A Coalition Of The Willing?

Thursday’s edition of the International Herald Tribune features an interesting article concerning the recent European rows about state interference in favour of so-called national champions.

Quoting Elie Cohen, the Tribune’s authors – Katrin Bennhold and Graham Bowley – suggest that both the French government’s allegedly new/refound role as M&A consultant in the Suez and Gaz de France deal (to avoid a bid from Italy’s ENEL) as well as the Spanish government’s attempt to thwart a takeover of Endesa, a Spanish utilty by E.ON, the German power corporation, are indicative of a resurgence “nation state” as a political concept in the Europe of the 21st century.

To be sure, the article correctly explains that conflicts regarding national political influence over industrial and energy policies have recently become more audible, and, in the wake of the failed first attempt to ratify the European constitution, they may have the potential to perpetuate themselves. The Commission’s President José Manuel Barroso seems to have accepted this rather bleak version of the future of European institutional integration, while his predecessor, Romano Prodi, who is now trying to remove Silvio Berlusconi from power in Italy, allegedly already vowed to block future French takeover bids if he wins election in April.

“We have to be realistic,” Barroso said in a recent interview. “Now
Europe will be projects based. We will be results based.”

But for all the political posturing, things are hardly as bleak as they sound – the French government, for example, has always had a rather special attitude with respect to its influence on the nation’s most important corporations, as a consequence of both the way French political and industrial elites were/are formed and, I think, the perceived (much less real) extraordinary success of the French “dirigisme” – a system of state guided economic development that was in place during the French post war economic miracle – les trentes glorieuses. Even when the Conservatives started their heavily politicized re-privatisation programme (which followed the initial nationalisation of the first Mitterand presidency) they did so not by trusting the markets more than absolutely necessary, instead creating “stable knots” they knew they could count on.

But Europe prevailed – Mitterand’s attempt to create communism in one country died as quickly as it was conceived: it weakened France in Europe. And, slowly, very slowly, even politicians in France have Europeanised their attitudes, and slowly, very slowly, even opened their regulated markets.

But still, I’m not sure I would go as far as Daniel Gros, director of the Center for European Policy Studies in Brussels, who is quoted in the article saying that the rise in nationalist rethoric is inevitable, temporary and, in the end, harmless –

“[The] progress [of the single market], he said, has made Europe’s economies ripe for cross-border mergers. Political resistance to this is both inevitable and temporary, he said. ‘Ten years ago a takeover bid for an energy company would have been unthinkable – they were all monopolies,’ Gros said. “We have come a long way and what we’re seeing now is a perfect déjà vu. It will blow over.”

The timing is bad, and while agreeing with Mr Gros that the storm will blow over, there might be some collateral damage that will be costly to repair. Someone always has to pay a price when politicians feel they’re losing power…

16 thoughts on “A Coalition Of The Willing?

  1. Oh, I’m glad you picked this up, I think the topic is an important one. I also think you are right to draw attention to the ‘iceberg effect’ which is at work, ie there is the part of the iceberg which you don’t see as well as the more voluble part above the surface.

    You are partly arguing a case which is also being made by Karel van Miert, former European commissioner for transport and competition:

    “What we are seeing is on the one hand very worrying, because it shows there is a reluctance to accept the logic of the single market. But it also shows that liberalisation is making some headway. Especially in the energy sector, we are seeing the beginning of a consolidation game – and this does trigger great resistance.”

    This is a point of view, and there is obviously something to this story, but digging a bit deeper I do feel there are more causes for concern.

    I think we need to go back to last June, and the French referendum result. At the time you cited a post from Henry Farrell to the effect that (paraphrasing wildly) the ‘no vote’ might have a silver lining, since it might lead to a real and genuine debate about the kind of EU we want.

    I think this view is badly flawed. I think the French grand ‘non’ was a major setback, and could become an important negative turning point. Unfortunately the only real debate I’ve noticed since has been the one inflamed by the Danish cartoons, and again this doesn’t seem to augur well.

    There are really a number of issues on which the bases of the icebergs seem to be moving apart rather than nearer together at the moment:

    1/ The stability and growth pact, and the willingness of national governments to accept Commission and ECB decisions.

    2/. The takeover directive, and the apparent increasing willingness of national governments to opt out.

    3/. The attitudes to a unified labour market as evidenced in the restrictions of citizens from the New Accession countries and the services directive.

