BRUSSELS, Mar 14 (AFP): A growing storm over protectionism in Europe clouded talks yesterday between eurozone finance ministers as they argued over the role of the state in their economies.
Smoothing over differences between member states, Luxembourg Prime Minister Jean-Claude Juncker insisted after chairing the meeting that "the exchanges were healthy, wise and virtuous and we will come back to this debate".
State intervention in a series of recent corporate deals has fuelled concern that protectionism could take a toll on the bloc's economy by preventing effective competition, holding back investment and denting consumption.
EU Economic and Monetary Affairs Commissioner Joaquin Almunia warned that "increasing protectionist trends" in Europe could harm improving consumer and business confidence in the eurozone.
"I do not want that this improving confidence, which should feed into stronger domestic demand in the Europe, should be put in danger by some debates that we're hearing now in Europe," Almunia said.
But Juncker warned that individual consumers want security above all in the face of big corporate deals and that the benefits of open EU markets meant little to them.
"We must not believe that our compatriots will turn towards Europe when they feel they are threatened by industrial projects that they don't understand," he said.
But earlier Austrian Finance Minister Karl-Heinz Grasser warned strongly that protectionism could harm eurozone economy.
"Free movement of capital is not only one of our principles but also one of our strengths," Grasser said.
"Any government interference in market economies is just unacceptable, leads to higher prices and lower growth," he added.
Concerns about protectionism have so far focused on Rome's claims that Paris has engineered a merger between state-controlled Gaz de France with the energy group Suez to thwart a rival bid for the latter from Italian energy group Enel.
The merger came only weeks after the European Commission warned that EU gas and electricity markets were overly concentrated in the hands of a few companies and that consumers were not reaping the benefits of gradual market liberalisation.
French Finance Minister Thierry Breton and Italian Economy Minister Giulio Tremonti met ahead of the meeting to ease the tensions between Rome and Paris.
Breton said afterwards that the meeting was held amid a "very friendly ambience" but that there would be no negotiations over the deal.