Yoghurt With Soda Anyone?

Well, this about beats the lot of them. Yesterday the shares Groupe Danone SA went through the roof on rumours of a takeover by PepsiCo Inc. Dominique de Vil-pin also went through the roof:

Prime Minister Dominique de Villepin said Danone was “among the jewels of our industry”…. “We plan to defend France’s interests,” Villepin said after a cabinet meeting at his official Matignon residence, although he insisted he was “not commenting on any rum“.

Jewels of French industry… defend France’s interests, well readers might be surprised to learn that Danone originated in Catalonia after local entrepreneur Isaac Carasso brought the formula for Bulgarian yoghurt back to Barcelona and set up shop in 1911. As the encyclopaedia entry notes:

Ten years later, the first French factory was built, but during WWII, (Isaac’s son) Daniel moved the company to New York, where Dannon Milk Products Inc. was founded. In the United States, Daniel changed the brand name to Dannon to sound more American. Then in 1958, the company returned to Paris, where its headquarters are located today“.

My interpretation is that if Vil-pin is defending any French interests here, then they would be imperial ones. Possibly another example of how some still consider the Tractat dels Pirineus a licence to do and say what they want.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

37 thoughts on “Yoghurt With Soda Anyone?

  1. Ironic parallel to the discussion in the US about the bid of the Chinese company CNOOC for the UNOCAL oil company.

  2. That would be tragedy & farce, then?

    Or maybe I missed something, and the French economy really would come to a grinding halt if deprived of yogurt.

  3. Il faut savoir que tout le monde peut danser la sardane ? condition de respecter certaines r?gles de base :
    – Avant d’entrer dans une ronde, s’interroger sur le niveau de celle-ci.
    – N’entrez pas dans une ronde pendant les sauts.
    – Demandez l’entr?e dans la ronde depuis l’ext?rieur, et attendez qu’elle s’ouvre.
    – Ne pas occuper le centre d’une ronde pendant les curts.
    – Ne pas entrer dans une ronde qui manifestement s’entra?ne en vue d’un concours, d’une exhibition…
    – Localisez et soyez attentifs aux ordres du meneur.
    – N’entrez pas seul(e) dans une ronde form?e de couples.
    – Ne changez pas de place dans la ronde.
    – Evitez les exhibitions solitaires.
    – Ne pas couper ? la droite d’un cavalier.

  4. If a malevolent foreign power controlled Danone, they actually could seriously impact France’s yogurt supply (which might have a devastating impact, given most French people’s yogurt dependency…). If a malevolent foreign power controlled Unocal, they could do precisely sod all to impact the US’s oil supply. This is the difference.

  5. Sorry Doug, it’s a Franco-Catalan thing – about who can join the dance. But English is the international language , n’est-ce-pas? Or should I say innit?

  6. France is absolutely justified in standing up for its industrial national champions; the alternative would be the British model where industry has been decimated and where the entire British economy today is based only on overvalued real estate.

    Whereas Britain has for instance completely wiped out its automotive industry France today still counts 3 succesful automotive global brands – Renault, Citroen and Peugeot. The French national champion model also led to Airbus being the global dominant force in the civilian airline market (the military side is more difficult as the Americans prohibit the Europeans from bidding on American military contracts).

    The French government should therefore do everything possible to block the Americans and take agressive action if needed against Pepsi to make sure it does not try to buy this French national icon.

    As the founder of Danone used to say: Danone is like the Cathedral of Chartres- and the cathedral of chartres is not for sale.

    Finally, there is nothing unusual about the French government standing up for this powerhouse of the food industry; the Italian government also came to the rescue of the Italian dairy giant Parmalat when it collapsed recently.

  7. Milky Bar Kid as White Knight?

    Nestl? may intervene if this isn’t just a rumour.

    However, isn’t Nestl? a competitor on many of the same markets?

    It’s one thing not promoting national champions at the expense of other European firms, but quite another allowing the Yanks (or the Swiss) to have our Champions. Just cos’ the Americans can be hypocrites about free trade doesn’t mean we can’t be too. 🙂

    Helmut is quite right – despite how dismal the management of the British motor industry was, and the sort of antagonistic our canteen and theirs, spit in their beer culture that had grown up.

