The U.S. and France: Big Business Is Pushing for Rapprochement

Ordinarily, a courtesy call on French President Jacques Chirac from the International Chamber of Commerce would be little more than a photo op. But the group's chairman, Chief Executive Jean-René Fourtou of Paris' Vivendi Universal, delivered an unusually pointed request when he met with Chirac on May 20. "Our key message, now that the war in Iraq is over, is for governments to put their divisions behind them," said Fourtou and other chamber leaders in a statement after the session.

More than a month after the fighting ended in Iraq, the political war between France and the U.S. is far from over. True, the two countries appear to have resolved their differences over a proposed U.N. resolution to end sanctions against Iraq, set for a Security Council vote on May 22. But only a week before the scheduled vote, the French ambassador to the U.S. sent a blistering letter to the White House accusing the Administration of spreading false allegations that France had supplied weapons to Saddam's regime. The U.S. ambassador to France, Howard H. Leach, told Le Figaro on May 20 that if the squabbling continues, he "would indeed be worried about our relations, including in economic matters."

The French business Establishment is already worried. On Apr. 30, a group of prominent French executives published an open letter in business daily Les Echos warning that continued hostility could damage the nearly $100 billion in annual trade between the U.S. and France. It's extremely unusual for French business leaders to speak publicly about politics. But, says Pierre A. Rodocanachi, a Paris executive at consulting firm Booz, Allen & Hamilton, who was one of the letter's signers, "there's too much at stake economically to take any risks." Now, groups such as the International Chamber of Commerce fret that Franco-U.S. tension could overshadow the Group of Eight summit that Chirac will host on June 1-3 in Evian-les-Bains. Business leaders hoped the summit would spur action on lagging global trade talks and other issues.

There have been some conciliatory signals. When G-8 ministers met in Normandy in mid-May, French Finance Minister Francis Mer toured the D-day beaches with U.S. Treasury Secretary John Snow. The U.S. is reassuring the French that President Bush will attend the summit and spend the night in France -- not, as was rumored, in Switzerland.

Yet Chirac and Foreign Minister Dominique de Villepin show few signs of softening. Paris' last-minute support for the U.N. resolution on Iraq is pragmatic, not heartfelt. The French realized they could not marshal the opposition and risked alienating Germany and Russia, which want to mend fences with the U.S. Business leaders have pleaded with the Elysée Palace to tone down the rhetoric, says Pierre Lellouche, a center-right parliamentarian who opposed Chirac's Iraq position. But, says Lellouche, "they've been told, 'Get lost."'

The problem is that, for Chirac, standing up to the U.S. is still paying political dividends. The French public avidly backed his antiwar stance. Chirac's approval rating is still as high as 68%. But business leaders fear a long-term chill in relations could hurt commerce, particularly for companies such as food-service giant Sodexho Alliance, which relies heavily on U.S. government contracts. Commercial aviation, where Boeing (BA ) Co. faces Airbus Industrie, could be embroiled in tensions, too. "There's a strong desire in the business and political leadership to restore normal relations," says Yves Galland, a center-right politician who was just hired to run Boeing's operations in France. "But this may take some time." For now, both sides stand to lose.

By Carol Matlack in Paris

Edited by Rose Brady

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