Sat, Mar 25, 2006 - Page 9 News List

France mans the barricades against change

If France objects to the claim that it is having its economic cake and eating it, then it's doing little to convince otherwise


When French voters rejected the EU constitution last May, it was thought by many observers to be an anomaly -- a one-off act by voters afraid of losing cherished privileges in a land committed to an integrated Europe.

However, nearly one year on, it is beginning to look more and more as if the country that likes to style itself a "motor of Europe" might actually be more of a roadblock on the path to European integration.

A series of maneuvers by French companies and leaders have created the suspicion, in Brussels and elsewhere in Europe, that the French want to have their economic cake and eat it too -- that is, benefit from the EU's open borders while keeping a firm hand on their family jewels.

Growing criticism of alleged French protectionism provoked President Jacques Chirac into an angry defense of his country during talks with German Chancellor Angela Merkel earlier this month.

"France has been accused in the foreign media of being protectionist," Chirac said in Berlin. "This is absolutely absurd."

Nevertheless, resentment over what French leaders themselves have called "economic nationalism" has grown so strong that one Italian editorialist spoke of a "French illness that risks infecting everyone on Europe."

Italian Finance Minister Giulio Tremonti compared the situation created by French behavior to the period leading up to World War I.

"Today, no one wants a blockage of the European markets either, but ... we are risking a chain reaction," he complained.

The Italians were commenting on the most recent case of French so-called economic nationalism, which involves two French companies, French energy giant Gaz de France (GDF) and the energy and environment services group Suez.

Brussels and Rome accuse the French authorities of arranging a shotgun wedding between the two companies to head off an anticipated hostile takeover bid for Suez by the Italian giant ENEL.

As a result, Brussels has chosen to make a test case of the Suez affair about the way business will be conducted in Europe in the future.

The EU could take France to court over the case if it proves that French authorities played a role in hampering ENEL's ability to make a bid for Suez.

On Tuesday, French Finance Minister Thierry Breton -- apparently fearing censure by Brussels -- blithely said that his government was not encouraging this or any other merger.

"I only encourage companies to do their work," Breton said. "They can join with whomever they like."

This was the same Breton who two months earlier openly expressed his government's hostility to a hostile takeover bid by the world's No. 1 steelmaker Mittal Steel for Europe's Arcelor.

Breton said the French government was worried about the takeover attempt because "Arcelor carries out a very large part of its activities in Europe, notably in France."

In fact, the French government has compiled a telltale history of interference in the free market of cross-border takeovers, repeatedly selecting like a protective mother what it considers the most fitting partners for its companies.

In 2004, when the Swiss pharmaceuticals company Novartis made a bid for the French-German group Aventis, the government of then-prime minister Jean-Pierre Raffarin immediately voiced its strong opposition.

"We will do everything in our power so that this merger is not completed," a Raffarin adviser said at the time. "France is a sovereign state. We will not let the Swiss simply take over what we have spent years to build up."

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