  8. I think I saw Borloo quoted as saying that a hotile take-over was to be opposed because, amongst other things, Danone was important for the French ‘art de vivre’. I suspect that’s a bad sign.

  9. I thing the Anglo-American business model will eventually completely end up degrading the global economy into a communist system; if Europe allows the anglos a free hand with all these mega mergers we would soon end up in an absolutely miserabe world.

    Today its Pepsi taking over Danone; tomorrow Coca Cola takes over Nestle. Then next week it will be Procter and Gamble buying Unilever. Next month we would then have Coca Cola taking over Unilever. And next year we will have Coca Cola taking over Pepsi.

    We can all go then and shop and marvel at one big shelf with one single brand for everything- like under communism. And under the American system we would all end up with one store- that would be Wal Mart of course. Wal Mart and Coca Cola – this is the end game that the Americans want to peddle to the rest of the world as some sort of paradise of economic efficiency- pathetic.

    Every European should fight this Anglo business model before the English and the Americans completely destroy Europe.

  10. In 2001 the French unions were urging the French public to boycott Danone because of factory closures. So much for the ‘art de vivre’. State opposition to the takeover is presumably about jobs.

    Danone recently sold HP Sauce, Lee & Perrins and Rajah spices to Heinz. What about the Brit art de vivre then?

  11. And let’s not forget “national champions” gave France Alcatel, that big engineering disaster whose name escapes me at the moment, and the enormously expensive Paribas (and associated) bailout. How much did that cost, in the end? Is it even known?

  12. Why do you write de Villepin name as Vil-pin? Is that some kind of joke I don’t get or just that you can’t copy/paste properly? Either way that’s really out of place here, it makes your otherwise quite sound blog look more like the forum of FoxNews or The Sun than anything else.

  13. “Is that some kind of joke”

    Actually it is. No a very funny one evidently.

    “or The Sun than anything else.”

    God forbid. Would that the sun were so harmless and innocent. I accept though that you are offended, perhaps I should have said something less humorous and rather stronger. I have no sympathy with this kind of approach, but since I don’t want to engage in ‘France Bashing’ I stay on this level.

    There is no excuse for this kind of reducing economics to series of national football play-offs: not when people in the US bash China, nor when Europeans tell us their yoghurt is threatened.

    But instead of being offended, tell me what you really think of the fact that he claims defending a Catalan national champion is in France’s interest, and then see if you can spot the logical flaws in the arguments that you would be forced to use. I’m only guessing :).

  14. Edward,

    This is about much more than yoghurt- it is an entire way of life and way of doing business that is threatened by the American Pepsi Cola company.

    Danone is an extremely responsible company- unlike American food companies Danone pays French farmers a very good price for their milk products- it is a stated goal of Danone to keep excellent relations with small French farmers. Danone enjoys an excellent reputation in the French farming community.

    Now comes the brute from America that wants to impose their lowest common denominator standards on France. Farmers would be squeezed into bankruptcy; quality would suffer; the fresh milk from small farmers would be replaced with cheap hormoned milk powder from America – it would be all about volumes and profits even if it means firing the entire company and destroying thousands and thousands of small farmers

  15. Well, to me your attitude is indeed bordering with French-bashing as I seem to have missed the oh-so-funny play on words about any non-French politician, but maybe I didn’t look hard enough. As I said I usually find the reading of the blog informative, therefore I’ve been rather disappointed to see you resorting to such low-level humour, the kind of stuff The Sun and the rest of the gutter press would print proudly on their front page.

    Back to your claim that Danone is some kind of Spanish company that the French pretend to be their own.

    You seem to confuse the brand Danone and the company itself. No deny the original Danone had been born in Spain, actually I ignored that so I have learned something today. But as of today the Danone group is the result of various mergers between large French industrial groups, namely BSN (itself a merger of Glaces de Boussois and Souchon-Neuvesel) and Gervais Danone (which merged in 1967). The new company chose Danone as a new name because it sounded sexier than BSN Gervais Danone I guess. So indeed, a part of the Danone group originated in Spain but the vast majority of it has French roots.

    Following your logic and stretching it to its limits I could claim GM is actually a French company because Chevrolet (part of the GM group) was probably once founded by a French migrant.

