Economic nationalism? Almost certainly! Racism? Not very likely! Racism probably plays a very small part in the strong opposition to Lakshmi Mittal´s attempts to take over Arcelor, the European steel company created in 2002 from the merger of steel companies in France, Belgium, Luxembourg and Spain.
The much more obvious reason for the opposition to the ?hostile? bid by the Mittal Steel Company for Arcelor is economic nationalism?or ?economic patriotism,? as it has been dubbed in France, where opposition to the bid is the strongest.
The fact is that the French government seems determined to prevent the takeover of French companies by foreign companies, even other European companies.
Attempts by the Swiss pharmaceutical company to team up with its French counterpart, Aventis, were thwarted, and Aventis then joined forces with another French company, Sanofi-Synthelabo.
That was some two years ago. Only last month attempts by the Italian company, Enel, to take over the French multinational, Suez, were blocked and the marriage took place instead between Suez and Gaz de France, both French.
Last December, France adopted a legislation designed to protect strategic sectors of its economy, including its high-tech industries, from falling prey to foreign companies.
So far France is the leader in this form of economic nationalism, a.k.a. protectionism, although Mittal Steel´s efforts to gain control of its major rival, Arcelor, is being opposed by Luxembourg and Spain also.
But this form of economic protectionism could catch on. What these developments reflect is the failure, certainly in French eyes, of the European Union (EU) to develop an effective common industrial and economic policy, linking together all 25 EU countries. But France is perhaps a special case in this connection.
French policy, since the earliest days of European integration, 50 years ago, has been to use the EU in order to project French power. But the EU is adrift, particularly since the European Constitution, crafted by a former French President, was rejected by the French and Dutch in national referendums last year.
Even so, Europe´s single market and its single currency? the euro?have created conditions favourable to the emergence of European multinationals. The process of cross-border mergers will continue, driven by the very free market forces that France is trying to curb.
Unfortunately for Lakshmi Mittal, the French see Arcelor as essentially a French company.
(India News in Europe Programme (INEP), IPC, Residence Palace, Block C, Room 02256, Rue de la Loi, 155, 1040 Brussels, Belgium.)