Summary: Protectionist French economic policies are hurting the unity of the European Union and undermining the economies of newer, less prosperous members.
Development: President Sarkozy has announced the creation of a $7.75 billion loan to be made to the French auto industry. Two of France’s largest automakers, Renault and Peugeot-Citroen, have agreed, as part of the loan, not to outsource the production of their cars to other lower-cost nations. This poses a problem for the Czech Republic: where 17% of its 2007 GDP was earned from its auto industry, a large part of which was involved in the production of French cars. This, in turn, poses a problem for the European Union as the Czech Republic is the only one of the 27 European Union nations which has yet to ratify the Lisbon treaty, a key pact designed to streamline EU leadership and expedite the formation of EU policy.
Analysis: The Czech Republic has been putting off ratification of the treaty until the necessary majority is present in the Czech legislature. Prague had signaled that it was near the needed votes, but this move by France is likely to alienate enough legislators to and push the final ratification of this treaty further out of sight. Currently, the Czech Republic holds the six month rotating EU presidency, an office which was passed to Czech Prime Minister Mirek Topolanek from French President Nicholas Sarkozy on January 1st. Ironically, the Lisbon treaty would eliminate the six month rotating presidency and would eliminate the ability of smaller nations, such as the Czech Republic, to restrict the implementation of Union policy, such as the Lisbon Treaty. If France’s actions do cause further delay to the ratification of the Lisbon Treaty, the unity of the European Union as well as the reputation of France and French President Nicholas Sarkozy will be damaged. More serious of course, is the damage of protectionism to the unity of the EU and then the prolongation of Europe’s recovery from the current global economic crisis.
[Andrew Stover]