US embassy cable - 05PARIS5935

UNCLAS SECTION 01 OF 02 PARIS 005935 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/TPP, EUR/ERA, EUR/WE, EUR/PPD, DRL/IL AND 
INR/EUC AND EB 
COMMERCE FOR NAAS 
DEPT OF LABOR FOR ILAB 
DEPARTMENT OF COMMERCE FOR ITA 
 
STATE FOR USTR 
 
E.O. 12958:  N/A 
TAGS: ECON, ETRD, PGOV, PREL, ELAB, PINR, FR, EUN 
SUBJECT: NEW FRENCH BUSINESS LEADER WARNS AGAINST GOVERNMENT 
PROTECTIONISM 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
 
SUMMARY 
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1. (SBU) Laurence Parisot, the new head of France\'s leading 
business association, MEDEF, recently warned the French 
Government against any resurgence of protectionism.  In a 
newspaper interview on Aug. 30, she reiterated her intention 
to reconcile the French with the market economy, business 
culture, and work.  This coincides with MEDEF\'s decision to 
inform the French population at large of the realities and 
the advantages of a global and market economy in view of the 
2007 presidential elections.  End Summary. 
 
2.  (SBU)  Departing from her predecessors at MEDEF, Parisot 
clearly set an open market, pro-competition tone by 
stressing that France should abide by existing global market 
rules.  Referring to Prime Minister Dominique de Villepin\'s 
recent call for \"economic patriotism\" following the false 
rumors of a Pepsi Co takeover of Danone, Parisot told French 
newspaper \"Le Figaro\" on August 30 that takeovers were a 
\"normal\" part of business and that France could not hide 
from global market rules by erecting a new \"Maginot line.\" 
Pointing to the hypocrisy of France\'s position, Parisot 
added that France could not boast of conquering new markets 
while \"refusing reciprocity.\"  She proposed as an 
alternative that France adopt a system of pension funds. 
The GOF has been reluctant to introduce pension funds in 
France because of stiff trade union opposition to the 
\"privatization\" of France\'s government-financed retirement 
scheme. 
 
3.  (SBU)  Parisot\'s statement -- the first clear message by 
a MEDEF leader that protectionism should never be condoned 
in whatever shape or form -- follows the recent confirmation 
by French Industry Minister Francois Loos of upcoming GOF 
plans to draw up a list of industrial sectors to be shielded 
from foreign takeovers.  This heated exchange between French 
Government and business over whether foreign predators 
should be allowed to take over French \"industrial jewels\" 
was triggered by the recent Pepsi Co.-Danone speculation. 
This episode widened the growing gap between political and 
business circles to an extent unparalleled before.  During 
MEDEF\'s recent off-site summer seminar (\"universite d\'ete\"), 
many business leaders, including Denis Kessler, President of 
the French Insurance Federation and former Vice-President of 
MEDEF, pointed out that \"politicians remembered the 
importance of business only when companies were forced to 
close down, relocate or fall into the arms of a foreigner.\" 
 
4.  (SBU)  In her interview with \"Le Figaro,\" Parisot 
reiterated her calls for more flexibility in the French 
labor market and the French Labor Code.  \"It is illusory to 
think that the Labor Code provides security,\" she explained. 
A company will close down or lay people off regardless of 
restrictive labor code regulations, she added.  Instead, 
Parisot called for more anticipation and greater training 
availability. 
 
5.  (SBU)  Invoking MEDEF\'s major campaign theme between now 
and the 2007 Presidential elections, Parisot said that the 
first condition for economic growth was straight forward: 
France needs to work more.  MEDEF will spend much time to 
convince people that the mentality borne out of the 35-hour 
runs counter to France\'s interests.  During the recent MEDEF 
summer seminar (Aug. 29-31), many if not all MEDEF speakers 
and interlocutors confirmed to us that the government sent a 
\"catastrophic\" message to French people that the country 
could afford to work less and have more time for leisure 
while the rest of the world worked more. 
 
6.  (SBU)  The only antidote to this frame of mind is to 
work abroad, one French business leader told us.  As an 
example, he mentioned a number of young French people who 
had come to work at the UK subsidiary of a large French 
company \"with their heads full of French social regulations\" 
only to discover the love and pride one can derive from a 
\"solid day\'s work.\"  MEDEF is determined to turn French 
mentalities around. 
5.  (SBU)  With the exception of UMP President and Interior 
Minister Nicolas Sarkozy, few French politicians would agree 
with these precepts, at least not officially. 
Stapleton