Chirac EU walkout adds linguistic to economic row

[Harold F. Schiffman]

WRAPUP 8-

Chirac EU walkout adds linguistic to economic row
Thu Mar 23, 2006 5:11 PM ET

By Laure Bretton and Darren Ennis

BRUSSELS, March 23 (Reuters) - French President Jacques Chirac added
linguistic patriotism to economic nationalism on Thursday when he briefly
walked out of a European Union summit after a French business leader spoke
in English. Facing violent street protests at home over a disputed youth
employment law, Chirac stormed out of the room when the head of the EU
business lobby, Ernest-Antoine Seilliere, switched from French to what he
called "the language of business". The incident, confirmed by French
officials, came on top of a row over alleged protectionism by Paris, which
dominated leaders' comments at the start of the two-day meeting.

Controversy over a shotgun wedding between two French energy giants
brokered by Paris to stave off a potential rival Italian bid upstaged
efforts to launch a common EU energy policy and measures to promote jobs
and growth. Chirac said it was crucial that EU countries coordinate their
energy policies but insisted that free market principles alone could not
shape the bloc's future power industry. "The construction of a Europe of
energy cannot be confined to the liberalisation of markets," he told
fellow leaders, according to speaking notes released by his staff. "We
must do everything to encourage the development of 'European champions',
based on solid industrial ambition and not on a purely financial
approach," he said.

The European Commission is studying whether France breached EU law when,
in the name of "economic patriotism", it brokered a merger of state-owned
Gaz de France and private utility Suez last month to fend off a looming
bid from Italy's Enel.


"PRECISE ACTION"

Italian Prime Minister Silvio Berlusconi, battling for his political life
in an April 9-10 general election, said he would not raise the Suez affair
but he expected the European Commission to take "very precise action". One
of Berlusconi's coalition partners, parliament speaker Pier Ferdinando
Casini, told reporters that any government that restricted cross-border
takeovers as a "pretend European". German Chancellor Angela Merkel said:
"We can only have an internal market when electricity flows freely and
when we accept European champions and not just think nationally." British
Prime Minister Tony Blair's spokesman said London wanted "maximum
liberalisation".

Luxembourg Prime Minister Jean-Claude Juncker, seeking to fend off a
hostile bid by Mittal Steel for steelmaker Arcelor in his country,
declined to condemn economic nationalism, saying: "Sometimes governments
have good arguments." Aside from the French probe, the EU executive has
started similar inquiries into moves by Spain, Poland and Italy to block
cross-border takeovers in energy and financial services. European
Commission President Jose Manuel Barroso said that, while economic
nationalism had no place in the EU's single market, "those are the growing
pains of the internal market".


FRENCH WALK-OUT

Italy's attempt to recruit allies for an open letter denouncing
protectionism and calling for open markets collapsed on the eve of the
two-day summit, suggesting few EU leaders want a public fight after a year
of deep divisions in 2005. Berlusconi denied any intention of presenting a
letter to the summit, saying the whole episode was "an absolute phoney".
Known for unconventional outbursts, the Italian leader has his back to the
wall. Polls show him trailing a centre-left coalition led by ex-European
Commission President Romano Prodi. He is not the only EU leader in trouble
at home.

Britain's Blair is under fire over secret loans to his Labour Party in a
row that has intensified speculation he may step down earlier than
anticipated. Chirac faces protests against a new youth employment
contract. A French official said Chirac, Foreign Minister Philippe
Douste-Blazy and Finance Minister Thierry Breton left the room when
Seilliere, head of the UNICE business group, switched from French to
English. They returned after he had finished speaking. The main novelty on
the summit agenda is a drive to launch a common European energy policy in
the wake of the crisis in January when Russia turned the taps off on
Ukraine in a pricing dispute, abruptly reducing supplies to EU countries.

New east European members that once lived under Soviet domination are keen
for the EU to speak with a single voice to Moscow, and to pledge that oil
and gas stocks will be shared with any member state which suffers a sudden
supply cutoff. West European powers such as France and Germany want to
maintain privileged bilateral relations with Russia and are wary of
letting the European Commission negotiate on their behalf.

(Additional reporting by Crispian Balmer, Ingrid Melander, and Jan
Strupczewski)


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