- The Washington Times - Thursday, March 12, 2009

ANALYSIS/OPINION:

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Economic defenses are up and trade retaliation is the order of the day in the wake of what investor Warren Buffet has called the equivalent of an “economic Pearl Harbor” attack against the United States. American readers may content themselves that matters are no better elsewhere, as Europe suffers a financial blitz just as horrible.

Unfortunately, tough times lead to overly strong measures. While the new Obama administration may offer a foreign policy of hands across the sea, economically it is cutting any digits that are proffered back.

The president has urged a “buy America” policy and has been supported in the Senate. In Europe everyone is behaving just as badly. British Prime Minister Gordon Brown has recently claimed “British jobs should be for British workers” and the French president, Nicolas Sarkozy, has called for saving national champions, particularly major car manufacturers such as Renault. Meanwhile the Germans are withdrawing from Central European economies faster than an apocryphal Italian tank commander.

Caught in this monetary maelstrom is the European Commission, which is meant to guard one of the successes of 27 nation-states grouping that is the European Union, its single market. Antitrust laws are meant ensure against the success of “beggar thy neighbor” policies, one reason for the length of the Great Depression.



However, much to the horror of those administrators inside the Brussels bubble, the co-operative spirit of the original European Community is dying. And dying with it is support for free trade, under threat from politicians with more nationalist sentiments.

Over the last five years one of the biggest proponents of open trade policies has been Jose Manuel Barroso, the European Commission president. His term ends in November. Though he is campaigning vigorously for a second term in his unelected post, a groundswell of opposition is developing against him, particularly in Paris.

“We´ve seen signs of this for a while”, said a Brussels diplomat. “Barroso has probably got the job again, but the member states will need to find a consensus candidate.

“However, Sarkozy has been complaining that Barroso is too liberal often recently and Paris keeps on reiterating this point. A lot of this is sour grapes, as the commission is enforcing competition and antitrust laws that the French agreed to in the first place. I think this is more a case of France putting pressure on Barroso to clear its more protectionist decisions.”

The diplomat also noted that while Mr. Barroso has an edge at the moment, with the support of the United Kingdom and Central European countries, if the German government lines up behind the Sarkozy position the situation could change very swiftly.

Other sources in Brussels suggest this already happening and that German Chancellor Angela Merkel wants another candidate. Although, likely to would come from the center-right of European politics, the new commission chief would be forced to follow a more protectionist line favored by Berlin and Paris. This would threaten open trade borders between the United States and Europe at a time when they are needed the most.

With Washington following more government-directed economic and commercial policies than it has in a decade, it seems the world´s biggest trading bloc faces a severe threat. Free trade, which has nurtured the trans-Atlantic relationship for decades, faces the possibility of a severe reversal.

Jeremy Slater is a British political and economic journalist based in Brussels.

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