Hollande scores a draw with Mittal, loses image

Tags: News

Row hurts France’s image as a place to do business

Francois Hollande’s bid to rescue steel furnaces in France’s historic industrial heartland was to be the mark of a president on the side of the workers and a state with the courage to bring a multinational to heel.

But the two-month stand-off over steel giant ArcelorMittal’s Florange plant in Lorraine has unnerved investors in the euro zone’s second largest economy, confused Fran­ce’s unions and exposed his six-month-old government to international ridicule.

His Socialist allies have hailed as a victory a late-Friday compromise under which ArcelorMittal agreed to invest 180 million euros to expand the site near the German border over five years and hold off making forced redundancies.

But as the European steel sector struggles to cope with over-capacity, the furnaces themselves will remain shuttered for now, and questions remain over the exact fate of the some 630 workers employed there and further funding needed for expansion.

With unemployment at 14-year highs of 10 per cent and his popularity ratings at record lows for a president only half a year into his mandate, there was clear political advantage for Hollande to lock horns with steel magnate Lakshmi Mittal.

But the result is at best a no-score-draw, and the tactics used - anti-business rhetoric and the threat of nationalisation - could damage his wider reform effort.

While his pugnacious, micro-managing predecessor Nicolas Sarkozy led from the front, Hollande let his ministers lead the fight, creating confusion over who runs industrial policy.

Arnaud Montebourg, the firebrand leftist industry minister who pushed the nationalisation option hardest, declared Mittal a persona non grata in France and revealed he had found an anonymous potential buyer ready to invest in the plant.

That was lapped up by international critics including London mayor Boris Johnson, who told executives in New Delhi that the “sans culottes” revolutionaries had taken control in Paris and advised them to bring their investment rupees to Britain.

Montebourg later retracted his personal attack on Mittal but then had to watch as aides of prime minister Jean-Marc Ayrault, who announced the final accord, briefed media that his putative investor was neither “credible or solid”.

Facing opposition calls to resign, Montebourg went on local television on Saturday to announce he had Hollande’s support and insist he felt “not betrayed, merely let down” by the outcome.

But worse than the damage done to the credibility of one of Hollande’s most high-profile ministers, many fear the cacophony further shakes France’s image as a place to do business just when it needs all the help it can get to avert recession. “It has been a disaster,” a senior French banker said last week as the episode unfolded.

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