José Manuel Barroso yesterday warned European governments against economic nationalism after a rash of cross-border merger bids. He also announced plans for a €500 million fund to help retrain workers made unemployed in the European Union as a result of outsourcing and shifting trade and investment patterns arising from globalisation.
As president of the commission, Mr Barroso has a definite role in both issues, which are directly connected. In the last few weeks the French, Spanish, Polish and Luxembourg governments have hardened their opposition to foreign takeovers of what they regard as national strategic sectors or assets. The French government is arranging a merger between the Suez and Gaz de France companies to pre-empt a bid from the Italian energy group Enel. Now Italian politicians, who are in the middle of an election campaign, are defending retaliatory action against French companies - only weeks after Antonio Fazio, governor of the Bank of Italy, was forced to resign for resisting foreign takeovers of banks there.
This surge of protectionism has been criticised by the competition commissioner, Charlie McCreevy, as a grave threat to the EU's single market and he has vowed to resist it. Partly, it reflects the very success of that policy as it matures on a continental scale. But it is also part and parcel of a wider globalising trend. This is exemplified by the bid for the Acelor steel company, based in the Netherlands but owned by an Indian family, by its rival Mittal Steel. Based in Luxembourg, Mittal has been defended by the government there as a strategic asset. In the same way US congressmen have kicked up a furore over the bid by the Dubai-based conglomerate DP World for the British P&O, which would also give it control over major American ports. Irish readers will be reminded of recent hints that the Government might resist a takeover of Eircom by the Australian company, Babcock and Brown.
Such cross-border rationalisations are part and parcel of contemporary capitalism. The question is what limits and constraints - if any - should be put on them at national, regional and global levels of governance. There is greater political resistance to them when growth is sluggish, unemployment high and governments are subject to pressures for protecting existing standards - as in most EU states at present.
Mr Barroso's proposal for an EU global adjustment fund to supplement national retraining and relocation efforts makes good sense. But it is only a start compared to the huge resources deployed by the companies concerned and the potential impact on workers and citizens.