US embassy cable - 05PARIS5232

C O N F I D E N T I A L SECTION 01 OF 02 PARIS 005232 
 
SIPDIS 
 
STATE FOR EUR/WE AND EB 
 
E.O. 12958: DECL: 07/29/2015 
TAGS: ECON, EFIN, PREL, FR 
SUBJECT: AMBASSADOR'S CALL ON FINANCE MINISTER BRETON 
 
REF: MERTEN-BALL AND WHITE-ALLEGRONE E-MAIL EXCHANGES 
 
Classified By: Ambassador Craig R. Stapleton for reasons 1.4 (b) and (d 
). 
 
1.  (C) SUMMARY.  Finance Minister Breton underlined to 
Ambassador Stapleton his commitment to press for economic 
reforms, including tax reform, as a way to stimulate economic 
growth in France.  He emphasized his "great love" for the 
United States and called himself a great friend of the United 
States in the heart of the French Government.  He promised to 
work with the Ambassador to keep bilateral economic relations 
excellent.  Breton also signaled his desire to travel to 
Washington later this year.  End Summary. 
 
2.  (U) On 27 July, Ambassador Stapleton paid his 
introductory call on Minister of Finance and Economy, Thierry 
Breton.  Diplomatic Advisor, Sylvain Lambert, accompanied 
Breton, while Embassy DCM and Econ Counselor accompanied 
Ambassador Stapleton. 
 
A Friend of the U.S.A. 
---------------------- 
3.  (C) Breton welcomed Ambassador Stapleton to France and 
said he had an excellent working relationship with his 
predecessor.  Breton noted that he had a "great love" for the 
U.S. and enjoyed visiting the U.S. regularly.  He emphasized 
his familiarity with the U.S. gained through his  stints 
teaching in New York and running the electronics companies 
RCA and Thomson.  He said that Ambassador Stapleton should 
always remember that in Breton, the U.S. had a great friend 
in the heart of the French government.  Breton said he looked 
forward to developing an excellent relationship with the 
Ambassador and that Ambassador Stapleton should feel free to 
bring "any issues, no matter what they are" to Breton, 
"either through formal channels, or personally."  Ambassador 
Stapleton welcomed Breton's warm words and said he looked 
forward to keeping the generally excellent economic 
relationship on track. 
 
The Education Minister? 
----------------------- 
4.  (C) Ambassador Stapleton asked Breton what his priorities 
were as Finance Minister.  "Education," Breton said. 
"Education of the French public...They need to know the 
facts, and they need to know the truth.  The French people 
are looking for someone to explain the need to reform to them 
by telling them the truth."  He explained that he was an 
unabashed "liberal" (free-market supporter) in the French 
sense.  Reforms, he said were necessary, particularly tax 
reform.  The ISF (the Wealth Tax on all capital and real 
property), he said was the most urgent item in need of 
reform.  He called the tax "stupid" and a barrier to 
increasing investment in France.  (N.B. In mid-July, Breton 
floated a trail balloon calling for the elimination of the 
ISF; the following day, President Chirac commented that the 
tax was necessary to maintain "solidarity," but conceded that 
the tax probably needed to be studied and reformed.) 
 
Reforms and Economic Nationalism 
-------------------------------- 
5.  (C) Breton noted that he was working to put in place the 
right "processes" to deal with France's financial problems. 
While France has a high level of public debt, he explained, 
that debt need not be a problem on a temporary basis, 
assuming the "business model" was right.  Getting the 
"business model" right is what this Government is working on 
now.  He added that the time is ripe for action.  PM de 
Villepin was an ally in supporting reforms, Breton said, and 
was interested in making reforms produce results as quickly 
as possible. 
 
6.  (C) Turning to the recent press hysteria surrounding a 
rumored PepsiCo takeover of food and drinks producer Danone, 
Breton said he regretted the public position that "some 
politicians" felt compelled to take on the issue.  He opined 
that Danone was not a corporate "jewel," but a company like 
any other.  He called to Ambassador Stapleton's attention the 
public position that he had taken:  "France has laws to 
govern takeovers; the Government's job is to ensure that the 
laws are followed, no more, no less." 
 
7.  (C) Breton told Ambassador Stapleton of his strong desire 
to increase exchanges between the U.S. and France.  He 
explained that educational, corporate and cultural exchanges 
were of tremendous value in a globalizing world.  He 
explained that, despite the reputation to the contrary, 
younger generations of French people were considerably more 
well traveled and internationally minded than their parents. 
Ambassador Stapleton explained that the USG already has a 
good mechanism for exchanges in place but he would look for 
ways to enhance those programs with France. 
 
Promise to Be Helpful 
--------------------- 
8.  (C) Before departing, Ambassador Stapleton asked Minister 
Breton for help in resolving the Berman customs' dispute 
(refs).  He explained that Senator Lugar had been very active 
on the Berman family's behalf and was convinced that the root 
of the problem was a misunderstanding between the Bermans and 
the French Customs agents.  He asked if Breton could 
intervene to resolve the issue once and for all.  Ambassador 
Stapleton passed Breton copies of the letters from Senator 
Lugar to Minister Cope and to the Embassy.  Reading them, 
Breton shook his head and said that this "should be 
relatively easy" to resolve.  Breton kept the letters and 
asked Lambert to follow up with Minister Cope's office.  He 
did not say exactly what he would do, but did undertake to 
seek a resolution to the issue. 
 
9.  (C) Breton noted that he would like to make a trip to 
Washington in the "second half of the year" and said he would 
welcome any suggestions from Ambassador Stapleton on possible 
meetings.  Ambassador Stapleton promised that the Embassy 
would be as helpful as possible once Breton gave us a better 
idea of when he would like to travel. 
 
Comment 
------- 
10.  (C) The U.S. clearly has a good friend in Breton.  He 
clearly feels comfortable with the United States and with 
Americans.  He spoke movingly about his trip with President 
Chirac to Washington and New York on 16-17 September 2001. 
He also shows surprising independence in describing himself 
as a "liberal" when both President Chirac and PM de Villepin 
continue to talk about preserving the "French model." 
Despite this temporary stint in serving his country as 
Finance Minister, he still sees his roots firmly planted in 
the private sector; a relatively unusual phenomenon in 
government circles here.  Despite his confidence in being 
able to push through reforms and educating the French people, 
the one French citizen he will have to educate most 
intensively will be President Chirac, whose embrace of real 
reforms has continually proven to be lukewarm at best. 
 
STAPLETON