Page 67 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

cially those in the automotive sector—and the reluctance of
governments to fund these automobile company bailouts if they
benefit other economies at the expense of their own.
In France, the government controversially announced that
recipients of government bailouts in the automotive sector
would be required to offer “engagements” or “counterparts.”
Nicolas Sarkozy, the French president, speaking in the context
of the provision of aid to the French automobile industry, said,
“It is justifiable if a Renault factory is built in India so that
Renault cars may be sold to the Indians, but it is not justifiable
if a factory of a certain producer, without citing anyone, is built
in the Czech Republic and its cars are sold in France.” 5
Although this condition was withdrawn after outcries from the
European Commission claiming that the financial crisis should
not be used to introduce protectionism, it is realistic to assume
that the carmakers will take the hint.
But this thinking is by no means restricted to France alone.
Even the nonprotectionist German government—which initi-
ated a generous “cash for clunkers” program benefiting mainly
foreign producers of small cars—was criticized by countries
such as Belgium, Poland, and the United Kingdom. These
countries allege that the German government preferred a failed
bid for one of its domestic automobile manufacturers on the
basis that jobs for German workers would be guaranteed.
All this happened before the full effect of the crisis had
reached Europe’s labor market. So it is no wonder that the
European Commission is worried about the future of the single
market. As one commission official put it, “If we can get
through the next five years with the single market fully intact,
we can congratulate ourselves.” 6

■ 46 ■