The director general of Ibec, Turlough O'Sullivan, has suggested that the European Commission's opposition to the Government's proposed State aid to Intel's new development in Leixlip may have been rooted in continental European envy of the Republic's economic success.

Speaking in Brussels, where he was attending a meeting of European business associations, Mr O'Sullivan said there was no justification on grounds of competition for the commission's stance. "It's hard not to be a bit suspicious that the EU may not have been properly motivated," he said.

Mr O'Sullivan said that the Government had been remarkably successful in attracting high-calibre investment to the Republic, through low corporate tax rates and by other means.

"My view is that, rather than be jealous and negative, why doesn't the competition behave in a similar way? " he said.

The Government last month withdrew a plan to grant investment aid worth up to €100 million for a €1.6 billion expansion of Intel's Leixlip plant. The commission had made clear that it regarded the aid as illegal and told the Government that a formal investigation was almost certain to strike it down.

The Taoiseach, Bertie Ahern, will raise the Intel case at a meeting of EU leaders starting today in Brussels, when he will plead for new state-aid rules to take account of the impact of investment on the whole of the EU.

The Government argues that, since the Intel project was unlikely to go to any other EU member state, subsidising it would not create unfair competition within the EU.

Later this year, the commission will draw up new guidelines for state aid to innovative and high-tech industries and the Government is hoping to ensure that the new rules will allow state assistance to developments such as Intel's.

The commission justified its opposition to the Government's aid plan on the basis that it would create no new jobs, would not involve any technology transfer and would reinforce Intel's already dominant position in the European microchip market.