    The reactions in France may seem excessive (and probably are) but it’s understandable that most people feel uneasy seeing a successful and globalized French company owning most of the food brands of their childhood being taken over by a foreign group. How will people in the USA react when McDonald’s or Coca-Cola will be bought by a Chinese firm? There’s probably not much a government in a liberal economy can do to avoid things like that happening, but I can’t see the problem with them being honest about their feelings about the eventuality of Danone being the target of a hostile takeover.

  16. “Well, to me your attitude is indeed bordering with French-bashing ”

    Ok, well since you are insisting, and since you maybe right that people in French culture are sensitive about this kind of thing, I will desist in future (he will be DdV like GWB). I don’t particularly like DdV, as I am nervous about Sarkozy in a different way (I think he may be authoritarian), and my ‘dream ticket’ for Europe would be Blair, Merkel and Jack Lang which is, I reckon reasonably politically eclectic.

    You can find more about this, and my admiration for Rene Char, here:


    “the oh-so-funny play on words about any non-French politician”

    Oh, when faced with tragi-comic characters, I think we can rise to the bait. You will find plenty of references to Muntefering and his ‘swarms’ floating about.

    “Back to your claim that Danone is some kind of Spanish company”

    I think this is the point, I never said Spaaaanish (incidentally, I take it you’re not offended by Zapatitos, or ZPT). I said it was Catalan, and in the reference to the ‘Tractat dels Pireneus’ I was alluding to the fact that Catalunya had been carved up between France and Spain (and that if Catalunya had had its own state, then today like the Netherlands, or Denmark it would have its own MNCs, probably Danone among them).

    I was suggesting that France had ingested Catalunya in the same way it is now ingesting its yoghurt. This is no joke. And the French political class is – in the main – in denial about the national minorities it has within its borders. This is why I think it was an unfortunate example for DdV to talk about national jewels.

    Of course the origins don’t matter when you look at the present and future of a company. This wasn’t the case when Vivendi took over Universal, or when Telefonica bought Lycos. Nor should it have been. But I don’t think DdV has any more right to interfere with shareholders decisions in the Pepsi case than Bush would have with CNOOC and Unocal. These are the rules of the game, and I think its better for all of us if we play by them.

    I think there are plenty of people in France itself who feel she is badly in need of reform in this sense.

    As a young man I became convinced that Europe (in the sense of the EU) was a good idea because it would give all our local companies the opportunity to restructure on a multi-national level by leveraging a much bigger market. The absence of European level companies (as opposed to national champions who operate across frontiers) is one of the biggest obstacles to the evolution of the EU:

    “Following your logic and stretching it to its limits I could claim GM is actually a French company because Chevrolet (part of the GM group) was probably once founded by a French migrant.”

    Well it’s not quite the same, being pedantic, since it wasn’t founded in France, but even if it were, why shouldn’t the French buy GM? Actually I can think of several reasons why it would be a good idea not to, since the defined benefit pension arrangements mean they are more or less technically bankrupt. The Chinese will probably buy them when they go for Chapter 11, since the brand name would fit well with their business model (Rover just isn’t big enough to fit the bill 🙂 ):

    The point is, even were a French company to buy GM, I hardly think a US President (or VP) would talk about national interest issues in this way. Not would a British pm.

    “How will people in the USA react”

    This is the point, we are not talking about ‘people’ here, the incredible man on the Clapham Omnibus, we are talking about senior politicians. Leave the ‘national jewels’ to the Le Pens of this world. France has a major issue with itself following the no vote in the referendum. Responsible French politicians need to be actively working to break the ‘anti-globalisation’ hold on the public mind that seems to be behind that vote. The French need to begin to think of themselves more as Europeans, and less as ‘French’.

    I don’t give a damn if the Chinese buy Big Mac or Cola. Actually they probably fit the GM pattern, since they are well past their best, and are really now struggling to find their way.

    But my guess is that the US has handled the ‘soft power’ issue so badly over the last 5 years that the global market for US cultural products in the developing world has been badly affected. This won’t help the trade deficit. My guess is that Bollywood is on the up here, and the brand original struggling to hold its place. Similarly with Cola, probably the Indians will come up with some new (yoghurt based? Lasi?) drink that will sweep the world. Life would be so boring if things weren’t like this.

