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Last Updated: Thursday, 23 March 2006, 12:59 GMT
Patriotism and protectionism in the EU
By Tim Franks
BBC Europe correspondent, Paris

European Union leaders are holding their annual attempt at pumping life into the EU economy - trying to make it the most competitive in the world by 2010.

Danone products
Danone takeover talk caused gasps of horror along the boulevards
But this year's summit is taking place in a new and more challenging landscape - several member states, France chief among them, are championing a new nationalistic ideal called "economic patriotism".

But is patriotism just a new word for protectionism?

The upsurge in economic nationalism in France was given a push from an unlikely source - the yoghurt section of a French supermarket.

Last summer, the American food giant PepsiCo was thought to be interested in buying up the French dairy company Danone. A gasp of horror resonated down the wide Parisian boulevards.

Soon after, the French government came up with 11 strategic commercial sectors that should be protected from foreign takeovers. Economic patriotism was the new trumpet cry.

Strategic sectors

Bernard Carayon is one of those sounding the charge. He's the MP given the job by the prime minister, Dominique de Villepin, of advancing the economic patriotism agenda.

Bernard Carayon
Bernard Carayon: Parts of the economy deserve to be protected
He says France is just picking up where a phenomenally self-interested USA has led.

"When we want to make a show of being liberal," he says, "whether we're American or French or whatever, we must have the honesty to recognise that there are parts of the economy that deserve to be protected that are identified as being of strategic importance in order to gain ground commercially."

It is in that spirit that the government stepped in when the French waste water and energy company Suez became the target of a takeover bid from the Italian company Enel.

With some haste and some glee, it was announced that Suez would now merge with the state-owned utility, Gaz de France. Not everyone cheered.

The unions went on to the streets to protest about the de facto privatisation of Gaz de France. Suez shareholders equally complained about the de factor nationalisation of their company.

Sceptical France

In Brussels, the European Commission - the guardian of the single market - has given a strong indication that it's thinking about challenging this proposed merger - just as it might where other potential foreign takeovers have been warded off by government intervention.

Neelie Kroes
Neelie Kroes: Economic patriotism is a no-no
Competition Commissioner Neelie Kroes won't talk about specific cases at the moment. But in principle, can fair competition ever work with economic patriotism?

"No, no. Patriotism, talking about the economic terms, is outdated. It's not in line with what we adhered to as a decision long ago - one internal market.

"And one internal market is at the end of the day beneficial for everyone - for every member state and for the consumer and for the business world."

Those strong sentiments from Brussels are guaranteed to stir a reaction in France.

These days, the voices of scepticism, even consternation, about what the EU is trying to do have come from France.

The voices of support are coming from places like Britain. For Europe these are new and strange times.

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