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Cablegate: New French Business Leader Warns Against Government

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

011115Z Sep 05

UNCLAS SECTION 01 OF 02 PARIS 005935

SIPDIS

SENSITIVE

STATE FOR EB/TPP, EUR/ERA, EUR/WE, EUR/PPD, DRL/IL AND
INR/EUC AND EB
COMMERCE FOR NAAS
DEPT OF LABOR FOR ILAB
DEPARTMENT OF COMMERCE FOR ITA

STATE FOR USTR

E.O. 12958: N/A
TAGS: ECON ETRD PGOV PREL ELAB PINR FR EUN
SUBJECT: NEW FRENCH BUSINESS LEADER WARNS AGAINST GOVERNMENT
PROTECTIONISM


NOT FOR INTERNET DISTRIBUTION


SUMMARY
-------

1. (SBU) Laurence Parisot, the new head of France's leading
business association, MEDEF, recently warned the French
Government against any resurgence of protectionism. In a
newspaper interview on Aug. 30, she reiterated her intention
to reconcile the French with the market economy, business
culture, and work. This coincides with MEDEF's decision to
inform the French population at large of the realities and
the advantages of a global and market economy in view of the
2007 presidential elections. End Summary.

2. (SBU) Departing from her predecessors at MEDEF, Parisot
clearly set an open market, pro-competition tone by
stressing that France should abide by existing global market
rules. Referring to Prime Minister Dominique de Villepin's
recent call for "economic patriotism" following the false
rumors of a Pepsi Co takeover of Danone, Parisot told French
newspaper "Le Figaro" on August 30 that takeovers were a
"normal" part of business and that France could not hide
from global market rules by erecting a new "Maginot line."
Pointing to the hypocrisy of France's position, Parisot
added that France could not boast of conquering new markets
while "refusing reciprocity." She proposed as an
alternative that France adopt a system of pension funds.
The GOF has been reluctant to introduce pension funds in
France because of stiff trade union opposition to the
"privatization" of France's government-financed retirement
scheme.

3. (SBU) Parisot's statement -- the first clear message by
a MEDEF leader that protectionism should never be condoned
in whatever shape or form -- follows the recent confirmation
by French Industry Minister Francois Loos of upcoming GOF
plans to draw up a list of industrial sectors to be shielded
from foreign takeovers. This heated exchange between French
Government and business over whether foreign predators
should be allowed to take over French "industrial jewels"
was triggered by the recent Pepsi Co.-Danone speculation.
This episode widened the growing gap between political and
business circles to an extent unparalleled before. During
MEDEF's recent off-site summer seminar ("universite d'ete"),
many business leaders, including Denis Kessler, President of
the French Insurance Federation and former Vice-President of
MEDEF, pointed out that "politicians remembered the
importance of business only when companies were forced to
close down, relocate or fall into the arms of a foreigner."

4. (SBU) In her interview with "Le Figaro," Parisot
reiterated her calls for more flexibility in the French
labor market and the French Labor Code. "It is illusory to
think that the Labor Code provides security," she explained.
A company will close down or lay people off regardless of
restrictive labor code regulations, she added. Instead,
Parisot called for more anticipation and greater training
availability.

5. (SBU) Invoking MEDEF's major campaign theme between now
and the 2007 Presidential elections, Parisot said that the
first condition for economic growth was straight forward:
France needs to work more. MEDEF will spend much time to
convince people that the mentality borne out of the 35-hour
runs counter to France's interests. During the recent MEDEF
summer seminar (Aug. 29-31), many if not all MEDEF speakers
and interlocutors confirmed to us that the government sent a
"catastrophic" message to French people that the country
could afford to work less and have more time for leisure
while the rest of the world worked more.

6. (SBU) The only antidote to this frame of mind is to
work abroad, one French business leader told us. As an
example, he mentioned a number of young French people who
had come to work at the UK subsidiary of a large French
company "with their heads full of French social regulations"
only to discover the love and pride one can derive from a
"solid day's work." MEDEF is determined to turn French
mentalities around.
5. (SBU) With the exception of UMP President and Interior
Minister Nicolas Sarkozy, few French politicians would agree
with these precepts, at least not officially.
Stapleton

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