AP Features, January 8th, 2008
French President Nicolas Sarkozy vowed to defend French companies from unwanted foreign predators such as hedge funds or sovereign wealth funds, signaling a new era of economic patriotism.
The state-controlled Caisse des Depots et des Consignations, or CDC, will be the chosen "instrument for this policy of defense and promoting the primordial economic interests of the nation," he said at a Paris news conference.
The CDC serves as an investment bank for the government, holding 37 billion euros ($55 billion) in shares of traded companies, including European Aeronautic Defence & Space Co. NV, the owner of planemaker Airbus.
"In the face of the growing power of speculative funds, which are extremely aggressive, and sovereign wealth funds which don't respect economic logic, there is no question of France not taking action," Sarkozy said.
Economic patriotism was promoted by Sarkozy's rival, former Prime Minister Dominique de Villepin.
In 2005 he vowed to defend yogurt maker Danone SA against a rumored bid from PepsiCo Inc. that never materialized. But he failed to prevent Netherlands-based Mittal steel taking over Arcelor SA.
Sarkozy is credited with using political muscle to force the merger that in 2004 created French drugs giant Sanofi-Aventis SA, fending off a possible bid from Swiss rival Novartis SA.
Since his election he waved through the merger between utilities Gaz de France SA and Suez SA, designed by de Villepin to thwart a rival bid by Italy's Enel SpA.
Sarkozy is also backed by German Chancellor Angela Merkel in his desire for stronger regulation of financial markets.
Their case has been strengthened by the recent financial market turmoil that some blame on banks that made risky bets on U.S. subprime mortgages and ratings agencies that graded these investments.
