Thursday, July 26, 2007

Economic Patriotism 2

"National champions" have long been an important feature of French "economic patriotism," a subject I broached yesterday. One of the most successful of French national champions is Areva, the world's leading nuclear energy company, which is 90-percent state-owned. Areva is about to sign an "historic" contract with China to sell two European Pressurized Reactors at $3 billion each. In addition, President Sarkozy, meeting yesterday in Libya with Col. Kadhafi, signed a tentative agreement for cooperation on civilian nuclear power, a deal from which Areva is likely to profit (click on this link for a smashing picture of the colonel clad in an eclectic costume that aspires to combine native traditions with Tom Wolfe and John Travolta). The French president's haste to seal the deal as France's top nuclear VRP might appear to be somewhat unseemly, with the Bulgarian nurses still recounting their torture in Libyan prisons, but to the liberator belong the spoils.

Areva's boss is Anne Lauvergeon, the eighth most powerful woman in the world, according to Forbes, and the most powerful woman in France. She is a Socialist, promoted through the ranks by Roger-Gérard Schwartzenberg and François Mitterrand. Sarkozy approached her for the position of minister of industry--yet another socialiste d'ouverture--but she declined. Areva is expanding worldwide, including in the US, where it signed a deal with Constellation of Baltimore in 2005. One of the reasons for the delay in the GDF-Suez merger that I mentioned yesterday--the feat of "economic patriotism" engineered by Villepin to prevent a takeover of another French national champion, GDF, by the Italian firm Enel--is that the Sarkozy government may decide to privatize Areva and make it the linchpin of a French energy giant that would include a privatized GDF. An impediment to this arrangement is Sarko's promise as interior minister not to privatize GDF. A further complication is the "Grenelle of the environment," the talks the government is conducting with various environmental groups and others. Green groups are skeptical of nuclear energy and will want assurances about government plans in this regard, but Sarkozy, who touts nuclear as "green energy" and "the energy of the future," and who has been talking with Gordon Brown about a lower VAT for "green commodities," might have his own ideas about promoting the nuclear alternative.

Of course the temptation to privatize Areva will be strong, since the money it would bring to the treasury would go a long way toward financing Sarko's tax reforms. On the other hand, it is sure to provoke strong resistance.

P.S. If you live in the US, you've probably enjoyed Areva's animated TV commercial, which makes nuclear power look like as much fun as a day at the beach. It was created by the celebrated design firm H5 in Paris, which also does a lot of work for the entertianment and luxury goods industries. Prominent friends of Sarkozy have interests that span these same areas: communications, luxury goods, energy. The new economy creates some unusual synergies, and the inclusion of politics and the state in the mix is obviously of some interest.

LATE ADDENDUM: For the strong negative German reaction, see here.


Anonymous said...

On this issue, you may want to read an interesting policy brief from Nicolas Véron, available on the Bruegel website at:


Unknown said...

Thanks for the tip, Marcos.

Anonymous said...

^^ nice blog!! ^@^

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