EU summit / March 23 2006 / * Can Denmark’s “flexicurity” social model can be exported / Financial Times

EU set for summit clash over protectionism
By George Parker in Brussels
Published: March 23 2006 14:13 | Last updated: March 23 2006 14:13

Angela Merkel, Germany’s chancellor, on Thursday delivered a thinly-veiled rebuke to France and Spain for trying to protect their energy markets from foreign takeovers, ahead of a European Union economic summit in Brussels.

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European leaders will on Thursday night discuss the creation of an EU energy policy, but leaders like Ms Merkel will argue that such a plan is impossible unless member states dismantle national barriers to allow cross-border competition.

“For me it is certainly clear - and I think it’s clear for most - that we can only have an internal market when electricity flows freely and when we accept European champions and not just think nationally,” she said.

Ms Merkel’s words were clearly aimed at Spain, which is trying to prevent Eon, the German energy company, buying its Spanish rival Endesa.

Key points of the EU summit
* Protectionism - big flashpoint * Proposed new energy strategy * New small businesses plan, including cutting start-up red tape * European Institute of Technology * Unemployment, particularly among the young * Endorsement of €500m globalisation worker fund * Can Denmark’s “flexicurity” social model can be exported

But it will also be seen as criticism of France, which is accused by Italy of trying to stop Enel, the Italian utility, buying Suez, the Franco-Belgian group. Paris has organised a merger of Gaz de France and Suez, apparently to thwart Enel’s bid.

The Austrian EU presidency wants the two-day summit to focus on a positive economic agenda, including agreeing a new energy policy, a strategy to help small companies and new targets to cut unemployment.

But debate on the “new protectionism” seems inevitable. Silvio Berlusconi, Italian prime minister, is expected to raise the issue, heralding what some believe could be a bruising clash with Jacques Chirac, French president.

One of Mr Berlusconi’s allies, Pier Ferdinando Casini, the Italian parliament speaker, gave a flavour of the prime minister’s views at a pre-summit meeting of centre-right party leaders near Brussels.

“Either you are a pretend European, and are therefore in favour of protectionism and nationalism, or else you are a real European and want to stimulate competition,” he said.

Enel pledges high dividends but silent on Suez
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Wolfgang Schüssel, Austrian chancellor, said he remained “optimistic” that EU leaders would agree concrete targets for cutting unemployment, increasing renewable energy use and for cutting the start-up time for new businesses.

On Thursday night’s meeting will also include a separate dinner for EU finance ministers, who will discuss whether Denmark’s “flexicurity” economic model - combining flexible labour laws and high levels of social security - can be exported.