is the eu cracking up?

Telegraph | To recap, Mr Sarkozy last week pointedly referred to a Peugeot-Citroen plant in the Czech Republic to say that planned French government aid to automakers would be on the condition that all cars would be "Made in France". This is what he said: "If you build a Renault plant in India to sell Renaults to Indians, that's justified, but if you build a factory, without saying the company's name, in the Czech Republic to sell cars in France, that's not justified".

Like it or not, that is what the EU's single market is all about. Is Mr Sarkozy now against it? Question that and then what is left for the EU?

This all comes as the Elysée announces up to 6 billion euro worth of handouts (£5.25 billion) to Renault and PSA Peugeot-Citroen.

The five year loans will include conditions such as a halt to layoffs and a suspension of factory closures in France.

Prague is furious.

Mirek Topolanek, the usually unflappable Czech PM, has lashed out by warning Mr Sarkozy that the Lisbon Treaty, much beloved in Paris and Berlin, might be a casualty.

"If someone wanted to really jeopardise the ratification of the Lisbon Treaty, he could not have chosen a better way and a better time," he snarled on Monday.

A Czech statement: "As the Prime Minister of the Czech Republic I do not understand the argument that it is unjustifiable to manufacture cars for the French market in the Czech Republic. The attempts to use the financial crisis to introduce such forms of protectionism and protective measures may slow down and threaten the revival of the European economy".

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