The "economic patriotism", which is referred by EU chief Jose Manuel Barroso as "nationalist rhetoric", is frequently seen in French media. It means efforts by the national power to fend off takeover of domestic large enterprises by foreign businesses.
French Prime Minister Dominique de Villepin officially put forward "economic patriotism" last July to stall at all costs the prospect of passing the French dairy giant Danone on to the US drink giant PepsiCo. PepsiCo then denied its intention of takeover.
In February this year, the news about the possibility of Italian energy group Enel taking over French utility giant Suez, French largest water and environment company, prompted the French government to declare within 72 hours over a breathtaking decision of a merger between the state-controlled Gaz de France and Suez. The deal makes Europe's second largest energy group with an annual operating revenue of € 64 billion and the government holding 34 to 35 percent of stakes.
The French government believes that would block Enel's offer.
France is apparently promoting the "economic patriotism" as a national strategy and is ready to mount a defense against any exotic "hostile takeover". The government thinks it is its responsibility, amid the global surge of acquisitions, to watch over the country's large enterprises in energy, transportation, military and food processing industries which are part of the national economic lifeline and interests. The "economic patriotism" is widely applauded by the French political and industrial circles.
In recent years, France has built up experience in safeguarding its businesses. In 2003, the energy and power giant Alstom was turned into a state-controlled company after the government bought 30 percent of its stakes as an bailout to its severe financial crisis. Similar relief was also given to the power giant EDF. Those cases provide empirical foundation for the concept of "economic patriotism".
The landscape of the French society lies behind the "economic patriotism". Different from British or American companies where the interests of shareholders and economic benefits always go first, French businesses are operational in both economic and social sense. Employees are much more attached to their businesses all their lives. Securing a home company has a direct bearing not only on the national interest, but also the social stability. Concerns and even fears over job cuts and social welfare slash are the natural result of any prospect of a domestic company falling into control of a foreign rival in a country facing sluggish economy and high unemployment.
Some European economies built on the Rhineland model, the social market economy not compromising justice to economic success, face similar paradox although they do not jump the bandwagon of the "economic patriotism". They are principally as resolved as France on fending off exotic takeovers.
The Spanish government, for example, waged a campaign against the German energy group E.On's attempts of acquiring Spain's largest electricity company Endesa. The global surge of mergers and acquisitions has met the harshest defense in Europe. The economic nationalism does not fade away in the "old Europe" amid the economic globalization. Instead, it has become a sense of value being consolidated.
However, along the strong wave of globalization, the cross-border capital flow is irreversible. Even some European enterprises, including some French banks and iron and steel businesses, have done that by making mergers and acquisitions beyond the boundaries. The same advocators of the "economic patriotism" are silent to the expansion of businesses of their own countries. That shows the double standards they hold.
Given that, the "economic patriotism" carries the hallmarks of not only "neo-protectionism", but also national egoism. That happens under historical and realistic contexts. But it is not worth any hail anyway.
(People's Daily March 14, 2006)