    4/. The reform process attached to the Lisbon Agenda and the generalised back-peddling therewith (I will be posting on this separately, tomorrow I hope).

    5/. The apparent difficulty in establishing a unified energy policy.

    6/. The de facto death of the constitution process.

    Now this already makes a fairly long and substantial list.

    Really I don’t see how Daniel Gros can keep a straight face when he says this:

    “We have come a long way and what we’re seeing now is a perfect déjà vu. It will blow over.”

    I think Mario Monte is much nearer the truth when he says:

    “The single market, a key pillar of the European Union since its foundation, is in danger…..The euro, meant to be the crowning achievement of the single market, looks increasingly like a currency in search of its market.

    At this rate we are soon headed for very troubled water. My guess is that the real test will come in the battle between the ECB/Commission and the member state governments over the deficit situation.

    “The Commission’s President José Manuel Barroso seems to have accepted this rather bleak version of the future of European institutional integration”

    Well thank god for this. Actually I, like probably you, expected a lot more from Prodi than we actually got. OTOH I expected very little from Barroso and to date he seems to be doing somewhat better than expected. He rapidly accepted (eg) that the Consitition process had ground to a halt.

    Now I think he is being pretty realistic about the current state of play. So really it is time for all men and women of good will to come to the aid of their country, with the country in question here being the European Union, and rally round our leader (the unduly unbecoming Barroso). I still think our best bet is an alliance between those who really feel themselves to be, and want to be, Europeans, those who live in the smaller states who feel excluded by this large state nationalism, those members of national minorities within the larger states who are not part of the ‘show’ and the new Europeans, the immigrants, who have no real vested interest in preserving these old identities which have long-simce over-run their sell-by dates.

    Of course, the realist in me suggests that this process is more likely to take off after rather than before the deluge.

  2. “In France, where the government brokered a merger over the weekend between Suez, a water and power company, and Gaz de France to thwart a possible rival bid by the Italian company Enel, Prime Minister Dominique de Villepin made it no secret that he would put France’s well-being over Europe’s.”

    What’s news?

    “Dominique de Villepin, whom the referendum result made prime minister, is the first wholehearted admirer of Napoleon to become head of a French government since the Emperor Napoleon III, as he later became, was elected president in 1848. . .

    “Three years ago, Mr de Villepin published a book so far untranslated into English: Les Cent Jours. The 100 days were those from Napoleon’s escape from captivity on Elba and his last abdication after Waterloo. The day after he became prime minister, Mr de Villepin said he hoped to restore French confidence in 100 days. He expected, it seemed, no Waterloo. A poll in the Sunday paper Le Journal du Dimanche had a decisive majority of 60 per cent not believing that he could do it. But whatever happens, a French politician in a position of authority has identified himself with Napoleon for the first time in more than 150 years.”
    http://www.opinion.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2005/06/08/do0801.xml&sSheet=/opinion/2005/06/08/ixopinion.html

  3. Does an admiration for Napoleon necessarily make you a nationalist? In his heyday Napoleon presented himself as the heir to the Enlightenment, a piece of marketing assisted by the quintessentially old regime character of his principal enemies, from Wellington down. Arguably his greatest achievement – the Code Napoleon – was a precursor of the European regulatory order now under attack from the economic nationalists. As with most marketing, the mix contained a generous dose of bullshit (for example, the revolutionary governments had abolished slavery – Napoleon reintroduced it). But his ability to symbolise for many the ideal of rationality – liberated from the sickly grip of church and monarchy, put to use to serve the cause of progress – accounts for much of his enduring appeal.

    The complexities of Napoleon as a historic figure – at once nationalist and internationalist – perhaps explain the fact that, unlike other European military dictators, he still has streets named after him. The Napoleonic model showed the great nation serving as the universal model for human progress. What glory.

    This is significant because it points to a deeper truth: France will embrace a project in which national greatness and enlightened values can be shown (or plausibly claimed) to coincide.

    For a long time Europe was such a project. At the time of its founding, the basic accommodations (German postwar rehabilitation in exchange for French political control; German industry’s access to European markets in exchange for a continental system of agricultural protection) served French interests. The last great project, the euro, allowed rhetorical appeals to “ever closer union” to coincide with the removal of the Bundesbank’s grip on French monetary policy.

