from the Guardian

Gordon Brown will today urge his fellow European finance ministers to make a new push to open up EU markets to competition and resist a growing tide of protectionism within the 25-nation bloc.

The chancellor, who said last week that badly functioning gas markets in the EU meant British consumers were now paying £10bn a year more for their gas than they should, is pushing for tougher action from Brussels against what is being called "economic patriotism" in countries such as France, Spain and Italy.

The Guardian had an article on this whose title is pretty explicit (Europe's protectionists add £10bn to our gas bill, says chancellor) and not really substantiated in the article, which basically lists all price increases in the energy sector in the UK, and simply prints Brown's contention that it is the fault of Europe's "protectionists".

As a note again, the "protectionists" that are quoted by name in all these attacks are ALWAYS the same: France and Spain. Italy is not usually listed, but that probably reflects both their honorary membership of the "Club Med" of perenially inefficient economies and the expectation that they will soon become an evil lefty country again...

from the Guardian

He is presenting an Ecofin meeting of EU finance ministers and central bank chiefs in Vienna with a new pamphlet called the Case for Open Markets: how increased competition can equip Europe for global change.

"The EU needs to do more to complete the single market, drive up levels of competition and open up to the rest of the world," Mr Brown's pamphlet says.

He will call for the establishment of panels of experts in particular fields to report back regularly to EU competition commissioner Neelie Kroes about uncompetitive behaviour or market abuse by firms in sectors such as energy and telecoms so that the commission can launch legal actions against companies.

That did not go too well in Brsueels, for two reasons:

• they never saw the paper
  
• it is a direct assault on functions already performed by the European Commission

from the FT

But the plan received little support and was seen by some ministers as athinly disguised attempt to undermine the Commission, which already has sweep-ing powers to investigate and tackle antitrust behaviour.

Joaquín Almunia, the EU monetary affairs commissioner, said Neelie Kroes, his colleague in charge of competition policy, was already carrying out sectoral inquiries into restrictive practices in the energy and financial services sectors.

Speaking at an informal Ecofin council of finance ministers in Vienna, Mr Almunia said: "The most effective and respected experts in Europe regarding competition are in the competition department of the European Commission.

"Everyone agrees the Commission acts with absolute independence. I think the best thing we can do is support the work of Neelie Kroes."

One official at the meeting said Mr Brown did not press the point with colleagues and that some had not even seen Mr Brown's paper on the subject, even though it had been widely trailed in the British press.

As so much of the European debate in the UK press, it is about domestic issues, and about shifting the blame for mthe government to the "bureaucrats in Brussels" or some other European plot. To be fair, the same is true in most European countries, and using Brussels as a scapegoat for unpopular policies is a long abused tool of most national politicians, but nowhere, to my knowledge, do you see such messianic and ideological statements, promoting the policies of one's country as the only rational ones, and insulting and blaming others for not adopting them.

from the Guardian

The government is furious that a lack of adequate gas supplies in winter through an undersea pipeline from Belgium to Britain pushed spot gas prices up to record levels.

Mr Brown believes that the new competition regime put in place by the Labour government in Britain has worked well, improving the efficiency of markets and lowering prices to consumers. Britain's openness to overseas investment, he thinks, has increased wealth and boosted employment in Britain. He thinks much of Europe, fearing the impact of globalisation, is becoming more inward-looking. Examples include the French government late last year publishing a list of industries it would not be prepared to see taken over by foreign firms and, in February, engineering a merger between French company Suez and Gaz de France when Suez became the target for a takeover by an Italian firm.

I can't blame Brown for saying these things, after all, he is a politician and trying to put his record in a good light. Bur for the Guardian to reprint these blatant distorsions of the facts uncritically is really bad journalism.

• affirming that the competitive regime is working "and lowering prices for consumers" is THE core lie of the freemarketistas: markets do not guarantee lower prices, only more transparent prices, which then supposedly allow sellers and buyers to transact on the best terms and accordingly decide whether to buy, sell, invest or find substitutes...

