Breakingviews - Cox: Parisian elite’s offsite exposes fractures

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AIX-EN-PROVENCE, France (Reuters Breakingviews) - French politicians see three unstoppable forces that threaten the well-being of Europe: China, U.S. President Donald Trump, and “les GAFA”, or Google, Apple, Facebook and Amazon. Yet the leaders of Gallic multinationals say they are investing more in the United States, desperate to get the right Chinese commercial strategy, and partnering with Big Tech.

This dichotomy was on display at the annual “Rencontres Economiques” gathering of French officials, economics nerds and business bigwigs in Aix-en-Provence over the weekend. Under the banner of “Renewing Trust”, they debated how to combat declining faith in French and European institutions. Participants agreed on the need to do so. The trouble is that the closer global economic and trade ties which have helped French enterprises to thrive have simultaneously weakened the state.  

That explains the different notes struck at the conference by politicians and company bosses. Take the panel in which Finance Minister Bruno Le Maire and Annegret Kramp-Karrenbauer, the leader of Germany’s Christian Democratic Union party, joined the chief executives of Airbus and Saint-Gobain, Guillaume Faury and Pierre-André de Chalendar respectively.

Le Maire, a professed Germanophile, elicited hearty applause when he said the United States could not police the world, a sentiment Trump would likely cheer; and also when speaking of Chinese economic expansion: “Yes to positive investment but no to pillage.” He cosied up to his German counterpart, known as AKK, who reciprocated by calling herself a Franco-German, having grown up on the Saar River, which runs through both countries.

Le Maire reiterated his desire to reshape rules to “be able to build champions in Europe”, like the merger of the Alstom and Siemens train businesses, which EU competition authorities blocked earlier this year. The two politicians argued for reciprocal access to the Chinese market for European companies. And AKK said: “If we don’t want Amazon standards to be omnipresent we need to create our own.”

By contrast, the Airbus and Saint-Gobain executives took a more measured tone. De Chalendar, whose company employs 75% of its 180,000 workers outside France, avoided discussing Trump, China or Silicon Valley, focusing instead on the need to pay more heed to the younger generation. Faury, whose firm sells more airplanes in the Asia Pacific than in Europe, said the forces decried by the politicians might even help his company in its competition with Boeing: “American power and Chinese ambitions compel us to be strong.”

Politicians’ tub-thumping is not helping them curry favour with the general public. A BVA poll of French adults conducted last month showed 37% expressed confidence in large companies, compared with the 11% who felt the same way about political parties. And banks, at 29%, fared better than members of parliament, who scored 23%.

Thomas Buberl, the German executive who runs Axa, Europe’s second-largest insurer, has some sympathy for politicians. “For Europeans, China and Trump are the same question,” he said in an interview at the Aix meeting. “It is about the question of technological leadership in the world and where we are headed now, and the longer-term fight that will lead to two separate Chinese and American universes – Europe has to position itself appropriately.”

Even so, Buberl called for something no politicians at Aix broached: a rethink of Europe’s approach to dealing with technology, including the general data protection regulation, the landmark EU law on data protection and privacy that was rolled out in May 2018. “GDPR is the gold standard of data, but a year on you ask if we went too far,” he told Breakingviews. “When you look today it more-or-less hampers the development of the utilization of data in Europe – finding a better balance is key.”

Many private-sector participants at Aix had more critical words for political bromides, such as Le Maire’s push to create European champions, or a Franco-German leader in the manufacture of electric-vehicle batteries. Patrick Artus, the chief economist at investment bank Natixis, and a member of “Le Cercle des Economistes”, which organises the Aix conferences, noted that America is going in the other direction: towards greater regulation, and a possible breakup, of its digital champions. As for the idea of creating monopolies, like the one in trains proposed by Alstom and Siemens, Artus highlighted “the risk that you just take rents from the European customer”.

Simeon Djankov, a Bulgarian economist with the World Bank, was even less diplomatic. In a session titled “Can France breathe new life into Europe?”, he joked that the rest of the world was happy to let France lecture about wine and soccer, domains in which it was a world champion, but less so in matters such as employment and taxation, where the country was a laggard. For all the French self-criticism in Aix, that went down less well.

-This item has been updated to correct the reference in the first sentence to “les GAFA” to replace Alphabet with Amazon.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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