Monday, February 04, 2008

Sarkozy's Latest Shenanigans (And I Don't Mean His Marriage to a Model/Rock Star)

I guess I'm not really surprised, but let's just say I'm getting ready to be either impressed or disappointed, depending on the outcome of a battle between Arcelor-Mittal and the French government.

Either French President Sarkozy is arm-wrestling with steel magnate Mr. Mittal, or he actually believes that the laying off of workers in a steel factory deserves state intervention a la Hugo Chavez.

In 2007, newly elected Mr. Sarkozy came along looking so very promising for France, saying things that would have been political suicide only a few years ago. He said he was going to reform France's heavily socialist policies once and for all, and he surprised everyone by persuading well over half the French population to go along with him, including many former socialists.

He started out well, moved fast, got a few things done. But then he began to make economic faux pas, like promising to sit down with the megastores to reason with them about their "unfair" price increases, and like persuading a few suppliers to freeze the prices of school supplies last September to "help out" struggling parents.

He also has started to emit protectionist statements about "keeping jobs in France," and he reprimands the European Central Bank for not allowing the euro to slip lower in support of the export sector, completely ignoring that the ECB doesn't have to pay him any mind, and probably won't. (He probably doesn't really care, realizing that in politics it's often the intention that counts.)

His latest display of bad economic taste is promising state investment in a French steel mill to save jobs. Or is this statist gesture just camouflage for something else?

The steel mill company, Arcelor-Mittal, is now run by an influential Indian who has bought up many steel resources. In 2006, Mr. Mittal acquired Arcelor, a European company with steel mills in a region of France among other places, making Arcelor-Mittal the biggest steel company in the world.

After about a year, two French senators began to call for state intervention for alleged mistreatment of minority shareholders. Apparently, the courts are not an option, for some reason, so they go crying to Daddy.

[Thanks to for the photo.]

Sarkozy, who likes to play Daddy and has involved himself in disputes of this sort on a few occasions already (especially when he can get face time in the French media shaking hands with factory workers), called Mr. Mittal into the Elysee Palace for a meeting. (Source.)

Mittal attended, but decided that he could still no longer afford to maintain all the workers at the French plant--a seeming about-face from his earlier enthusiasm. He declared that he would lay off hundreds of employees.

Sarkozy has now reacted by committing the latest in the economic faux-pas series. He has promised laid-off workers that the French government would work out some kind of deal involving state financial intervention. ["Soit nous arrivons à convaincre Lakshmi Mittal (le patron indien d'ArcelorMittal, de revenir sur son plan [note-de-la-redaction]) et nous investirons avec lui, soit nous trouvons un repreneur et nous investirons avec lui."]

Mittal did agree to freeze his lay-offs after their recent one-on-one meeting, so now the union involved will appoint an expert review of the situation. In March or April, Sarkozy intends to reunite union leaders, Mittal representatives, and the expert, to consider the alternatives. He promises the workers, "I'll come back to the factory to announce the solution we will have found."

Now I'm wondering: Is Sarkozy really making this faux pas innocently, or is he playing socialist hardball with capitalist Mittal? (i.e., "If you continue to threaten lay-offs, we'll nationalize you.")

A suivre. [To be continued.]

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