    “being the target of a hostile takeover”.

    In all of this, what I think we need to watch is emotive language. In Spaaaaaaaanish this would be an OPA (oferta p?blica de adquisici?n). Since this is not emotive, I think it’s better. What is an OPA? Well one company offers to buy shares from the shareholders of others. There are rules governing this, and it is only ‘hostile’ in the sense that the existing management don’t recommend it (if indeed they don’t). So this is really a question of backing one group of managers vs another. Shareholders normally wouldn’t be interested in selling if they were happy with the existing management. I don’t see what national interest has to do with any of this. I can understand that France may want an airbus industry, or a space and telecommunications sector for strategic purposes. I am not an out and out 100% laissez faire person, but I can’t for the life of me see what yoghurt has to do with all this.

    You mention Spain. Helmut says:

    “Danone pays French farmers a very good price for their milk products”

    This may be the case, and if it is this may be part of the reason for their financial problems (maybe they need to outsource, the fear of something like this happening may be the real issue here) but in any event it hides another double standard. French milk is arriving in large quantities in Spain at ridiculously low prices (I believe this is called dumping) and this is causing serious difficulties to Spnaish farmers. If these were economic (and not subsidised) prices I would have no problem, France may turn out to be a cheap outsourcing venue, but somehow I doubt it.

    Obviously the whole CAP needs to be on the immediate future agenda of the EU.

    I think on European and cultural diversity issues the French ‘imaginaire’ needs to take a long hard look at itself in the mirror. I speak a quite passable French (these days with a Spanish accent, so people who want to be ‘helpful’ now try addressing me in Spanish). I would say French is my ‘third’ language. But what I say to people is that I find them hard to please: I speak it seems one langue which is too big (English, dominating everything) and one which is too small (Catalan, why the hell do you want to bother with something like that). Now you really have to decide, which one is it? Do you really want to defend ‘minority languages’ (including French in the global sense), or do you only want two or three ‘important languages’. Revealingly enough, Pasqual Maragall (the Catalan President) when he went to Paris to secure French backing for our bid to get the language accepted at EU level was asked to have us included as a Francophone region. I have no issue in principle with this (although of course it cuased no end of eyebrow raising in Madrid), there are lots of ties between Catalunya and the whole Midi, Occitan, Proven?al and Catalan are closely related languages. But it shouldn’t have been necessary, since Catalan, along with Occitan, Breton and a host of others are langauges spoken in France, and France should be defending the diversity of its own society in Brussels itself.

    To conclude: I see plenty of evidence of French diversity (old and new) on the football pitch, but far less in the public declarations of her politicians.

    Incidentally, I’m not a nationalist in any way. I just believe in ‘fair play’, a level playing field, all that kind of thing.

  17. I’m all for a liberal economy, but as Europe has a hard time creating world-class companies, should we just all look away politely as all the European ‘jewels’ are being taken over by US or Chinese companies, and resign to becoming a huge theme park for rich tourists? Companies like Danone play a large role in creating jobs and fund scientific research in Europe, and one can wonder what would happen if it were to merge with a bigger extra-european company.

    Takeover is OPA as well in French (as in Offre Publique d’Achat), I said it was hostile because yes, the management don’t seem to agree with it at the moment. It actually seems all those reactions of French politicians have been requested by Franck Riboud, Danone’s boss.

    As for the rest of your analysis, I fully agree, France needs to reform itself urgently and to accept the fact it’s just a piece of a globalized world and that globalization won’t stop at its borders. The ‘No’ at the referendum just made obvious a large part of the French people has problems with that. The ‘yes’ campaign was very clumsy about that issue (Chirac presenting the Constitution as a rampart against ‘anglo-saxon ultra-liberalism’).

    Jack Lang as a French president, now THAT’s a good joke 🙂 I have nothing against the man but he really seems to be just style over substance and craving for approval. On the left, Bernard Kouchner or Dominique Strauss-Kahn would be a much more sensible option for the presidency. Sarkozy is on the verge of populism at the moment, trying to seduce some of Le Pen’s voters with tough talking, but he’s maybe one of the few politicians able to come up with the energy France needs to reform itself.

