In These New Times

A new paradigm for a post-imperial world

Sarkozy calls for halt to foreign ownership

Posted by seumasach on October 21, 2008

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Nicolas Sarkozy risked blowing apart the European consensus over how to deal with the financial crisis by proposing today that each country launch sovereign wealth funds to take stakes in key industries to stop them falling into foreign hands.

The French President argued that falling share prices meant that big industries were in imminent danger of being taken over and called for the EU to follow the US Congress pledge to take $25 billion stakes in the country’s three main car-making companies.

With France holding the rotating presidency of the EU, Mr Sarkozy is in a strong position to push through his plans for sovereign wealth funds as world leaders prepare to re-write gloabl financial rules at a series of Bretton Woods-style meetings starting next month.

“Stock markets are at historic lows. I do not want European citizens to wake up a few months from now and discover that European companies belong to non-European capital which has bought at the lowest point of the stock exchange,” Mr Sarkozy told MEPs.

“European citizens would then turn around and say what did you do? I would ask that all of us consider how interesting it would be to set up sovereign funds in each of our countries – and maybe these national sovereign funds could now and again coordinate to give an industrial response to the crisis.”

He said that he was interested by the US Government offering huge sums to its top car producers to save them from bankruptcy.

It has been reported that German and French government officials have said that their countries’ carmakers, which have asked the European Commission for billions of euros in cheap loans, are eligible to access their governments’ banking rescue plans.

Both the German and French finance ministries said this week that the financing arms of carmakers could use the state guarantees for new lending of up to €400bn and €320bn respectively.

Mr Sarkozy added: “In Europe, we are asking our manufacturers to produce clean cars to completely change their production systems.

“Can we leave the European car industry in a situation of grave distortion of competition with our American competitors without asking about European sectoral policies in order to defend European trade policy?

“That does not mean we need to question the single market or the question of competition, it does not mean we need to question the issue of state aid. It does mean we need a single response. It cannot be a naive response in the face of competition from the rest of the world.

He said: “We should be able to manufacture ships, cars, aeroplanes in Europe because Europe needs a strong industry and on that policy the presidency will stand up and fight.”

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