to the forefront national sentiments that will rock the foundations of the European Union and its aspiration to form a unified, global, economic powerhouse.