    “French milk is arriving in large quantities in Spain at ridiculously low prices (I believe this is called dumping) and this is causing serious difficulties to Spnaish farmers.”
    I thought the CAP meant the subsidies were the same throughout Europe (at least for the 15 older states). If it’s the case, and providing French milk isn’t sold for less that it costs to produce, that would mean that even without subsidies on both sides of the Pyreneans, French milk would still be cheaper because it is produced more effectively there.

  18. Herve

    Thanks for the lengthy reply. As I said I am sorry if the joke offended, and since it offended you, it probably will offend more so I will desist.

    I think as a result we have explored some of the issues, rather more than had been done on this post, so sometimes, good does come out of bad.

    I am genuinely grateful for your insight into Sarkozy, which confirms my impression, and makes me rather nervous. I am also listening to what you say about Lang. It is difficult to judge these things from a distance. I’m not looking for someone either on the left or on the right, but someone in the middle, I don’t mind from which party, who understands the need for reform, but also understands that you have to hold society together to carry this through. But at the end of the day it doesn’t matter who I’m looking for, its who the voters want that matters.

    I only know Kouchner through MsF and Kosovo. I will look at DSK again.

    “French milk isn’t sold for less that it costs to produce”

    I really shouldn’t get too much into this, because its not within my ‘knowledge area’. All that I can tell you is that the Syndicat des Paysans equivalent here say that this is what is happening: dumping, via French – Carrefour etc – control of the distribution outlets (and this part is certainly true). Decide for yourself. I am sure that French agriculture is in general more efficient than Spansih agriculture in general, but if the inetrvention price is the same, how do the French networks manage to undersell? I don’t know.

    “should we just all look away politely as all the European ‘jewels’ are being taken”

    This really was the J-J S Schreiber view, the American Challenge, that I admit first got me interested as an economist – in the late 60’s – in the idea of a European company. The ailing condition of the UKs car industry might have had something to do with this.

    I now think all this is terribly old economy. What Europe, and China and the US need are dynamic company-generation processes. I forget now which song the ‘everything that lives was born to die’ comes from: but this is surely true of the company. What we need is a legal and tax environment, a labour market (including one extending to Poland), and an education and R&D support system which support creativity and innovation. As to who actually ‘owns’ the company – see Muntefering and his swarms of hedgefunds for the German equivalent of this debate – I don’t think it matters.

    This post was right on detail, but not maybe on substance:


    European companies need a more dynamic process of birth and death.

    It’s more. To support our pension funds in times of ageing, savings-rich economies, we are going to need – via pension funds – to export a lot of capital, and live offf some of the income. This means give and take, and not “what’s good for us, isn’t good for you”.

    Anyway, I think we are just exploring issues. I appreciate that you don’t agree with me, and I appreciate that you appreciate that I don’t agree with you. You are right, these are the standards of this blog, and I will try myself to better maintain them in the future.

    But before we go, c’mon, an honest answer to an honest question: when you said Spain, instead of Catalunya, wasn’t this more than a slip of the keyboard, wasn’t it part of the way people in large nations like France, Germany and England (England note, not Britain) conceptualise things, at least unconsciously (which is why I intentionally said Imaginaire: I have in my day read Lacan and Castoriadis, and I’ll confide in you a secret, I’m still an admirer of the young Baudrillard, I even once wanted to move to Paris just to sit in on his classes in Vincennes. The old version has clearly gone mad. I still belive what we consume are signs, and not material objects in and of themselves: perfect for the ‘immaterialism’ of the information society). I have the feeling that people from ‘small countries’ like the Netherlands, Sweden and Denmark are much more respectful on this kind of question, and on the issue of minority languages generally. It’s the insensitivty of DdV – or of his left equivalent Chevenement – on this kind of question that leads me to want to ridicule him (still, following Artaud, I guess I don’t need to, he ridicules himself: life in the twentieth century has inverted the relation between art and its object. Previously art was, following Aristotle, an imitation of life, now life is only a pale imitation of art). And we all remember what Plato said about poets :).

    OK, I’ve indulged myself. Nice talking to you, and please, please come back and comment on our posts in future. One thing this blog badly lacks is informed French opinion.

  19. Sarkozy would be a disastrous president for France and for the world; first he is only first generation French and therefore his ties to France are not strong enough.

