THE US and the European Union may manage to avert a damaging tit-for-tat trade war over controversial ‘Buy American’ provisions in President Barack Obama’s draft economic stimulus bill, but as the world economy slides steadily into recession, the ugly spectre of protectionism — or economic nationalism as some prefer to call it — appears to be re-emerging from the shadows.

The stakes are high. Analysts are quasi-unanimous in warning that in an increasingly globalised world, any efforts to close off markets — and other more modern forms of protecting local economies at the expense of global trade — will worsen the grim economic climate, not improve it.‘Buy local’ measures by governments will jeopardise export-sector jobs and risk setting the world on a damaging downward spiral of beggar-thy-neighbour protectionism, according to Pascal Lamy, director general of the World Trade Organisation (WTO). “If you start killing imports, you will kill exports,” said Lamy. Since a high proportion of global output depends on international supply chains, shrinking trade flows would have a huge multiplier impact on world production and jobs, Lamy wrote in Britain’s Financial Times.

Britain’s business secretary, Peter Mandelson, has also warned that “protectionism would be a sure-fire way of turning recession into depression”.

While such talk is reassuring, a new global trade liberalisation agreement would be even more so. However, despite eight years of talk and delays, efforts to clinch the Doha trade talks appear as elusive as ever. A preliminary outline of a deal is, however, set to be presented to the summit of G20 leaders in London in early April.

Lamy has said that countries are 80 per cent of the way to completing the agreement, but admitted recently that the economic crisis has “made it both easier and more difficult to conclude the round”: easier because WTO members now recognise the importance of the round, but more difficult for countries to make concessions that might harm parts of their electorates.

With an agreement on Doha still pending, the EU, as well as Japan and Canada, have said they will lodge a formal complaint against the US at the WTO if the ‘Buy American’ provision — which bars the use of any stimulus funds to buy steel, iron or other manufactured goods for infrastructure construction projects from abroad — is adopted as part of the almost $900bn economic stimulus package.

EU officials say they are “encouraged” by President Obama’s recognition that the disputed clause could fuel protectionist tensions. “He realises, like we do in Europe, that we need to trade our way out of the current economic difficulties. Trade is part of the solution as it acts as a stimulus,” said EU trade commissioner Catherine Ashton.

Ashton is right, of course, but the EU has little to gloat about. Governments in the 27-nation bloc may rage against the US but the public mood in Europe is equally grim.

Public-sector strikes hit France last week as trade unions demanded government action to protect jobs. There have been wildcat strikes in Britain aimed at keeping British jobs for the British and some EU governments are seeking to deter companies that have received public capital from investing outside their home country.

So can Europe escape protectionist pressures — or will governments abandon their free-trade commitments as the economic recession worsens over the months ahead?

There are no clear answers for the moment. But if EU leaders do take the route of economic nationalism, it’s not just the global economy that will suffer, the bloc’s much-vaunted “internal market” — within which goods, people and services can cross borders without barriers — will also receive a fatal blow.

The signs are not heartening. Long the EU’s most enthusiastic backer of American-style deregulation and free trade, Britain has been hit by wildcat strikes protesting a decision by the French-owned Total oil company to bring in 300 Italian and Portuguese contract labourers at a huge construction project in Immingham.

British workers at the refinery said they want jobs to go to locals, not to cheaper foreign workers. Under European Union rules, the Italian and Portuguese labourers have the same right to work in Britain as British citizens do.

Officials have come under similar pressure in Ireland where workers want construction companies to give precedence to Irish labourers over foreigners. Some 300,000 Polish workers who flocked to Ireland’s once booming building sector after Poland joined the EU in 2004 have now returned home as jobs become scarcer in their once welcoming host country.

French President Nicolas Sarkozy is under attack by French trade unions to protect both public- and private-sector jobs. Unions are also concerned at stagnating salaries and slumping purchasing power which they say were ignored when the government drew up its $34bn economic stimulus package last year.

French leaders have so far promised to stay the course. But the country has a long tradition of leaders reversing policy once faced with public and trade union opposition to change and reform. In Germany, Europe’s largest economy, a recent study by Ernst & Young indicated that 78 per cent of small- and medium-sized companies favoured the state embracing ‘protectionist measures’ to shield them from the global recession.

EU officials point out that developing countries have raised tariffs in recent months, despite the G20 pledge in November last year to refrain from doing so. Russia has increased duties on imported cars by 20 per cent.

There is also concern of an increase in the use of anti-dumping measures which raise tariffs when imports are seen as being priced below cost. In recent years, countries such as China and India, which have had anti-dumping rules used against them by the US and the EU, have become big users of anti-dumping duties themselves.

Combating the new inward-looking public mood is not going to be easy for American and European policymakers who have often taken the easy — and politically popular — road of blaming foreign imports and foreign workers for their domestic woes.

In today’s interdependent economies, however, in both rich and poor countries, economic nationalism could be akin to economic suicide.

The writer is Dawn’s correspondent in Brussels

THE election of a moderate Islamist as Somalia’s president has given Barack Obama an early opportunity to redeem his pledge to forge new relationships with the Muslim world.

But if the US leader is to repair the damage caused by past western policy in the Horn of Africa, he will have to move quickly. The government now being formed by Sheikh Sharif Ahmed may yet be strangled at birth.

After winning last weekend’s vote in Somalia’s parliament-in-exile in Djibouti, Ahmed not so much offered as threw an olive branch at Obama. “America has become a force which supports peace ... We think the American view of Somalia is now positive,” he told Egypt’s el-Shorouk newspaper.

Ahmed’s statement crowned a remarkable political turnaround by a man who led the Islamic Courts Union (ICU) until it was driven from power in 2006 by Ethiopia with Washington’s blessing. The US claimed ICU elements were linked to Al Qaeda, but the replacement — the corrupt, western-backed transitional federal government (TFG) — accelerated Somalia’s descent into anarchy.

Ahmed then created the moderate Alliance for the Re-Liberation of Somalia, causing Islamist hardliners to break away. One group, led by Sheikh Hassan Aweys, is based in Eritrea. Another more potent force, the al-Shabaab militia, continued to fight the Ethiopians and the TFG. Following the Ethiopian withdrawal in January, it now controls most of southern and central Somalia.

Its leaders denounce Ahmed as a traitor. Sheikh Hayakalah, an al-Shabaab leader in Kismayu, said: “We shall fight the so-called government of Sharif in every place. He is now with our number one enemy, Ethiopia, and calling for more support from non-believers.”

The UN’s Somalia monitoring group says al-Shabaab comprises several thousand fighters, outnumbering TFG forces and the African Union peace mission. Regional experts say many of these young fighters are not religious zealots. Humanitarian imperatives aside, western security and commercial self-interest suggest that the opportunity presented by Ahmed’s election should be urgently seized. The Obama administration has not yet said how this policy may change, or how it plans to help Ahmed end Somalia’s tragedy.

— The Guardian, London