A European energy market
 
Mar 14, 2006 - International Herald Tribune
 

It bears recalling at times that the precursor to the European Union was the European Coal and Steel Community, which was set up in 1951 to reduce the possibility of another continental war by putting a strategic industry under joint control. The European Union is now pushing to do something similar with energy supplies. The threat is no longer war among EU members, of course, but rather the broader notion of "energy security." Europe imports half its energy, and that will soon rise to 70 percent. At the same time, global demand for energy is growing exponentially, and the sources are not always in savory hands.

The European Commission, led by Jose Manuel Barroso, correctly declared last week that there must be a unified European response and a single European energy market.

 

That means, first of all, that France and Spain must abandon the argument that energy is a strategic national interest that must not be ceded to Brussels. This is simply an excuse for raw protectionism. As Barroso argued on these pages last week (IHT, March 8), the energy challenge is common to all European countries, and a unified market would give Europe immeasurably greater leverage in dealing with suppliers. Put bluntly, would Russia, which supplies a quarter of Europe's gas and oil, play chicken with an entity that contributed more than 40 percent of the Kremlin's federal budget, the way it did with an isolated Ukraine?

 

The question must be put, first of all, to France. Prime Minister Dominique de Villepin has gained an image as Europe's protectionist- in-chief for trying to protect the utility Suez from an Italian takeover. The ploy was a merger with the state-own Gaz de France. That move follows official efforts to preserve French ownership in pharmaceuticals, steel and even yogurt. Unfortunately for Villepin, the misguided defense of French honor at least in the Suez affair was spurned by the labor unions, which fear that any partial privatization of GDF would cost them cushy state-backed jobs. The greater irony is that France ranks near the top of the EU in investments by foreign companies, and Villepin's antics may scare off foreign investors.

But France is not alone. Spain, too, has thrown up barricades against a takeover of its leading energy company, Endesa, by the German giant E.ON.

 

The European Union has taken a battering of late, and it is easy these days for national politicians to play to the crowds with phony invocations of national security. But cutting the European Commission out of an issue as central to Europe as energy would undermine the very reason for the existence of the EU. When energy ministers meet later this month, they would do well to recall that the French founders of the first European common market believed their national security was best served by putting key industries under collective control.

 

 


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