US embassy cable - 05PARIS1264

C O N F I D E N T I A L SECTION 01 OF 02 PARIS 001264 
 
SIPDIS 
 
STATE FOR E, EB AND EUR/WE 
STATE PASS USTR 
 
E.O. 12958: DECL: 02/28/2015 
TAGS: ECON, ETRD, EFIN, PREL, FR 
SUBJECT: FRANCE'S FOURTH FINANCE MINISTER IN A YEAR: 
THIERRY BRETON 
 
REF: A. PARIS 1230 
     B. PARIS 1231 
 
Classified By: ECON Minister Counselor Thomas White for 
reasons 1.5 (b) and (d) 
 
 SUMMARY 
------- 
 
1.  (C) France Telecom CEO, Thiery Breton, has been named as 
new Minister of Finance, Economy and Industry, replacing 
Herve Gaymard.  Breton, an admired and politically astute 
technocrat and business executive, had been approached to 
replace Nicolas Sarkozy as Finance Minister in November 2004 
but turned down the offer, and the job went to Gaymard. 
Chirac has now asked Breton to take the job on an emergency 
basis, following Gaymard,s resignation in the burgeoning 
scandal over his misrepresentations regarding government 
payment for a luxury apartment. 
 
2.  (C) With French unemployment hitting the symbolic 10 
percent level, Breton will need all the skills he has learned 
from reinvigorating sclerotic state-owned companies to manage 
one of the largest government ministries and to reinvigorate 
the French economy by generating badly needed economic 
growth. Breton is a political ally of both President Chirac 
and PM Raffarin, having served with the latter on the 
Poitou-Charentes Regional Council during the 1990's.  The 
50-year-old Breton is experienced in international business 
circles and speaks excellent English.  END SUMMARY. 
 
Gaymard Out, Breton In 
---------------------- 
 
3.  (U) On 25 February, Finance Minister Herve Gaymard turned 
in his resignation in response to an enveloping housing and 
benefits scandal (ref A), particularly his misrepresentations 
about his property holdings and personal wealth amidst 
controversy over a luxury apartment rented for him by the 
government.  Later that day, France Telecom (FT) CEO Thierry 
Breton was named by President Chirac to be Gaymard,s 
successor. 
 
4.  (C) In a February 1 luncheon with the Ambassador, Breton 
claimed that he avoided taking the Finance Ministry job 
earlier in November 2004, when Gaymard succeeded Nicolas 
Sarkozy, arguing he wanted to complete his three-year 
recovery plan for France Telecom.  However, Chirac clearly 
felt he was the man for the job this time.   This will be 
France's fourth Finance Minister in less than a year, and 
Chirac wants to avoid any further scandal in the run-up to 
the EU Constitution referendum.  In Breton he has chosen a 
capable, ambitious individual who will be sensitive to Elysee 
wishes but command credibility domestically and 
internationally. 
 
Corporate Background 
-------------------- 
 
5.  (SBU) Breton is widely seen as a savvy corporate 
turnaround specialist.  In the mid-1990s, he helped improve 
(temporarily) the balance sheets of computer and software 
maker Bull.  In the late 1990,s, he was credited with saving 
the French consumer electronics company Thomson Multimedia, 
which, at the time, Prime Minister Alain Juppe wanted to 
effectively give away to Daewoo Corporation for a symbolic 
franc.  Breton,s quick turnarounds at Bull, Thomson, mobile 
phone operator Orange, and finally at France Telecom, were 
accomplished by sharply reducing costs and increasing 
revenue. 
 
6.  (SBU) Breton,s professional experience has been mostly 
in the French corporate sector.  He did a stint at the 
Ministry of Education, where he served as technical adviser 
for information technologies between 1986 and 1988.  He is a 
political ally of both President Chirac and PM Raffarin, and 
served with the latter on the Poitou-Charentes Regional 
Council during the 1990's.  Prior to assuming leadership of 
France Telecom (FT) in October 2002, he was Chairman of the 
Board of Directors of Orange, FT,s mobile unit.  At FT, he 
took over what was then regarded as the most indebted 
telecoms firm in the world.  He undertook aggressive steps, 
selling off non-essential assets, negotiating a deal with the 
GOF to help pay off the debt, and shedding 7,500 jobs in 
FT,s domestic operations, after difficult negotiations with 
the unions. 
 
7.  (SBU) Prior to his time at Orange/FT, Breton was Chairman 
and Chief Executive Officer of Thomson (formerly Thomson 
Multimedia S.A.) from 1997 to September 2002.  From 1993 to 
1997, he was on the Executive Committee of the Bull Group. 
From 1990 to March 1993, he served as Director General of 
CGI, a service development company.  From 1981 to 1990 he 
served as Chief Executive Officer of Forma Systems, an 
information systems engineering company.  Breton has also 
served on the boards of Thomson SA, Schneider Electric, and 
Dexia (Belgium) and on the supervisory boards of insurance 
giant AXA and of Equant NV. 
 
Personal Background 
------------------- 
 
8.  (SBU) Born in Paris on 15 January 1955, Breton graduated 
from the Ecole suprieure d,lectricit (Suplec) de Paris 
and the Institut des Hautes Etudes de Dfense Nationale 
(IHEDN).  Fluent in English, Breton worked as a math teacher 
at the French Lycee in New York as part of his military 
service obligations between 1979 and 1981.  He has also 
authored eight science fiction books and several other books 
on information technology.  He has been decorated with the 
Legion of Honor and, in 2004, was designated as a Commander 
in the National Order of Merit, both prestigious awards.  He 
is married to Nicole-Valerie Baroin with whom he has three 
children. 
 
Comment 
------- 
 
9.  (C) As the fourth French Finance Minister in less than a 
year, Breton, age 50, will need all of his political savvy 
and management skills.  President Chirac will want to chart a 
cautious course between now and the EU constitutional 
referendum this summer, but Breton at the same time will be 
expected to confront persistent unemployment and lagging GOF 
efforts to improve labor market flexibility; carry out 
pension and health care reform; reduce the public sector 
deficit, and stimulate the economy.  Unlike his previous 
turnaround roles, however, Breton is not the CEO of this 
ship, whose captain has a broader political agenda to protect. 
Leach