FORCING recapitalised banks to lend money to domestic businesses at the expense of foreign competitors will spark a wave of protectionism, EU Commissioner Charlie McCreevy warned yesterday.
Speaking in Dublin, the commissioner for internal markets and services warned that governments are tending to attach too many conditions to aid to banks.
“Requiring banks or companies to use the money, for example, to support the domestic economy at the expense of others,” he said. “This is a classic beggar-thy-neighbour approach. It’s an example of the type of short-term political reaction that will stir up protectionism, as well as creating new barriers in our internal market.”
Mr McCreevy said he would work with his fellow commissioners to ensure that aid given to banks by any EU government complied with the union’s own regulations and with international treaty obligations.
In terms of the Republic's plans to pump €7 billion into AIB and Bank of Ireland, Mr McCreevy told The Irish Timesthat the Government was aware of state aid rules and would have already consulted with the commission about its proposals.
He added that the Republic’s recapitalisation proposals were a matter for the Government itself.
While he was in Dublin yesterday, Mr McCreevy launched the Punchestown racing festival. The track is located in his former Kildare Dáil constituency.
The commissioner acknowledged that, based on figures produced by a study a number of years ago, the festival was worth €70 million to the local economy.
After the launch, he pointed out that “we don’t realise that a lot of people in this country work in the retail and service areas”.
Mr McCreevy also addressed the Institute of International and European Affairs while he was in Dublin yesterday.
Brosnan role
DENIS BROSNAN, chairman of the task force set up to combat job losses in the mid-west, said yesterday there was no quick fix for the region.
"It's been turning down for the last four or five years," he said, adding that the closure of Dell's manufacturing operations with the loss of 1,900 jobs would hit the region, both in terms of direct and indirect employment.
The task force for the area, which he is chairing, meets for the first time today. Mr Brosnan said yesterday that the body would not waste time.
"We have a busy agenda for the meeting and we have a lot of ideas," he said.
The Government established the task force in the wake of the Dell announcement, and asked Mr Brosnan, regarded as the architect of food ingredients group Kerry, to chair it. Dr Vincent Cunnane of Shannone Development is the taskforce's chief executive.
Mr Brosnan is chairman of State body Horse Racing Ireland. He was speaking after the launch of the Punchestown national hunt racing festival in Dublin yesterday.