• saying that the policy has brough "lower prices" at a time when prices are at their highest takes quite a bit of chutzpah - but it works if nobody is there to provide another interpretation

• repeating that Britain is more open to foreign investment appears so self-evident that it is not even worth checking, right? Well, as afew pointed out no long ago (protectionalism), it is not so obvious:

  

• blaming France is always easy, and using the same tired facts that everybody repeats without context (the industries protected from foreign takeovers in France are, for instance, all strictly defense-related, plus casinos, legitimate sectors to protect in all countries - and indeed they are everywhere)

Let's repeat it again. Free markets do not guarantee lower prices. The only thing that guarantees lower prices in the energy sector (like in others) is surplus production capacity on the supply side. That exists on the continent thanks to State investment or regulation, but it does not exist in Britain because market signals did not encourage investment on the production side for so long as prices were low (and they were low thanks to earlier, public, investment in the sector). So, with (temporarily) low prices, the private sector was not incentivised to invest, and with no regulatory push to force them, it indeed did not happen. Now that they are high, investment is indeed spurred, but sadly, these things take time in that sector, thus leading to prices being much higher for a while... and now government "regulation" comes in the form of panicked attempts to try to steal - there is no other word - spare capacity from the neighbors...

As to the assertion that producers on the continent are withholding sales to the UK, all it means is that there must be opportunities to make a quick buck by taking advantage of the price differential on the two sides of the pipeline - any smart market player should be able to buy gas on one side and sell it on the other side, no? There cannot be "no gas", can there? Because it would mean that "markets" do not work, and that cannot be, can it?

(And to those that say, "nut there is no gas because the existing players are withholding gas or transport capacity, I respond that, thanks to the liberalisation efforts of the past years, all these companies are publicly quoted companies, focused on their profits like all normal companies, and if they could take advantage of that price differential, they certainly would. If they don't, it means that they are constrained by other things, presumably prior contractual commitments to deliver gas to their existing customers, and they consider that causing shortages for these customers is not (yet) worth the quick profit to be made by diverting the gas to the UK...)

And thus the Guardian becomes an extra wheel on the Murdoch anti-European carriage.

"We need to put in place the conditions that will enable European companies and brands to thrive in a global market and make Europe an attractive location for global companies to invest," the report says.

The commission launched actions against 17 of the EU's 25 members earlier this week for violations of the single market, particularly in the electricity and gas industries, which are due to be fully liberalised in July next year. Mr Brown wants the commission's powers in this and other areas beefed up and broadened.

Maybe it would be worth mentioning that Britain is amongst the 17, alongside France and others... And maybe the record number of takeovers in Europe in recent months, conveniently used when there is a need to praise the financial wizards in the City of London which all make it possible, also reflect that attractivity of Europe as a place to invest?

The chancellor has long been exasperated at much of the EU's inability to push through sweeping economic reforms to labour, product and capital markets agreed at Lisbon in 2000 which were designed to increase economic growth and reduce the bloc's 20 million unemployed.

He thinks that only by embracing the opportunities of globalisation, rather than perceiving it as a threat, can Europe deliver more jobs and prosperity. And this does not mean that Europe has to abandon its social democratic traditions.

"Increased flexibility in labour, product and capital markets does not have to come at the expense of fairness. We will need investment in skills and active labour market policies to ensure that Europe can provide opportunity for all," Mr Brown's report adds.

Brown's exasperation is only for the consumption of the credulous journalists who eat it up. As to the idea that "increased flexibility does not have to come at the expense of fairness" - does that mean then that, when it is unfair, it is all right to protest? Nah, because, strangely enough, it has yet to happen without being unfair... But protesting "increasing flexibility without fairness" is still a sign of total backwardness. Sigh...

from the FT

Thierry Breton, French finance minister, opposed Mr Brown's plan. "I think we should not increase bureaucracy," he said.

(...)

Finance ministers also unanimously rejected protectionism and agreed that globalisation was good for Europe, a statement not necessarily shared by their bosses in the national capitals.

France and Spain are among those facing criticism for trying to defend national champions, particularly in the energy sector, from foreign takeovers.

Again the unsubstantiated charges about protectionism in national capitals. Or do they know something they don't need to tell us about? As this is a British paper, presumably they mean something in London, right?

As to Breton's cheap shot, he should have played it smart and welcome Brown's commission, and point it to the OECD graph posted above... That he didn't means that he actually believes what Brown says and was just trying for an easy out of this debate he presumably thinks he cannot win. That's just as disappointing, of course.

Why blame the Guardian, when everybody that counts believes the same tripe? Because they have a responsibility to their readers, not towards the common wisdom of the politicians and wonks, a responsibility they seem to be forgetting. For a lefty paper, it's a disgrace.