McCreevy to attack protectionism and laud Republic as economic model

European commissioner Charlie McCreevy will today launch a stinging attack on protectionism and hold Ireland up as a model for economic success in the European Union.

In a major policy speech in London, Mr McCreevy will condemn recent moves by governments in Spain, France and Poland to create national champions by blocking proposed international mergers in the banking and energy sectors.

He will also reiterate his intention to use legal action to prise open markets across Europe.

"Does anyone really think that I am going to turn a blind eye to the cosy old-boy networks between politicians and managers of companies? If they do, they are living in a fool's paradise," Mr McCreevy will say today.

"Be it in banks in Italy or Poland; a steel company in Luxembourg; energy companies in Spain and France. Everywhere you see the same outdated instinct, the same recipe of protection of the status quo, of governments prompting national champions, of shutting out competition."

The speech marks Mr McCreevy's first substantive public reaction to a recent upsurge in protectionism practised by several EU states in the sensitive banking, energy and steel sectors.

These include:

a decision by the Polish government to block a proposed international merger between HVB bank and Unicredito because it would mean the merger of their two Polish subsidiaries;

allegations that the French government intervened to block a takeover bid by Italian energy firm Enel for the French utility Suez;

the Spanish government's continuing attempts to block a takeover bid by German energy company Eon for the Spanish utility Endesa.

A draft of Mr McCreevy's speech, which is due to be delivered today at the London School of Economics, shows he will accuse national governments of "feeding misconceptions" and "misleading" citizens about the economic facts of life.

The governments' actions are "backward and dangerous economically and cowardly and unacceptable politically", Mr McCreevy will say, while threatening legal action.

Mr McCreevy moved yesterday to begin the legal onslaught on government protectionism by launching infringement proceedings against the Polish government for preventing the Unicredito/HVB merger.

He is also conducting an investigation into the French government's role in preventing a bid by Enel for Suez.