European Council - Press conference given by M. Jacques Chirac, President of the Republic, following the European Council (excerpts)

Brussels, 24 March 2006

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CPE (FIRST EMPLOYMENT CONTRACT)

Q. - You talked about youth unemployment. Can we know if, in the margins of this summit, you received the support of some of your colleagues with respect to the very tense current situation in France regarding the First Employment Contract (CPE - Contrat Première Embauche)?

THE PRESIDENT - There was support, obviously, but that doesn’t prove anything, it may simply have been courtesy - so I won’t bank on this support however kindly it was offered - and on the other hand, astonishment. Admittedly, our colleagues find it a bit hard to understand the nature of the strong reactions provoked, in general, by the reforms in France. But I pointed out to them that this was part of the French genius. We have a number of absolutely wonderful things at the cultural, civilization level, and which are recognized as such. Our qualities are double-edged swords. We have to accept the bad with the good.

More seriously, I’d nevertheless like to talk about a couple of things which are implicit in your question. The first is that yesterday we witnessed absolutely intolerable and unacceptable acts of violence. A number of troublemakers joined the demonstrations and assaulted passers-by, damaged property, which is unacceptable. I have asked the government - indeed, that went without saying - to ensure that these troublemakers, who have absolutely nothing to do with the demonstrators, are charged and punished with all necessary severity, because this isn’t acceptable, and so, they will be.

My second observation concerns the First Employment Contract (CPE) which is at the heart of this discussion. As regards this contract, I want to say first that I attach the utmost importance to the discussions starting today between the government and trade-union organizations and professional bodies, including student unions. Today’s first meeting must, I hope, open a dialogue to address the worries, concerns which have emerged, and find solutions in line with the government’s fundamental objective, which cannot be deviated from, i.e. a solution tailored to the needs of the young people in greatest difficulty - because it’s them the CPE is aimed at - with conditions which can be explained, defended and agreed in the normal way.

In this sphere, I have every confidence that the Prime Minister and government will hold the necessary negotiations and discussions in a spirit of openness and understanding, just as I have every confidence that the trade-union and professional bodies and student unions will conduct a responsible and sensible social dialogue.

In reality, what is at stake is youth employment which no one can deny has to be improved, and - and this is more fundamental than youth employment - the response to give to the aspiration of young people to find their full natural, legitimate place in society. Natural, legitimate and also essential, since no society can progress, develop efficiently and harmoniously if young people don’t feel they have their full place in it.

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PROTECTIONISM

Q. - Can you understand the criticism being levelled that the merger between Gaz de France and Suez is a form of protectionism?

THE PRESIDENT - I suspected that I’d be asked about protectionism, and I’ll answer you on the Gaz de France/Suez issue.

I’d like to begin by saying that we have here a sort of fashion which has developed, particularly in the case of the very superficial business observers, for alleging that France is protectionist. Yet, in relation to her national wealth, France has twice as much foreign investment as Germany and three times as much as Italy. Now, you may say: but you say that, prove it? I’ve looked again at the data, the most incontrovertible in this sphere and universally recognized, that of the International Monetary Fund’s most recent report, dating from 2004, but things haven’t substantially changed.

This report is entitled "FDI [foreign direct investment] as a percentage of every nation’s GDP, International Monetary Fund" and it is, I believe, irrefutable. It emerges from it that in France FDI accounts for 42% of investment, followed by the United Kingdom with 36%, then Germany with 24%, i.e. half that in France, then Spain with 21%, then Italy with 13%, a third of that in France. Let me add, from the same report, that in France, one private-sector employee in seven is employed by a foreign firm, and in industry, one in four, compared with one in ten in the United Kingdom, one in ten in Germany and one in 20 in the United States.

Moreover, 45% of the capital of the major French companies in the top 40 listed on the French Stock Exchange (CAC 40) is held by foreign firms - 45%, which is a record in Europe. So you will understand that when I hear talk of protectionism in France, I tell myself that, really, people are talking nonsense, uttering blatant falsehoods. No one in the world can support that argument, no one with a minimum of competence. This is in fact why I was very surprised to see or read that we were going to discuss these problems - we weren’t of course, for the simple reason that there was no reason to do so. Everyone knows exactly what France’s situation is: the country most open to foreign investment. So none of our partners who are serious, of course, and essentially well-informed, would wish to make a comment of that nature for fear of being told to go back to school. That’s how it is. There are rumours like that, spreading like wildfire.

I would add that France is one of the rare countries which have agreed to sell banks, the case of the CCF, and insurance companies, the case of AGF, to foreigners and to place essential assets, particularly in the transport field, like EADS for example, under foreign control. This explains why no one, in fact, raised this problem despite any urgings of superficial or ill-intentioned observers. No one raised this problem during the Council.

GAZ DE FRANCE/SUEZ

Secondly, Gaz de France/Suez: there have been rumours going round that ENEL, a company totally under Italian government control, had made a hostile takeover bid for Suez in order to break it up - a strictly financial operation, with no economic [business] motive and, what’s more, involving two totally different cultures, attacking not a European, but a Franco-Belgian company. (...)

Of course we thought twice about this. We did so especially because the negotiations on a merger between Gaz de France and Suez have been going on for over six months. It’s long because it’s complicated. In particular, there must be absolute guarantees for the jobs and status of the workers, particularly those of Gaz de France, so this isn’t something to be dealt with hastily. Respect for the status of the Gaz de France workers and employment are obviously crucial elements in a possible agreement.

So there you are, I can’t see how France can be accused of protectionism, just because she does not want to give in on a purely financial operation, which is contrary to the wishes of the shareholders and French and Belgian States, hence our position. I don’t know if it will take place later, we’ll see, but in any case there was no discussion of this matter either during this Council.

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EU LABOUR MARKET/NEW MEMBER STATES

Q. - A question on the labour market, but this time relating to workers from Eastern Europe, the eight new member States. France has closed her borders until 30 April and taken in few workers from Eastern Europe. Of all the European countries, she’s the State which has taken in the fewest. What do you intend doing from 1 May onwards? Do you intend dismantling what is, for those countries, a little Berlin wall, a little one, but a wall all the same?

THE PRESIDENT - It’s a real problem. It’s in the European Union’s nature to find its solution as fast as possible. As you know, we must, I believe, on 1 May, give our answer. The French government has met. It has decided to take a step, i.e. to take a simultaneously incremental and controlled position on opening up the labour market, giving special recognition, of course, to sectors where our country’s workforce isn’t large enough.

The terms and conditions of this controlled and incremental policy are being discussed, particularly with the trade union and employee organizations. I hope we will begin progressively to improve the situation, but we are compelled to take account of our country’s employment situation, which we are all aware of. (...)./.

Published on 11/04/2006

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