French politics trump business over Alstom

Sun Jun 22, 2014 6:02pm EDT
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By Mark John and Jean-Baptiste Vey

PARIS (Reuters) - There was dual cause for back-slapping in President Francois Hollande's Elysee Palace late on Friday night.

France had thrashed Switzerland in the soccer World Cup, so largely assuring its place in the next round. And the government had just imposed its will to end a two-month fight for control over ailing French engineering group Alstom.

"France has shown it can negotiate cleverly and openly with multinationals," an official close to Hollande said of the decision announced hours earlier defining the shape of a planned tie-up between Alstom and U.S. conglomerate General Electric.

"France's international image was at stake ... We have shown we can stand up for our sovereign interests, as other countries do," said the official, speaking on condition of anonymity.

It may be debatable what that image now is. But for prospective investors in France the Alstom saga has brought home one simple fact: in France, economic patriotism rules.

From the moment in late April that GE revealed its interest in the 86-year-old group that built France's power grid and high-speed TGV trains, politics has never been far away.

The battle was fought as Hollande's Socialists tried in vain to halt the rise in last month's European Parliament elections of the far-right National Front, whose protectionist platform attracts voters bewildered by France's economic decline.

The pace-setter in the race for Alstom has not been GE or its German rival Siemens but 51-year-old French economy minister Arnaud Montebourg, a loose cannon who makes no secret of his own presidential ambitions.   Continued...

The logo of French power and transport engineering company Alstom is pictured on the roof of the company's plant in Reichshoffen near Haguenau, North Eastern France, April 24, 2014. REUTERS/Vincent Kessler