A new form of protectionism is fast establishing itself around the globe. This is the one that stops foreign companies or sovereign wealth funds buying into national assets deemed to be strategically important. From China to the US, and from Germany to Canada, countries all over the world are putting up barriers to foreign direct investment.
About the only country which isn't is the UK, whose government religiously sticks to the open borders policy it believes to have been a key part of the nation's economic success. Others are less sure of the benefits, and in a world still awash with cash and capital imbalances, have been taking steps to protect their companies, real estate, factories and energy assets from overseas acquisition.
The most recent example is proposed legislation in Germany to make it more difficult for foreign, government-controlled investment funds to buy what are judged to be key German companies, including energy utilities and aerospace. Ominously, Germany might also include foreign-controlled private equity funds on the list of unwanted acquirers. France's new President, Nicolas Sarkozy, has similarly played the economic patriotism card, having succeeded in striking "free and undistorted competition" from the EU treaty's list of policy objectives.
The European Union theoretically allows a free market in cross-border mergers, yet even within the EU these rules are routinely flouted in key sectors such as energy and banking. Yet such protections are not confined to "old" Europe. In the US they masquerade as "homeland security". Already they have succeeded in blocking the acquisition by Dubai Ports of a number of US container terminals. China's Cnooc was also prevented from buying up one of California's largest oil companies, Unocal Corp.
A number of takeovers by US private-equity firms in China have been similarly blocked, while India has long had a myriad of different protections to prevent not just takeovers, but foreign participation more generally in key industries.
When we think of protectionism, we think mainly about barriers to trade in goods and services. Interference with takeovers is a relatively new form of protectionism which the World Trade Organisation has so far left largely unaddressed. There are few internationally agreed rules to prevent barriers to capital investment. The present explosion in cross-border takeover activity has prompted a political backlash.
With its open borders, Britain leads from the front in making the free-for-all case in cross-border mergers. Yet privately, even the Brits admit to a degree of concern when it is pointed out to them that outside National Grid and Centrica, virtually the entire British energy supply industry is now owned by foreign interests.
Is it right that the sovereign wealth funds of Asia and the Middle East should be allowed to buy up our assets - in effect nationalisation but by a foreign power - when reciprocal rights to do the same overseas frequently don't exist? So far ministers have just shrugged their shoulders. The test will come when there is a Chinese bid for BP, a Russian offer for Centrica or a UAE stab at Rolls-Royce. How robust will our free-market idealism prove then?
UBS's Wuffli latest victim of the activists
The immediate cause of Peter Wuffli's sacking as chief executive at UBS, the bulge bracket investment bank, was presumably the debacle over the in-house hedge fund Dillon Read Capital Management. Mr Wuffli was personally involved in setting up this business, so it was quite a humiliation for him to have to close it down.
Even so, it was generally assumed he had survived this embarrassment and certainly few were anticipating his public execution quite so soon. So why did Marcel Ospel, who Mr Wuffli was supposed to succeed as chairman, decide to act?
UBS has performed well but unspectacularly under Mr Wuffli. Its wealth management business is the envy of rivals, but the investment banking side is widely thought to be losing the plot. Mr Wuffli's bureaucratic and risk averse style seemed unsuited to the flamboyant nature of investment banking. In recent months, UBS has suffered some high-level defections, with more thought to be about to jump ship.
A number of highly aggressive shareholder activists have also joined the share register over the last year or two. Mr Ospel's natural inclination would be to tell them go jump into the icy waters of Lake Geneva, but there is just a sneaking suspicion that they may have a point. With the terrible precedent of ABN Amro to act as a warning to all, it was plain that something needed to be done. Mr Wuffli's sacking is the public display of action supposed to demonstrate that UBS is not entirely asleep at the wheel.
None the less, the pressure for a break-up or a deal is not going to go away, and it may be that the disarray now apparent at the top brings such an outcome nearer. Under Mr Wuffli, UBS became the investment bank which was afraid of its own shadow - too bureaucratic and too risk averse. To succeed, it needs to rediscover some of the entrepreneurial spirit that originally made it into one of the world's leading investment banks.
Knives are out for poor old Diggers
Gordon Brown's "government of all talents" is barely more than a week old and already it is in trouble thanks to the appointment of Sir Digby Jones, former director general of the CBI, as minister for trade.
Sir Digby's elevation to government and the House of Lords has infuriated Labour loyalists, who point to his outspoken attacks both on the unions and Government policy. Sir Digby has agreed to take the Labour whip, but refuses to join the party. Now it emerges that only a few months back he was in talks with David Cameron about becoming the Tory candidate for London mayor.
This doesn't necessarily mean that Sir Digby is a Tory, and indeed he was vehemently denying last night that he would ever have stood at the Tory candidate. Whatever the truth, the episode paints him as something of a political tart and undoubtedly fuels the row over whether it is entirely appropriate to have a business lobbyist sitting there at the heart of government. Business is a vitally important constituency whose interests need to be represented in government, but it shouldn't be allowed to dictate public policy.
The history of unelected ministers with a background in business is mixed. One of the more colourful was Lord Young of Graffham, who ran the Department of Trade and Industry with headline-grabbing gusto, yet perhaps inevitably ended controversially when shortly after leaving office he became chairman of Cable & Wireless, a company which while in government he had awarded an extraordinarily lucrative mobile phone licence to.
David Simon, former chairman of BP, ran into questions about how his shares in BP were controlled and was bounced out of a job which he later admitted to finding deeply frustrating. David Sainsbury fared rather better with the science and technology brief and actually seemed to enjoy it, yet he never did entirely manage to quash the suggestion that as a Labour Party donor he had essentially bought the job.
Perhaps Sir Digby will do better, but even before he's got his feet under the table, the knives are out for him and I'd be amazed if he survives for long. His appointment looks too much like a gimmick to be taken seriously.
John Hutton, Secretary of State for Business, Enterprise and Regulatory Reform, jokingly claims already to have heard "Comrade Digby" humming the Red Flag while walking the corridors of power. If he'd listened more carefully he might have recognised the more irreverent version - "The working class can kiss my ..."Reuse content