ECONOMY

Firms to pull EU’s cart

Soul-searching and plenty of movement are following the realization in Brussels and other European decision-making centers, such as Paris and Berlin, that the European Union cannot meet its targets for upgrading its global economic role by 2010, as set out by the Lisbon summit in 2000. Besides decisions planned by European Commission President Jose Barroso to enforce the so-called Lisbon agenda (changes in labor and insurance policies, etc.), the latest factor in the situation is the initiative by French President Jacques Chirac and German Chancellor Gerhard Schroeder to start a debate on whether the EU should promote the creation of giant European enterprises that would play a determining role in the international economic environment. This is a variation on the famous discussion on «national champions,» i.e. companies that play a crucial role beyond national and even European frontiers, pulling economies forward to new technological and competitive grounds. This debate, which also surfaced to some degree in Greece when the National Bank of Greece and Alpha Bank were close to merging, is now dominating economic and political circles in Europe. Experts brand it an apparently defensive policy (to protect the EU from a mass attack of company acquisition by US capital). But in essence it constitutes an aggressive strategy for the expansion of European enterprises in the global economic field on competitive terms. This way has successfully been followed by the US and Japan, led by research and technology. Public/private cooperation President Chirac, to whom some praise is due given the importance of his role, set up a committee two months ago to prepare proposals for a national-champions policy. The title of the report the French president will be expecting is «Strategy for the French Economy in the International Context,» whose initial proposals, according to reports, are expected to favor the establishment of large national and European business schemes. Again, it is expected to note that economic policy itself should facilitate and bolster these enterprises. In addition, the committee for France’s strategy is proposing the creation of a corporation, with the cooperation of the state and the private sector, which will spot opportunities for large companies in global markets (and therefore decide where funds and investments ought to be directed to). The proposals on the supplementary and supportive role of the state are also to Chancellor Schroeder’s liking, because his wish is to instigate big mergers in Germany again. It is no coincidence that these views are also expressed by EU Enterprise Commissioner Guenter Verheugen, who echoes the Franco-German positions. The views heard last month at the presentation of the new monster Airbus (about miracles achieved by integrated European forces in the international competition level) are another sign of the way the wind is blowing. European observers agree that in the end, two opposite camps about champion enterprises will be formed, divided over whether national states and the EU should back such a political plan. They all know that the first to react will be the British, ever-flirting with US interests. But even in the US, the companies playing this role are funded, directly or not, by the state. Thus enterprise champions may be an opportunity to redefine the relationship between the state and economic policy on the one hand and the development of private firms in peak sectors or high global demand sectors on the other. The debate is hotting up – which is the first positive sign after five years of stagnation.