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Cablegate: Chirac Launches Innovation Agency to Create

This record is a partial extract of the original cable. The full text of the original cable is not available.

011115Z Sep 05





E.O. 12958: N/A


Ref: A)Paris 4900 B)Paris 5667

1. Summary. President Jacques Chirac outlined on August 30
a new industrial innovation agency and research drive to
encourage employment and prevent outsourcing. Spearheading
his policy drive in favor of industrial innovation in the
heart of the Champagne region, President Jacques Chirac
inaugurated the first of 67 industrial clusters or "poles of
competitiveness" to receive tax breaks and 1.5 billion Euros
(USD 1.8 billion) in state support over the next three years
(Reftel B). At the same time, he launched another pet
project, the Agency for Industrial Innovation AII), which
has a budget of one billion Euros USD 1.2 billion) to be
distributed over the next three years to "priority" sectors
such as energy, health, information society, and the
environment (Reftel A). Chirac said that the AII had
already identified a number of projects, including "the
development of an Internet search engine." Chirac denied a
return to French industrial policies of the 1970s, and
emphasized that these new measures were part of a broader
effort that involved specific projects as well as European
partners. End Summary.

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2. (SBU) During his policy presentation to French business
leaders and scientists, Chirac said that "all the conditions
are in place for France to go boldly on the offensive,"
particularly at a time of increased global competition for
"technological supremacy." He added that innovation was
essential to the creation of "highly qualified employment"
and was the best response to outsourcing." However, he
rejected any intention to reintroduce state interventionism
or protectionism, which he stressed were now "a thing of the
past." Instead, he said he wanted the new Agency for
Industrial Innovation to "resist the tyranny of the sort-
term" and focus on projects similar in scope to Airbus,
Ariane or nuclear policy, but using the "instruments adapted
to an open economy."

3. (SBU) At the same time, Chirac unveiled a new effort
for the "renewal of research" through a 3 billion Euro
budget over the next three years. These new resources will
fund the new National Research Agency as well as the
regional industrial clusters. Chirac further announced a
new framework bill for research over the next few months as
well as a new high Council for Science and Technology. As
part of that bill, France will also create a new School of
Economy to rival the best global institutions. These
measures will be detailed in a framework bill on research to
be presented in the coming weeks.

4. (SBU) Comment. Chirac's speech is a combination of
already announced agencies and a grab bag of new measures.
The heart of the message appears to be that Chirac is paving
the way for the future by setting innovation, science and
technology as the new domestic priority in France to remedy
all current ills, from unemployment hovering at 10 around
percent, to a record trade deficit in the first six months
of 2005. Cynics may point out that Chirac's current high-
tech drive is intended to take him through the 2007
Presidential campaign, as all government support is
currently earmarked for 2006 and 2007. Small French
businesses, for their part, fear that government aid will
help France's largest industrial players.

5. (SBU) It is worth noting that Chirac directly addresses
critics of his new industrial policy by pointing out that it
does not signal a return to France's old "Colbertist" ways.
He emphasized that these new measures were part of a broader
-- and if not national, at least Europe-wide effort that
involved the private sector, scientists and educators.
Despite the confusion that prevails over the synergies
between the various new agencies and their funding, the
emphasis on these solutions is nevertheless fueling fears
that the French Government may be attempting to create new
champions. With memories of the Franco-German Sanofi and
Aventis merger still fresh, the GOF is moving forward
rapidly to promote cooperative projects with other EU
partners, beginning with Germany on the "European Google"
project, all the while abiding by EU rules on state aid.
End Comment.

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