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EU 'big' brought to heel

Mark Mardell | 20:39 UK time, Sunday, 1 March 2009

The sting was drawn from this summit by the apparent French climbdown over its plans to link state aid to car plants, to putting firms on French soil first. Not that President Nicolas Sarkozy seemed that apologetic - more annoyed that he had been singled out for harsh words.

"Take my friend Gordon Brown - and you know how much I trust him - who owns 70% of a bank. Seventy per cent! It's nationalisation. So explain where is the logic in saying there's no problem when a state takes 70% of a bank but helping manufacturers to get credit, that is a problem. Who says Gordon Brown is a protectionist ? Who would say such nonsense? Nobody is a protectionist in Europe, nobody !"

He went on to suggest that, if nobody is protectionist, some are more in favour of free trade than others.

"I've never believed in protectionism. Never. And if the crisis of '29 was as bad as it was it's perhaps because the response was protectionism. So is it a bad word? Yes. It's a bad idea. But on the other hand I have never believed in being naive. I ask for reciprocity. Between protectionism and free-tradism, there can perhaps be a balance, meaning from my point of view there's no such thing as liberty without rules."

But he has signed up to the conclusions of the summit which said that leaders "agreed that Europe can only face this challenge and overcome the current crisis by continuing to act together in a coordinated manner, within the framework of the Single Market and EMU", and "stress that protectionism is no answer to the current crisis and express confidence in the Commission's role as guardian of the Treaty".

You can take these as the usual platitudinous expressions of unity but perhaps today they actually are important.

The most memorable phrase of this summit came from Hungarian Prime Minister Ferenc Gyurcsany.He said: "We should not allow a new iron curtain to set up and divide Europe into two parts."

His logic?

"This is the biggest challenge for Europe in 20 years. At the beginning of the 90s we reunified Europe. Now it is another challenge: whether we can unify Europe in terms of financing and its economy."

It's very important that the summit agree that deals to save banks could not be protectionist either: support for parent banks should not imply any restrictions on the activities of subsidiaries in EU host countries, is what they agreed. In other words, an Austrian bank cannot be bailed out on the condition that it pulls out of operations in Hungary."

So does today matter? I think it does.

You might not agree with it but there is no doubt that a core principle of the European Union is that the individual member states should not put their interests before the interests of Europe as a whole, or before the interests of each other. Of course, they always do, and probably always will. But the economic crisis is putting very real strains on the organisation.

As the job losses, plant closures, bank failures spin faster and faster, the centrifugal forces threaten to tear countries one from another and, in the end, if there is no countervailing force, the whole thing could fly apart.

Although the summit did more detailed work, it was called by the Czechs partly because of the deepening crisis in the East's banks but mainly because of their offense over Mr Sarkozy's remarks.

It suggests the "littles", as they are sometimes called in EU parlance, can call one of the biggest of the "bigs" to heel. This summit is just a staging post in a crisis that will run longer than is comfortable for any of us but it was a chance for countries to reaffirm their European spirit and economic orthodoxy.


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