French protectionism. Fearful Fortress France

French politicians could have responded to the No vote like statesmen. Instead they seek refuge behind old barriers and old ideas

FOR President Jacques Chirac, the symbolism of this week's European summit at Hampton Court was doubly awkward. His first foreign trip since going to hospital nearly two months ago, it was to the country he has most publicly quarrelled with in recent months. And the topic was how to respond to globalisation: a phenomenon which Britain faces calmly, while France remains deeply troubled.

In May, when the French voted against the Euro-constitution, they were said to be rejecting not so much the idea of Europe as what they feared Europe was becoming: a liberal, open, free-market zone. Faced with this defensive mood, two political responses were possible. Either explain that France cannot dodge globalisation; that it brings opportunity as well as pain; that the country is well-placed to adapt; and that chronic unemployment is avoidable. Or kowtow to public opinion, blame globalisation for every ill and seek refuge in old-time protectionism.

The second option was chosen. A sour protectionist mood has gripped politicians of all stripes, even those who backed the constitution. "France will never let Europe become a mere free-trade area," wrote President Chirac in 25 European newspapers ahead of the Hampton Court meeting. His centre-right government has been incensed by the offer from Peter Mandelson, Europe's (British) trade commissioner, to cut farm tariffs as part of the Doha round of trade talks. Philippe Douste-Blazy, France's foreign minister, says Europe "must not sacrifice" the common agricultural policy (CAP): it was cut far enough by an EU deal in 2003, and Mr Mandelson shouldn't yield more.

Even would-be reformers, such as Nicolas Sarkozy, the interior minister, for whom no French taboos are sacred (especially if they are dear to his rival, Mr Chirac), has beat the protectionist drum. Mr Mandelson's proposals, he wrote in Les Echos newspaper, were "not acceptable": they would bring "the dismantling of the CAP and Europe's renunciation of its status as an agricultural power".

These outbursts follow a string of others. President Chirac bashed the European Commission for failing to stop Hewlett-Packard, an American firm, slashing its French workforce. His prime minister, Dominique de Villepin, mutters about "economic patriotism": he denounced a rumoured takeover by PepsiCo of Danone, a French dairy firm, as an attack on a "crown jewel", and has named ten "strategic" industries - including casinos - that must be sheltered from foreign predators.

In the opposition camp, the Socialist Party has also drifted leftwards. The policy documents offered by rival candidates ahead of the party's leadership contest in November are sprinkled with protectionist and anti-capitalist talk. Francois Hollande, the party's boss, calls for a "fight against economic liberalism". Laurent Fabius, an ex-prime minister who led a breakaway faction against the constitution, decries economic liberalism as "not only unjust but inefficient". He wants measures to protect French firms from hostile takeovers - and to penalise relocation in search of lower costs. As the government this week announced the sale of 15% of Electricite de France (EDF), the energy utility, Mr Fabius vowed to renationalise it.

Why all this protectionism? On farming, the French consensus is solid. No mainstream politician wants subsidy cuts. Mr Chirac, a former farm minister who long represented rustic Correze, is committed to the countryside. Farming is seen as tied up with France's regional gastronomy, its healthy food industry, plus a charming rural world that foreigners love too. A recent French cartoon showed Tony Blair basking in the garden of a French farm house. "Tony, please help the CAP," begs Mr Chirac. "We don't care about your peasants, Jacques!" replies Mr Blair: "Agricultural land and farms will become gardens and cottages where English retirees can forget their sinister life in Britain."

Nor is protecting farmers only a Gaullist hobby. In the 1990s, a French Socialist government's resistance to CAP reform nearly scuppered the Uruguay round of trade talks. In short, though a minuscule share of the workforce is still farming, French politicians feel compelled to turn trade-liberalisation talks into matters of national identity and well-being.

This time, France is trying not to become isolated over how much to offer the World Trade Organisation. The French say they want a successful trade round, and are not yet talking of blocking the European offer. But divisions are deep. It is possible to imagine a re-run of 1992, when French farmers held trade talks hostage.

In other areas, French protectionism is baffling. This year, while the political class has railed against globalisation, companies have been cashing in. In the first eight months of 2005, France topped the league table for European cross-border acquisitions, bagging euro59.5 billion ($71.8 billion), according to Dealogic, a banking analyst. Pernod Ricard, a drinks company, bought Allied Domecq, its British rival. Suez, a utilities firm, picked up Belgium's Electrabel. France Telecom nabbed Spain's Amena, a mobile-phone operator. All this brings profits and tax revenues to France.

The paradox is not only that corporate France eagerly embraces what the politicians denounce. It is that the politicians themselves are all the while putting in place certain liberalising policies that clash with their own protectionist rhetoric. This week's decision to go ahead, albeit belatedly, with the sale of a first slice of EDF is but one example. Michel Camdessus, former IMF boss and author of a devastating critique of the French economy, told Le Figaro this week that "reform in our country moves ahead in disguise. Certain measures are taken, but we are never told why." Little wonder that the electorate is confused and fearful. One poll this month showed that 80% of the French thought that the outlook was bleak, and that the social climate was bound to get worse.

French politicans could have responded to the No vote in the May 2005 vote on the EU Constitution like statemen. Instead, the author contends, they seek refuge behind old barriers and old ideas

• Primary Source