In a country that has long resisted globalization, President Nicolas Sarkozy bluntly told France on Thursday to stop kidding itself and face up to it - but in a French way.
Calling the free market an illusion, Sarkozy said France should not be shy about having the government defend French companies and interests from foreign marauders. But he also signaled that he was not the French "dirigiste" of the past.
Outlining his own brand of Gaullism, the president vowed to make conditions more business-friendly at home to allow French companies to compete better in the world. In return, he asked them to have French interests at heart when they set prices, negotiated wages and made investment decisions.
"We will not obtain growth if we don't play the game of globalization collectively," Sarkozy told about 4,000 business executives at the annual conference of the country's biggest employers' federation, Medef.
"But let's not be naïve," Sarkozy went on to say. "Let's look at the world and ask ourselves the question: Should we be naïve to the point of being the only ones not to defend our interests when all the others are defending theirs?"
Sarkozy's comments came as the debate about the winners and losers of globalization was gathering pace in several countries, where governments face rising demands for protection from voters. The recent turmoil in credit markets has only intensified those calls.
Sarkozy promised to equip French business to compete better in world markets and vowed to go further in cutting payroll taxes and relaxing the 35-hour workweek - a piece of legislation he called "an immense economic mistake."
He also vowed to press ahead with changes to the labor code, easing onerous hiring and firing rules, and paving the way to an American-style "Small Business Act" that would earmark a share of public tenders for small and medium-sized companies.
In a speech that was as much aimed at voters and labor unions as the business community before him, the president said that globalization had changed the goal posts of economic policy - stripping the state of power in some areas, like raising taxes on jobs that could end up being moved abroad, while obliging it to act more forcefully in others.
One such area is industrial policy.
"I'm not afraid of industrial policy," Sarkozy said. "I will not leave our industry at the mercy of all sorts of dumping and all the speculators."
As if to illustrate his determination to create "national champions" in strategic sectors, he used his speech to press Suez, a private utility, to sell its water and waste business and merge its energy division with the state-owned natural gas company Gaz de France to create "a large European electricity and gas group in which the state would be the main shareholder."
Under Sarkozy's predecessor, the government announced a merger of the two companies to thwart a takeover bid from the Italian electricity company, Enel. But after 18 months, the deal has so far failed to materialize.
Vowing to take his battle for economic realpolitik to Brussels, Sarkozy said that Europe would not preserve its place in the global economy if it went the idealistic way of an ever freer market with strict competition rules and a ban on state aid for industry. In comments that are certain to irk the European Central Bank again, he repeated his call for a lower euro to bolster European exports.
"We are condemned if competition rules are tougher here than elsewhere, if it's the only region in the world where it's impossible to conduct industrial policy, trade policy or exchange rate policy," he said.
Sarkozy broke with tradition when he chose the campus of a business school and the audience of the country's top business executives to outline his economic program. France's political class has traditionally preferred to be seen with philosophers and intellectuals. But under Sarkozy, money and big business are no longer taboo.
The son of a Hungarian immigrant and, unlike most of his predecessors, not a graduate of France's elite Ecole Nationale d'Administration, Sarkozy counts numerous big bosses among his closest friends and unapologetically spends his holidays in their luxury villas or on their yachts. "There is no shame in success or money," he said during his election campaign.
On Thursday, Sarkozy moved with visible ease among executives, as if, one chief executive of a large French company remarked, "he was one of us."
Labor unions and leftist politicians, who have criticized Sarkozy's decision to give a high-profile speech on economic policy before a business federation, appeared to concur. "He is the president of the CAC 40," grumbled Jean-Luc Melanchon, a Socialist senator.
Thursday's announcements follow a first round of economic measures, passed in an extraordinary parliamentary session in the summer. Legislators voted last month to cut the maximum tax burden to 50 percent of personal income and scrapped taxes on overtime pay.
Dontcha just love Sarkonomics? (Or is that Sarkonomiques, mon ami?) While ol' Sarkozy is not one to shy away from talk about globalization, he says France will do it in its unique way, replete with dirigisme, national champions, and other manifestations that the French government still occupies the commanding heights. In other words, while France cannot isolate itself from the winds of globalization, it will not be cowed into allowing markets free rein over the power of government. How typically...Gallic. Meet the new boss, same as the old boss, etc. From the International Herald Tribune: