Monday, June 26, 2006

France's anti-globalisation fight a losing battle.

EU: France getting hit from both sides as the protectionist government is realizing they cannot stop the world economy.

FRANCE’S attempts to protect itself from globalisation through state intervention were in tatters last night, with Airbus in crisis and Arcelor likely to fall into the hands of Mittal Steel. Arcelor’s U-turn, in particular, illustrates the failure of the French Government’s economic patriotism. Lakshmi Mittal’s steelmaking group was a seen as the symbol of a new threat to Gallic status and sovereignty — the threat of being overtaken not just by the United States, but by developing nations as well. Never mind that Mr Mittal lives in London. Never mind that his group is based in the Netherlands. He is viewed in Paris as an Indian — the representative of a country whose aggressive capitalism could undermine France’s high-tax, generous welfare social model. Such fears run deep in France and Dominique de Villepin, the Prime Minister, has sought to calm them by manoeuvring to prevent the takeover of French groups by foreign competitors. He waded into rumours that Pepsico was planning a bid for Danone, the food group, sought to rebuff a move by Enel, the Italian energy group, for Suez, the utility, and threw the French Government’s weight behind Arcelor’s battle to stay independent. Although Arcelor has its headquarters in Luxembourg, its industrial base is in France, where it is seen a national champion. However, M de Villepin’s determination to buck the markets is proving futile and damaging — futile because he does not have the power to do so and damaging because it prevents his compatriots from accepting the reality of globalisation. After the French Government announced its opposition to Mittal’s offer, ministers realised their powerlessness. The decision lay not with them, but with Arcelor’s shareholders. They were acting like King Canute. The ministers have since taken a more prudent line. However, the damage has already been done and the French public will view Mittal’s victory as a defeat for Paris — thus fuelling anxieties over la mondialisation.

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