Damned either way

As far as demonstrations go, it was no big deal and, with no reports of the well-practised Belgian police water cannons in action, it was a pretty tame affair.

Nevertheless, more than 50,000 protestors gathered in Brussels yesterday to march against the proposed EU services directive, complaining that the commission's attempt to "open up public service markets" would drive down social and labour standards and threaten jobs.

The demonstration was organised by the European Trade Union Confederation which claims that, if the measure is approved it would provide ample opportunity for competition and privatisation in all public services, including those of general interest such as education and health.

John Monks, secretary general of the confederation was joined by other union leaders including Mickael Summer of the Federation of German Trade Unions (DGB), Jose Fidalgo of Spain's Comisiones Obreras (CCOO) and Francois Chereque of France's CFDT, in leading the crowd in chanting "Stop Bolkestein!"

The name refers to Dutch former EU commissioner Frits Bolkestein, who first introduced the measure – although it has been adopted with gusto by the Barroso commission which regards it as "a key plank" in the strategy to revive the flagging "Lisbon agenda", the programme adopted in 2000 with the aim of making Europe the world's most competitive society by 2010 (Do pay attention and try to stop giggling).

The commission continues to argue that the directive will revitalise the economy by enabling service providers to compete anywhere in the EU, but it has attracted the ire of the unions by introducing the "country of origin principle". This would allow a business to operate in another country under the laws of its own.

The unions fear this will drive "standards and wages" down to the level of the poorer countries, as businesses will be able to set up their headquarters in countries where the labour laws are least costly. Barroso, we are told, has infuriated the unions by saying there was no question of abandoning the country of origin principle.

Rejecting the claims of job losses, he retorted that: "Some people think the European Commission is there to protect the 15 against the new 10. It is not. It is there to promote the general interest of Europe."

The left-wing genesis of the dispute was illustrated by an Italian union demonstrator, Sergio Sinchetto, who told a reporter yesterday that "In Italy, we are already at war with the liberal policies of (Prime Minister Silvio) Berlusconi. We do not want to see a directive that extends this policy on the European scale."

The discontent with the proposed directive is also spilling over into the referendum campaign in France, with even Chirac latterly speaking out against the proposals, demanding that it is taken back by the commission and "rewritten".

Michel Barnier, the French Foreign Minister, condemned it as "social dumping" and even the right-wing deputy Philippe de Villiers railed the proposal that "would permit a Polish plumber to work in France with the salary and employment protection of his own country".

The British government, however, is largely in favour of the directive, although it has reservations about essential services, such as health, and concerns that service companies will be able to evade national taxes in high tax areas by relocating to Central and Eastern Europe where a number of accession states have adopted very low company tax rates.

Thus, although only 50,000 may have taken to the streets in Brussels yesterday, the opposition is far greater than the numbers would suggest, leaving Barroso with a serious problem on his hands. If he gives in, be will be condemned for pandering to protectionist forces and, if he does not, opposition can only intensify. He is damned either way.