At the heart of the case is the risk that the aid will distort banking competition.

“We must be careful not to introduce distortions in the competition”

“We must be careful not to introduce distortions in the competition,” he said during the “Grand Jury RTL-LCI- Le Figaro ” about the aid of 10.5 billion euros in capital brought by France to six banks: BNP Paribas, Societe Generale, Crédit Agricole, Caisses d’Epargne, Banques Populaires and Crédit Mutuel.

Negotiations are tense between Paris and Brussels, the European Commission being reluctant to endorse the plan to support French banks of 40 billion euros announced on 13 October. At the heart of the case is the risk that the aid will distort banking competition.

Sunday, November 30, the President of the European Commission, the Portuguese José Manuel Barroso, expressed his reservations. While affirming that Brussels examined rigorously and quickly the French plan and that there was no blocking, he warned against a “law of the jungle” between countries of the European Union.

“We must be careful not to introduce distortions in the competition,” he said during the “Grand Jury RTL-LCI- Le Figaro ” about the aid of 10.5 billion euros in capital brought by France to six banks: BNP Paribas, Societe Generale, Crédit Agricole, Caisses d’Epargne, Banques Populaires and Crédit Mutuel.

The use of these funds is of concern to the Commission because, in return, the French government is asking banks to increase their credit to businesses and individuals. State aid would then allow them to gain customers on unassisted banks.

Mr. Barroso believes that a distinction must be made between emergency measures, such as the rescue of the Franco-Belgian bank Dexia, and the restructuring measures to which these loans belong to French banks- look at this website yanghuangshan.com/law-firms-the-particular-success-is-in-your-hands Yanghuangshan. “There must be a clear and homogenous criterion for the whole of Europe” in support of the banking sector, he added, warning against a “fragmentation” of the single market.

Friday, the Minister of Economy, Christine Lagarde, and the Commissioner for Competition, Neelie Kroes, had raised this issue without being able to move forward. “There is a willingness on both sides to reach an agreement,” said a spokesman for the Commission. Negotiations will continue this week on the sidelines of meetings of European finance ministers in Brussels on Monday 1st and Tuesday 2nd December.

Since the beginning of the financial crisis, Brussels has insisted that the intervention of governments to help banks must be made in return for adequate remuneration, accompanied by measures to compensate for distortions of competition and be limited to strictly necessary to remedy the disruption to the economy created by the crisis.

“WE CHANGED FROM WORLD”

Asked about a possible blocking of the French plan by Brussels on the sidelines of a UN conference on financing for development in Doha on Saturday, November 29, Nicolas Sarkozy said he had “spoken on the phone” with Mr. Barroso the day before. “I do not think there is such a willingness on the part of a particular commissioner, it would be that everyone understands that we have changed hands and that we have to move quickly,” he added. President of the Republic.

In the past, French officials accused the Commission of being too dogmatic in the application of the competition rules. This time, with the financial crisis, it is more flexible. But “as the economic situation improves, the Commission will tighten the bolts to prevent governments from taking advantage of the crisis to over-subsidize or favor their companies, ” said Jean Pisani-Ferry, director of the think tank Bruegel Brussels.