Something interesting is happening at this very moment in Europe. Something which is likely to teach a valuable and unforgettable lesson about the scope and the destiny of globalization.
The EU common market, the powerful engine behind European Union economic aggregation and growth rests on four fundamental freedoms: the free movement of goods, the free provision of services, the freedom of establishment and the free flow of capitals.
Roughly speaking, free movement of goods means that there are no customs, tariffs or non-tariff barriers between EU Member States. Free provision of services means that anyone who is qualified to provide a service in a Member State can do the same in any other Member State. Freedom of establishment means that sudents, workers and corporations can elect their residence in any Member State without restrictions. Free flow of capitals means that investors may invest their capital in any Member State without nationality-based restrictions.
These fundamental (I would say constitutional) liberties of the European Union are now at jeopardy, due to the new taste of national governments for protectionism. The EU Commission sensed the threat posed to European aggregation and is fighting back to keep the common market open and competitive.
Everything started last summer, when two banks, the Dutch ABN Amro and the Spanish BBVA attempted to take over two Italian banks, respectively Banca Antonveneta and BNL. The Italian banking sector has been traditionally reluctant to host foreign operators and this has also harmed effective competition over the years (Italian bank accounts are the most expensive in Europe!!!!). Once again, like other times in the past, the Bank of Italy stepped in and denied authorization to the takeover bids by the foreign banks.
The Spanish and the Dutch screamed at the scandal and called the Italians bad names, until the judges in Milan found out that the governor of the Bank of Italy (and some politicians) was colluding with Italian banks to favor them in the bidding and keep Antonveneta and BNL under Italian control. To make a long story short, the governor eventually resigned, a new governor was appointed and the foreign bidders got the green light to jump on the Italian hot chicks. ABN Amro got control of Antonveneta and the French BNP Paribas bought BNL.
Italian media were still flogging the government over its medieval attitude in the circumstance, when the Italian energy giant Enel attempted to purchase the French energy company Suez. In a rapid sequence, however, the French government made it clear that it was not enthusiastic at the idea, got Gaz de France ready to buy Suez, amended the existing French law to allow the Suez-GdF merger and adopted a new statute against foreign takeovers in 'strategic sectors' (i.e. energy, telecoms, defence, etc.).
The French example was followed by Spain and by Poland. The latter, despite being a new Member State, did not want miss its chance to behave badly and opposed to the merger between the Italian bank Unicredit and the German HBV, which had previously been cleared by the EU Commission.
This was too much for the Commission, which opened investigations on these cases, charging the governments of restricting the freedom of establishment of foreign companies on national markets and restricting the free flow of capitals by making national companies less contendible. Proceedings for the infringement of the EC Treaty (providing for such freedoms) have been opened against some 20 Member States, but the most serious charges concern France, Spain and Italy, which are all trying to protect national companies in the energy sector.
The story raises a number of considerations. Globalization has been magnified as a driver for economic development. Jobs and workers' economic and social stability have been scarified on the assumption that globalization is efficiency-driven and makes of flexibility a condition to survival of businesses. Then we find out that globalization works when children manufacture soccer balls at one dollar per day, but miserably fails when it is called upon to liberalize the banking, energy and defense markets, traditionally fertile grounds for anticompetitive practices resulting in consumers' exploitation.
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