Globalized World Sees Wave Of Protectionism

Battles in the energy and steel sectors, concern over control of U.S. ports, and China's plans to use only domestic firms for its high-speed trains illustrate a rise in protectionism by governments that profess support for open economies.

In the U.S., usually the standard bearer of economic liberalism, ferocious criticism from both Republicans and Democrats in Congress last week sank an Arab company's acquisition of six American ports. An equally angry storm of criticism from lawmakers last year forced Chinese state-owned energy company CNOOC to abandon a bid to take over U.S. oil major Unocal Corp.

In Europe, the Spanish government is determined to block a takoever by E.ON, Germany's top power supplier, of Spanish electricity supplier Endesa. And in France, state-controlled Gaz de France says it will buy French power and water group Suez, in a move Rome criticized as a deliberate block to a takeover of Suez by Italian energy giant Enel. The French, Spanish and Luxembourg governments have also been up in arms recently over Mittal Steel's bid to swallow up European steel maker Arcelor.

Outbreaks of "economic patriotism" have been rampant in recent months. China says it wants domestic companies to build its high-speed rail lines, its canals and its power stations, Russia is drawing up a bill that would limit foreign access to "strategic sectors," and South Korea is upset at an offer by a U.S. corporate raider for the South Korean tobacco giant KTG.

"We are getting back to a tougher stance in terms of economic confrontation," said Christian Harbulot, the director of School of Economic Warfare in Paris, which describes itself as offering the first European post-graduate program entirely focused on management of information in hostile environments.

Harbulot added that power politics were now played out through the economy and no longer through nuclear confrontation. The world economy is undergoing a fracture between areas that are already largely globalized and of little strategic importance, and other more sensitive areas over which governments are ready to bare their fangs. Henceforth, "there are two fields in the economy, one which is completely open because the market has gone so far that it is hard to see how it could be reversed -- textiles, electronic goods -- and other sectors where this is not the case -- energy, raw materials -- and others where we are again seeing power play," said Harbulot.

Copyright Agence France-Presse, 2006

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