    That shows in how much he praises the British and the Americans; if I were Chirac I would ask Sarkozy to run for prime minister of Britain instead of France- he seems to admire Britain so much.

    Secondly Chirac should ask Sarkozy why thousands and thousands of Brits are fleeing Britain and moving to France- if Britain is so wonderful why are they coming to France ?

    Sarkozy cannot be trusted- his entire career has been built on doublecrossing others- he absolutely has no morals.

    Unfortuntately he is a very dangerous candidate because he has the full backing of the American and British government; he also has the full support of Edouard de Rothschild who owns Liberation and also from Marcel Dassault who owns the Socpresse media company(incl. Le Fifaro).

    While Edward will probably want to call it anti-semitic to point out that Sarkozy was born to a jewish mother I think that this should not be kept out of public discussion. The influential Marcel Dassault for instance is also jewish (original family name “Bloch”).

  20. “Unfortuntately he is a very dangerous candidate because he has the full backing of the American and British government; he also has the full support of Edouard de Rothschild who owns Liberation and also from Marcel Dassault who owns the Socpresse media company(incl. Le Fifaro).

    While Edward will probably want to call it anti-semitic to point out that Sarkozy was born to a jewish mother I think that this should not be kept out of public discussion. The influential Marcel Dassault for instance is also jewish (original family name “Bloch”).”

    OK Helmut. As you know I posted this this morning:

    “Comments on this blog *are* moderated. There is no attempt to ‘screen out’ any particular point of view, with the proviso that anti-semetic, racist, intenionally sexist and homophobe comments are not accepted.”

    I would not probably call it anti-semitism. It is anti-semitism, and you are banned.

  21. La?cisme is a fundamental principle of the French society. It does not matter what was the religion of the parents.

    In fact when people talk of the difficulty for immigrants in France to get access to power, I think that Sarkozy is an example on the contrary.

    BTW Edward is British, not English. And he’s lived long enough out of the UK, and in other parts of Europe, to have a rational opinion I would not discard so flimsically as you do.


  22. I wasn’t offended by the joke, I just think making fun of people’s name is out of place here.

    I mentioned Kouchner and Strauss-Kahn because they are ones of the few of the Parti Socialiste who openly acknowledge there is no alternative to the market economy. Half of the Parti Sociasliste still feels uneasy with that and is still close to the communists and the ‘altermondialistes’. I’m not too sure how Jack Lang stands on this issue.

    I agree with you about the lack of dynamism of the company-generation process in Europe. The issue is maybe worst in France – I read the majority of the Dow Jones companies were founded after 1965, while none of the companies of the French CAC-40 were founded after this date. The Lisbon agenda seemed a good start for improving the situation, shame it seems its targets won’t be met.

    Can’t I use Spain to talk about Catalunya, like I can mean Scotland or Wales if I use the word Britain? Honestly, the whole idea of regionalism is quite alien to me, I come from a part of France where there’s no regional folklore or dialect whatsoever, it’s just French. I feel quite grateful I can go to any part of France and the people there will speak the exact same French I speak, except for the local accent. When I realised that wasn’t necessary the case in countries like Spain and Germany – where I’ve been told people from different regions may have trouble to understand each other – or even small countries like the Netherlands, I was quite surprised and felt like we are lucky. France has always had the tradition of oppressing the minor languages within its borders, so why change now? 😉

  23. “Can’t I use Spain to talk about Catalunya, like I can mean Scotland or Wales if I use the word Britain?”

    Just quickly, because otherwise it will be like flogging a horse to death, I think there is a difference. You see British is an evolving identity, there are eg black British, muslim British (what I call the new British) and then there are the Welsh and the Scottish and the English (the old British). British is an umbrella identity which covers them all, and I think this is a positive achievement. This is not the case in Spain, since Spanish is the – perfectly legitimate – identity of one of the groups, but doesn’t really cover people who feel themselves strongly to be Basques, Catalans or Galicians. I don’t know about the Valencians, you’d need to ask them.

    Most people I know here refer to France as Jacobin and centralist even though this probably doesn’t encapculate the newer reality. Zapatero is actively working on a new multi-national Spanish identity (this is the point, I don’t think Scotland, Wales, Brittany (?) are simply regions). Historically they have been cultures with a strong collective identity, and deserve a place in the new Europe we are working to create, a Europe which is based on mutual respect.

