Thanks to years of promoting economic protectionism, this nation of tremendous cultural, social and economic potential has the third-highest level of state ownership of enterprises in the EU15. It is on a par with Oman and Kuwait as the 24th-freest economy in the world. The country is only 25th globally in per-capita income. Some 25.2% of its national GDP . . . the fourthhighest proportion in the world . . . is consumed by state supports and subsidies. It persistently ranks below the EU15 average in terms of the quality of its taxation system, judiciary, legal system and property rights, regulatory trade barriers, the size of the traded economy, restrictions on foreign ownership and investment, controls of capital, labour and credit markets, freedom of its citizens to trade internationally, competition in its domestic banking, price controls, costs of government bureaucracy, and quality of business regulations.

Fittingly, these 'outstanding' achievements on a domestic front have meant that the French positions on economic development within the EU became almost synonymous with entrenched protectionism. Under the presidency of Jacques Chirac, loud pronouncements about the need for harmonised taxation, EUwide restrictions on travel, pharmaceutical, IT and other industries, inter-European barriers to trade in services and other grand 'France comes first' policies were avoided like the plague by other European leaders.

Now, as if France needed more isolation, European politicians, central bankers, and Commission officials are joining forces to contain the new president of the French Republic, Nicholas Sarkozy.

Sarkozy is calling for a more interventionist approach to exchange rates (to stimulate French exports), a relaxing of eurozone rules on fiscal deficits (he is refusing to balance the French budget before 2012), the scrapping of the ECB's commitment to fight inflation (Sarkozy's economic platform rests primarily on increasing inflationary public spending) and the abandonment of the EU commitment to fight monopolies and state aid (the second pillar of Sarkozy's 'market' reforms is pumping more taxpayers' money into the 'national champions' . . . government-owned monopolies).

These proposals aim at the heart of existing monetary and economic systems, threatening the survival of the euro. In the 1980s and early 1990s, countries like Italy and France should have learned from their own first-hand experiences that bad fiscal policies lead immediately and unavoidably to currency and interest rate crises. Now France is advocating a repeat of the very same errors on an EU-wide scale.

Should French fiscal recklessness be legitimised, no interventions by the monetary authorities into forex markets will be able to save the common currency. Higher budgetary deficits run by France already impose severe costs on other European economies.

At the same time, active interference in the currency markets will be a drain on EU resources and will undermine the credibility of the common currency. Nothing short of a multilateral coordinated interventions involving the US, Japan and the UK will be able to shift euro exchange rates off their free-float levels.

At the same time, Sarkozy's antediluvian views on industrial policy promise to throw France and Europe back decades by retarding enterprise, competition and innovation. As the latest OECD report shows, the French economy's over-reliance on 'state champions' is already doing as much. According to the Centre for Economic Policy Research, with only 1.6% of inventions giving rise to new companies, France has a lower rate of knowledge economy entrepreneurship than any other country in Europe.

Not surprisingly, Sarkozy's proposals have led to a backlash from European leaders.

Even France's long-time ally, Germany, is signalling serious disappointment with the French neo-protectionist stance. Last week, German chancellor Angela Merkel told the Bundestag's EU committee: "If it should become the rule that every change of government [in Europe] triggers calls for amendments to international agreements we would be headed towards complications". She was, of course, talking about Sarkozy's desire to undermine the effectiveness of the reformed Growth and Stability Pact.

In short, the ECB, the European Commission and policymakers from across the EU will resist French pressure to slide back into the age of state monopolies, trade restrictions and barriers to labour and capital mobility. Alas, there is little hope that France will hear their message.

Dr Constantin Gurdgiev is an economist and editor of Business & Financemagazine