French Socialist Contender Hollande Plans No Nationalizations
Socialist Francois Hollande, the frontrunner in the French elections, won’t nationalize companies or sell state stakes in businesses if he’s elected, unlike previous party leaders Francois Mitterrand and Lionel Jospin.
“No nationalization, no privatization, certainly in the beginning,” Michel Destot, an adviser to Hollande on business and industry, said in an interview on April 9. “The government will find other means to balance the budget and fund public policies.”
France is under pressure from the European Union to cap its debt, which stands at more than 85 percent of its gross domestic product. At the end of 2011, the government held stakes in companies including Aeroports de Paris, carmaker Renault SA, Air France-KLM Group, France Telecom SA, defense electronics company Thales SA, nuclear reactor builder Areva SA and utilities Electricite de France and GDF Suez SA.
French voters will cast a first-round ballot on April 22 to choose the two finalists for the decisive May 6 vote. President Nicolas Sarkozy has trailed rival Hollande in the polls for the final round for more than a year.
In December 2007, about seven months after being sworn in, Sarkozy sold 2.5 percent of Electricite de France, Europe’s largest power producer, raising 3.7 billion euros ($4.9 billion) to improve the country’s universities. The transaction followed other stake reductions in companies, including the June sale of a 5 percent holding in France Telecom, Europe’s third-largest telephone company, to raise 2.65 billion euros.
As European markets slid with the economic crisis, Sarkozy halted stake sells. The benchmark CAC 40 index has almost halved during his term, falling more than 46 percent to 3245.20 points today from 6017.91 on May 16, 2007, the day he took power.
Hollande, 57, has pledged to balance the budget in 2017, while his rival Sarkozy promised to reach the target a year earlier. French public deficit stood at 5.2 percent in 2011. Hollande said he would increase spending by 20 billion euros over the five-year mandate, financing it by repealing 29 billion euros of tax breaks.
Hollande, a career politician, hasn’t made any public comments on possible sales of stakes in companies. He unveiled his platform earlier this year. If elected, he would be France’s first Socialist president since Mitterrand, who ended his mandate in 1995.
After his first victory in 1981, Mitterrand nationalized dozens of banks and companies, including banks Rothschild, Paribas and Worms.
In 1986, when he formed a government with the opposition party after losing legislative elections, the state privatized companies including Saint-Gobain (SGO), the bank Paribas and the industrial group Suez. In 1988 after his re-election, Mitterrand sought to reassure the business and financial sectors and sold shares in Renault to investors.
Socialist Prime Minister Lionel Jospin, who held office between 1997 and 2002 and was the last Socialist in power, sold stakes in 10 companies including Eramet (ERA), France Telecom, Air France (AF) and the bank Credit Lyonnais. Jospin was defeated in the April 2002 first round of the presidential elections.
Hollande has said he would gear his business and investment policies toward small- and-medium-sized companies in France. He has pledged to boost state funding to expand the nation’s industrial sector. Hollande hasn’t said how he would use the Fonds Strategique d’Investissement, or FSI, the state sovereign fund created by Sarkozy in 2008.
“We must establish a long-term strategy to rebuild a solid and competitive industrial sector,” Destot said. “If we look at successful neighbors, like the U.S. and Germany, we see that they work with bottom-up projects.”
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