The European Parliament rightly paid special attention to state aid in its hearing with commissioner-designate Joaquín Almunia on 12 January (Commissioners’ hearings, 14-2-20 January).
Almunia stated that he was for fair and equal treatment without state aid, but also defended the EU’s state aid regime in a time of crisis. And desperate times have, unfortunately, called for desperate measures.
Aid has been vast – it quadrupled in between 2007 and 2008, to more than 2% of the EU’s gross domestic product – and it is time to introduce a more restrictive approach, in part because, over the past year, we have seen numerous examples of state-aid schemes being used in an attempt to save jobs nationally. State aid has been given to the automobile industry, the transportation and shipping industries and the greenhouses sector to name a few.
State aid has become a form of protectionism, damaging the potential for a fair and competitive economy.
This weakens smaller states in particular. Big EU countries have shown no real concern about recent steps towards more protectionism in Europe. Seen from the perspective of small member states, this appears to be an abuse of their dominant position. Small countries do not have treasuries than can match those of the EU’s big countries. Small countries will demand some sense of proportionality and respect for the principles of the Common Market.
Protectionism is not only a problem within the EU. Figures from the Commission suggest that countries around the globe indulged in 223 new protectionist measures between October 2008 and October 2009. Most recently, the Chinese government introduced a bill favouring Chinese-made products in public-sector contracts.
Protectionism offers no bridge over troubled waters, as history has shown, and it will not improve Europe’s economic situation or accelerate its recovery. State aid is currently undermining the playing field – levelling that playing field should be at the heart of our strategy for recovery.