Economic Killer

Fire of Liberty

Irwin M. Stelzer of the Hudson Institute has a good piece over at the Weekly Standard that points out that the while the protectionist crowd is just revving up its engines within the halls of Congress, these forces are in full swing throughout Europe and is putting a severe dent in free trade and the world economy. See for yourself:

Until now attempts to throttle free trade were largely confined to goods, services, and people. Now politicians the world over are moving to prevent capital from crossing borders. No surprise, France is leading the way, proposing to insulate eleven sectors of its economy from foreign takeovers. President Jacques Chirac and prime minister Dominique de Villepin want to make especially certain that French energy companies are not taken over by foreigners as the European industry consolidates in anticipation of impending deregulation. So they brokered a merger of two French energy companies, Gaz de France and Suez SA, to fend off a possible takeover of Suez by Italy's largest power company, Enel. Although French President Jacques Chirac told Italian Prime Minister Silvio Burlesconi that he viewed Enel's plans as "hostile," the French deny violating the law and spirit of the EU common market by interfering in the transaction. Burlesconi, who did not intervene when Italy's second largest power company was taken over by Electricité de France, or when Banca Nazionale del Lavoro was acquired by France's BNP Paribasto, professes himself shocked, shocked at the French action. And European Commission president José Manuel Barrorso railed against "nationalistic rhetoric" of the sort France so vigorously opposed when pushing tighter European integration.

French antipathy to an invasion of foreign capital extends beyond its own borders. The government is adamantly opposed to the hostile bid of India's Mittal for Luxembourg's steel maker, Arcelor--itself the product of a merger of French, Belgian, Luxembourg, and Spanish steel companies. Thierry Breton, France's finance minister, claims that Arcelor's large workforce in France makes his government a "stakeholder," entitled to review everything from Mittal's plans for R&D spending to its social behavior.

Meanwhile, although Spanish companies have been on a worldwide takeover binge, when German power company Eon launched a $35 billion hostile bid for Spanish utility Endesa, the Spanish government announced that it "Will do everything in its power to ensure that Spain's energy companies remain Spanish." Trade and industry minister José Montilla is leading the charge to have the home-town favorite, Gas Natural, a company half Endesa' size, mount a competing bid.

Poland, too, is defying the European Commission by blocking Italian bank UniCredit's bid for local Bank BPH. And its former masters in the Kremlin are declaring 39 "strategic sectors" off limits to foreign control.

Here in America, politicians, led by Hillary Rodham Clinton, are in full cry against the takeover of P&O by Dubai Ports World, and are preparing to attack the planned takeover of UK-based Doncaster by another Dubai-based company--Doncaster's plants in Georgia and Connecticut manufacture components for military equipment.

I just hope we avoid venturing into the murky protectionistic waters that folks like Sens. Clinton and Schumer are pushing or we could end up economically stagnant much like the French and other European nations. Hillary might want to rethink this come 08.