    Since then, French faith that the national interest is served by Europe has collapsed. What we are witnessing now is the consequences of that collapse. It is not that nationalism has reemerged. Rather, it is that the nationalists have calculated that self-interest and Europe no longer coincide.

  4. “accounts for much of his enduring appeal.”

    Beethoven, for example, and of course, Goya.

    Very interesting Bert, very interesting.

  5. With that encouragement, I’ll try you with another example: Iraq.

    De Villepin’s speech to the Security Council contained admirable declarations of support for international law, multilateralism, and rationality in world affairs; his diplomacy involved an attempt to entrench France at the head of an alliance of European countries (Germany to the fore) and Russia to constrain American power.

    As an aside, the ironies of a devotee of Napoleon denouncing the Iraq project are too rich to ignore. Impose regime change on a backward despotism? Through the unilateral use of military force? Justified with abstract appeals to high principle?
    J’y suis!

  6. Thanks Tobias, by the way, for the IHT link. Elie Cohen sounds an interesting guy. I’d be interested to hear how influential his Conseil d’analyse économique, with its formal links to the Matignon, is in Paris. Any idea?

    My guess is, peripheral.
    Look for example at this (pdf). It’s eye-opening to see these kind of ideas come from a semi-official source (Jean Pisani-Ferry, incidentally, is a former head of CAE and a co-author of the Sapir Report). But it seems very much out of line with the current trend of both government policy and public opinion.

  7. sn’t vrybdy Sck & Trd f th 911 Cnsprcy Frks?

    s t m? r r ths 911 Cnsprcy Frks bcmng ntlrbl nd, mght sy, qt dngrs? Smbdy pls pt n nd t thr wld cnsprcy thry. t’s bn nrly fv yrs snc th dths f thsnds f nncnt ctzns; hrd wrkng ctzns wth fmls nd frnds wh’v hd thr hrts trn prt by th vnts f 911. t f rspct fr th vctms nd fr th sfty f r ntn’s ftr, rg ll f s t mv frwrd frm th rnts f th tn-fl ht brgd. t’s tgh chllng. Thy r nfd grp stckng t thr nsn nd mpssbl stry lk th gl ndr thr ns whch thy’r prbbly snffng. ky, ndrstnd wht cnsprcy s, tw r mr ppl plnnng sbvrsv ct; nd w hv cnsprcy lws n th bks bcs thy ctlly d hppn ll th tm. Yh, bt ths 911 frks wnt ll f s t chs thr cnsprcy thry vr nthr n.

    Hr r th tw tp cnsprcy thrs; ’ll lv t p t ll f y rtnl mndd ndvdls t mk dcsn. thr y jn th rnks f th frks r y jn th nrml wrld f ntllgnc.

    Cnsprcy Thry #1 – n 911, nntn dsgrntld gt hrdrs frm th thr sd f th wrld hddn n drk cv pln nd thn rchstrts th mst dvsttng ttck pn th mst hghly bdgtd nd dmntng, mpntrbl dfns systm th wrld hs vr knwn, nd sccds wth hrdly ny mny nd rmd nly wth rzr blds; ths frcng tht ntn t ltr ts wy f lf mr s thn frm ts prvs Wrld Wrs nd mjr mltry cnflcts. n ffct, gt hrdrs wth rzr blds wr mghtr thn ll nms cmbnd frm WW; WW; Krn Wr; Vtnm Wr; tc…

    R

    Cnsprcy Thry #2 – Sm f th wrld’s rchst nd mst pwrfl ndvdls wth vst rsrcs, tp ntch rgnztnl blts, drct ccss t S mltry pprts nd th mst xprncd nd ntrs clndstn prtn nts n th plnt dcd t mplmnt th 911 ttck t str p ncssry spprt frm th mrcn ppl n rdr t nvd Mddl strn cntrs nd mv clsr t thr gl f bslt cntrl f l mrkts, crtng rcrd shttrng prfts, stblshng lng stndng ntmdtn stnc n th rgn (prmnnt S mltry bss n th rgn) nd prtctn f l rsrcs nd lng trm prfts. Crprt hgmny r bttr knwn s Bnt Mssln pt t, fscsm.

