Chirac rejects protectionism claims amid criticism

BERLIN/STRASBOURG, Mar 14 (Reuters) French President Jacques Chirac today rejected accusations today that France has resorted to protectionism in warding off takeovers from abroad, saying his country was more open to foreign investment than many others in Europe.

But criticism grew of moves by France and other EU countries to protect home-grown firms as German President Horst Koehler, in a solemn address to the European Parliament, warned Europeans against pursuing an ''each for himself'' approach.

Standing next to Chirac at a joint news conference in Berlin, German Chancellor Angela Merkel steered clear of publicly criticising the French stance, but Koehler's remarks reflect the thinking of her government.

''Whoever weakens the European internal market through protectionism is cutting into his own flesh,'' Koehler said to applause in Strasbourg.

''Whoever falls back now into the old 'each for himself' approach fails to recognise the dimension of global competition and is fooling citizens with an illusion of security,'' he added.

Chirac, in Berlin for a biannual meeting of senior French and German government officials, suggested the accusations of protectionism were completely off the mark.

''I have heard here and there, notably in the foreign press, France accused of being protectionist. I would simply like to underline the completely absurd nature of this judgment,'' he said.

Chirac said France had more foreign investment than Germany, Italy and others. ''France is one of the most liberal countries in Europe from this point of view.'' FRANCE TRUMPS GERMANY IN FDI According to data from the UN Commission on Trade and Development, foreign direct investment (FDI) in France totalled 48.5 billion dollars last year, compared with 4.9 billion dollalrs in Germany. In the 25-nation EU, investment in Britain was the highest at 219.1 billion dollars.

Masataka Fujita, an expert on FDI at UNCTAD, said these numbers must be viewed with caution given their volatility from year to year. But he confirmed that investment in France has traditionally been much higher than in Germany, which has shed its resistance to foreign takeovers in recent years.

Koehler, a former head of the International Monetary Fund whose appointment was driven by Merkel, mentioned no country by name. But France, Spain, Italy and Poland have all come under fire over attempts to obstruct foreign takeovers in the energy and financial services sectors.

The French Government recently engineered a merger of utility group Suez and another French firm, Gaz de France, in order to head off a bid by Italy's Enel.

Germany has also been the target of French industrial policy in recent years, notably when Paris worked behind the scenes to prevent Germany's Siemens from acquiring assets of ailing French rival Alstom.

Koehler said the world was looking at Europe with increasing impatience and incomprehension and saying: ''Europe, if you are tired: step aside. We want to move forward.'' People around the globe who admire the EU's success are puzzled, he said, over why it is disunited so soon after its unification, why it has so little faith in the single market despite its successes and why it seems so half-hearted despite its great power and opportunities.

REUTERS PG RN2210