Analysis: Steel reprieve comes at price for France's Hollande

Sun Dec 2, 2012 5:41am EST
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By Mark John

PARIS (Reuters) - Francois Hollande's bid to rescue steel furnaces in France's historic industrial heartland was to be the mark of a president on the side of the workers and a state with the courage to bring a multinational to heel.

But the two-month stand-off over steel giant ArcelorMittal's ISPA.AS Florange plant in Lorraine has unnerved investors in the euro zone's second largest economy, confused France's unions and exposed his six-month-old government to international ridicule.

His Socialist allies have hailed as a victory a late-Friday compromise under which ArcelorMittal agreed to invest 180 million euros to expand the site near the German border over five years and hold off making forced redundancies.

But as the European steel sector struggles to cope with over-capacity, the furnaces themselves will remain shuttered for now, and questions remain over the exact fate of the some 630 workers employed there and further funding needed for expansion.

With unemployment at 14-year highs of 10 percent and his popularity ratings at record lows for a president only half a year into his mandate, there was clear political advantage for Hollande to lock horns with Indian steel magnate Lakshmi Mittal.

But the result is at best a no-score-draw, and the tactics used - anti-business rhetoric and the threat of nationalization - could damage his wider reform effort.

While his pugnacious, micro-managing predecessor Nicolas Sarkozy led from the front, Hollande let his ministers lead the fight, creating confusion over who runs industrial policy.

Arnaud Montebourg, the firebrand leftist industry minister who pushed the nationalization option hardest, declared Mittal a persona non grata in France and revealed he had found an anonymous potential buyer ready to invest in the plant.   Continued...

French President Francois Hollande jokes with journalists before welcoming European Central Bank (ECB) President Mario Draghi at the Elysee Palace in Paris, November 30, 2012. REUTERS/Philippe Wojazer