    Th 911 Trth Mvmnt s lv nd grwng fst. Fr ths nt n th knw yt, cm bck t rlty nd jn th hndrds f thsnds f cncrnd ctzns wh dsr jstc nd sfr ftr fr r chldrn. Gt nfrmd wth th fcts. Frdmtwn s grt plc t strt. Chck t t, nd thn sk yrslf, n lght f ll th nfrmtn, wht rlly hppnd n 911? r y ntrstd n fndng t mr? Th mst ccssbl nd rtnl vc n th 911 Trth Mvmnt s Dvd Ry Grffn. Hs bks r hghly rcmmndd; Th Nw Prl Hrbr; nd Th 911 Cmmssn Rprt, mssns nd Dstrtns.

    (By n mns m nsntng tht gt hrdrs s whl r n vl bnch.)

  8. An illuminating summary account of Napoleon’s contribution to European integration can be found here:
    http://www.bartleby.com/65/na/Napoleon1.html

    “It is difficult to fathom the enormity of casualties sustained on Napoleonic battlefields when reading accounts of the various battles. . . Waterloo was a 10-hour battle; therefore, there were an everage of 6,100 casualties per hour of the battle. This is tremendous. Except for a very few battles in World War I, no battle fought in the 20th Century can come close to matching the horror of the typical large Napoleonic battle.”
    http://www.napoleonic-literature.com/WE/Casualties.html

  9. These blog-spamming bots are getting cleverer, Doug. I think this one read the title of the post. That Turing test sometimes doesn’t seem so far off.

  10. Personally, I value citations of independent sources in blog debates if only because it reduces the scope for disinformation to promote partisan causes although I readily appreciate others have different personal preferences. They would, wouldn’t they?

    Between 1805 and 1812, 103 Martello Towers were built around the coasts of Britain to resist a potential invasion by Napoleon even though the decisive outcome of the Battle of Trafalgar in 1805 rendered the prospect of invasion unlikely if not entirely remote.
    http://www.ecastles.co.uk/martello.html

    There was no other naval battle on a comparable scale to Trafalgar until the battle of Tsushima, a hundred years later, between the battle fleets of the imperial navies of Russia and Japan.

    Despite De Villepin’s recollection of the battle of Waterloo in 1815 as “a defeat which gleams with the aura of victory” the outcome was fortunately decisive and Napoleon retired to St Helena in the south Atlantic, which rather restricted his subsequent capacity to inflict more destruction and carnage in mainland Europe.

    I’m amazed that anyone this side of sanity would wish now to suggest that the outcome of the Napoleonic wars really ought have gone the other way. Europe has already had more than its fair share of meglomaniacs in the last two hundred years.

  11. Bob, it sounds like you’d love Paul Johnson.

    As far as citations go, if you’d asked me last year I’d have agreed with you entirely. It’s just that I often produced posts filled with links, to the point of overkill: faced with so many, people reading wouldn’t bother following any of them. So I decided to try and link only to stuff that I’d want to read in its own right. That said, if there’s a point of fact that’s controversial, or central to a controversial argument, it’s right to want it sourced. And if there’s anything bugging you in what I’ve written, I’d be happy to try to stand it up if I can.

  12. Sorry, but I seldom read Paul Johnson. On this, I’m more inclined to read Pieter Geyl’s assessment: Napoleon – For and Against (1949) and revive my sentiments by re-reading Jean Anouilh’s drama: Antigone, which was originally performed in Paris in 1944, shortly before the Normandy invasion. The fundamental issues at stake haven’t changed much since IMO.

  13. Just a small comment on this article – I agree generally with your view Tobias. Yet we should not draw too many parallels between the Suez / GDF issue and the E.ON / Endesa one. While the Spanish government’s reaction may have been – in essence – the same as that of the French government in the GDF case, the role of E.ON in European energy markets is very tricky…

    E.ON’s merger with Ruhrgas created a major national champion in Germany that has been snapping up utilities all over Europe, and it has been argued that it is reaching such a size and dominance in Europe so as to prevent effective competition in the single market for gas – especially as Germany and Austria sit on the main supply routes from Russia. I’m sure the European Commission will have a say on the E.ON / Endesa case and may rule against a merger.

  14. “it has been argued that it is reaching such a size and dominance in Europe so as to prevent effective competition in the single market for gas”

    OK Jon, good point. This neeeds to be taken into account, which is why Brussels and not Madrid is the correct venue for consideration of the argument.

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