US embassy cable - 05PARIS5934

UNCLAS PARIS 005934 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB, EUR/ERA AND EUR/WE 
 
E.O. 12958: N/A 
TAGS: ECON, EIND, FR 
SUBJECT: CHIRAC LAUNCHES INNOVATION AGENCY TO CREATE 
"TOMORROW'S JOBS" AND "PRIORITY PROJECTS" 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
Ref: A)Paris 4900 B)Paris 5667 
 
 
1.  Summary.  President Jacques Chirac outlined on August 30 
a new industrial innovation agency and research drive to 
encourage employment and prevent outsourcing.  Spearheading 
his policy drive in favor of industrial innovation in the 
heart of the Champagne region, President Jacques Chirac 
inaugurated the first of 67 industrial clusters or "poles of 
competitiveness" to receive tax breaks and 1.5 billion Euros 
(USD 1.8 billion) in state support over the next three years 
(Reftel B).  At the same time, he launched another pet 
project, the Agency for Industrial Innovation AII), which 
has a budget of one billion Euros USD 1.2 billion) to be 
distributed over the next three years to "priority" sectors 
such as energy, health, information society, and the 
environment (Reftel A).  Chirac said that the AII had 
already identified a number of projects, including "the 
development of an Internet search engine."  Chirac denied a 
return to French industrial policies of the 1970s, and 
emphasized that these new measures were part of a broader 
effort that involved specific projects as well as European 
partners.   End Summary. 
 
2.  (SBU)  During his policy presentation to French business 
leaders and scientists, Chirac said that "all the conditions 
are in place for France to go boldly on the offensive," 
particularly at a time of increased global competition for 
"technological supremacy."  He added that innovation was 
essential to the creation of "highly qualified employment" 
and was the best response to outsourcing."  However, he 
rejected any intention to reintroduce state interventionism 
or protectionism, which he stressed were now "a thing of the 
past."  Instead, he said he wanted the new Agency for 
Industrial Innovation to "resist the tyranny of the sort- 
term" and focus on projects similar in scope to Airbus, 
Ariane or nuclear policy, but using the "instruments adapted 
to an open economy." 
 
3.  (SBU)  At the same time, Chirac unveiled a new effort 
for the "renewal of research" through a 3 billion Euro 
budget over the next three years.  These new resources will 
fund the new National Research Agency as well as the 
regional industrial clusters.  Chirac further announced a 
new framework bill for research over the next few months as 
well as a new high Council for Science and Technology.  As 
part of that bill, France will also create a new School of 
Economy to rival the best global institutions.  These 
measures will be detailed in a framework bill on research to 
be presented in the coming weeks. 
 
4.  (SBU)  Comment.  Chirac's speech is a combination of 
already announced agencies and a grab bag of new measures. 
The heart of the message appears to be that Chirac is paving 
the way for the future by setting innovation, science and 
technology as the new domestic priority in France to remedy 
all current ills, from unemployment hovering at 10 around 
percent, to a record trade deficit in the first six months 
of 2005.  Cynics may point out that Chirac's current high- 
tech drive is intended to take him through the 2007 
Presidential campaign, as all government support is 
currently earmarked for 2006 and 2007.  Small French 
businesses, for their part, fear that government aid will 
help France's largest industrial players. 
 
5.  (SBU)  It is worth noting that Chirac directly addresses 
critics of his new industrial policy by pointing out that it 
does not signal a return to France's old "Colbertist" ways. 
He emphasized that these new measures were part of a broader 
-- and if not national, at least Europe-wide effort that 
involved the private sector, scientists and educators. 
Despite the confusion that prevails over the synergies 
between the various new agencies and their funding, the 
emphasis on these solutions is nevertheless fueling fears 
that the French Government may be attempting to create new 
champions. With memories of the Franco-German Sanofi and 
Aventis merger still fresh, the GOF is moving forward 
rapidly to promote cooperative projects with other EU 
partners, beginning with Germany on the "European Google" 
project, all the while abiding by EU rules on state aid. 
End Comment. 
Stapleton