Today in protectionism

Gabriel Kahn of the WSJ has a big front-page article datelined Milan today, on how it’s hard out there for a major Italian industrialist, what with having to deal with interference from the government all the time.

Mr. Tronchetti Provera’s fight offers a window into the murky relationship between Europe’s governments and its grand families. Though European companies operate globally and have shareholders around the world, they are still buffeted by the intersection of outsized personalities, industrial dynasties and national politics…

This type of behind-the-scenes jockeying was mostly purged from the U.S. decades ago. In Europe, governments privatized state assets in the 1990s but maintained influence by selling big stakes to friendly families.

It’s true that the grand US families of yesteryear — the robber barons who used to control the country — are now a thing of the past. But protectionist government interference is not. Yes, it possibly happens even more in Europe: only today, Germany’s E.On has given up trying to buy Spain’s Endesa, and the Spanish government is a big reason why. On the other hand, Aeroflot is going after Alitalia, the Italian flag-carrier — something it surely wouldn’t have done if it anticipated fatal government push-back. And it’s worth noting that of Italy’s four major wireless companies, three are already foreign-owned:

The rest of the mobile sector is controlled by the United Kingdom’s Vodafone, Egypt’s Naguib Sawiris and Hong Kong’s Li Ka-Shing.

Meanwhile, of course, the US government seems to have little compunction in enacting protectionist measures of its own when it comes to paper, steel, ethanol, or the sale of US ports to a company in the United Arab Emirates. And don’t even get me started on the CNOOC-Unocal bid. Most governments occasionally try to stop the sale of large or important national companies to foreigners. In Italy, grand families still own a lot of companies, so the government interferes with grand families. But that says more about corporate ownership structures in Europe than it does about European protectionism.

This entry was posted in Econoblog. Bookmark the permalink.