    I’m sorry if I sound pedantic on this, but I do feel that if we can’t appreciate the cultural richness we already have around us, we are never going to be able to appreciate the new kinds of cultural diversity whicvh come to us through immigration have to offer.

    Well, that wasn’t too brief, but still :).

    “I’m not too sure how Jack Lang stands on this issue.”

    Well this is the point. In the FT article linked in the post I mentioned (which I guess has now gone the way of all flesh) he seemed to be advocating the third way, which is when I started getting interested. I don’t know, there’s still lots of time till 2007, and I guess we’ll get an idea of the lie of the land when the debate warms up in the autumn. For now, have a nice summer, and see you for the rentr

  24. Noel Forgeard would make a good French president.

    He would defend France and Europe like no other- under his leadership Airbus has become the dominant force in the global civilian airplane market.

    Thats what France needs- a good tough businessman who has has a history of winning in business and in defending French and European interests.

  25. Edward, I?m sure you?ve considered this, but I have to ask. Are strategic considerations the only relevant ones when considering US takeovers of European firms? Would a British PM really be content to see , say Vodafone, Glaxo, Tesco, Zeneca, Barclays and Lloyds, Unilever and the Pru all pass into Japanese or American hands? And if not, why not? Could it be that without directors with some kind of domestic network , and a taste for some kind of locally-flavoured carrot, be it popularity at the club, gongs, mates down the pub, quango service in retirement, etc, you don?t have companies with any motivation to take decisions in the national interest. Even multinationals have a centre. A Britain where all our work is done for decision-makers who are appointed elsewhere is a peculiar conception of democracy. Wasn?t there an element of patriotism in the way German banks and companies worked together to build German industry? And wasn?t it precisely the lack of such long-term view solidarity between city chaps and grimy industrialists that was often cited as one of the things holding Britain back, in the days when we still had a manufacturing sector.

  26. @ to John

    Firstly it’s curious how this post has taken some days to warm up and get to the real issues. Anyway I’m glad it has :).

    Secondly I am sure there is plenty of room for legitimate differences of opinion here. No-one has all the answers. But my opinions for what they’re worth are:

    “Are strategic considerations the only relevant ones when considering US takeovers of European firms?”

    The thing is this isn’t a one way street, it is a multilateral game. All across the OECD companies in one country buy companies in another. In the case of hedge funds, institutional entities take controlling interests. This has caused, as I’ve already remarked, a lot of debate in Germany.

    But this is what globlisation is about. I think the debate in the sixties – again as I’ve said – was about European companies, companies to rival US and Japanese ones – Germany in those days of course had a significantly smaller home market, and the UK was the ‘sick man of Europe’. Our preoccupation then was the Japanese takeover of things like the motor bike and TV industries.

    But since the 60s we have had another big wave of globalisation, and in particular we have had the financial big bang of the back end of the 1980’s.

    BTW this Stephen Roach’s post on Tuesday 19 July on the Morgan Stanley GEF contains a lot of material on globalisation and disinflation that I’ve been arguing solidly here for some time now. His source on this is Chapter IV of the 75th annual report of the Bank for International settlements (BIS: the banker’s bank). I mention this because I think you can’t understand the reach of globalisation from the 90s onwards unless you take account of the role and impact of the ‘big bang’. This is mainly for economics freaks, but still, if you (reader) are not one of those, then sorry about the aside.

    So now the name of the game is ‘global companies’, and really if you look at the debate in the US it isn’t very different from the one in Europe, they are worried there too about the extent to which a US company is still a US company, and clearly all the outsourcing is taking its toll at the balance of trade level.

    But if you want to build global companies, you really have to accept the right of others to do the same. This is the two way street argument. You mention Vodaphone, and this is the perfect case. Vodaphone bought up Japan Telecom and (I think I’m right in saying stripped out the fixed line component), Vodaphone has a considerable share of the US mobile market (via Verizon I think). But this needs to work both ways, why shouldn’t WalMart get Tesco? Frankly the UK, France, Germany. the Netherlands and Sweden are big enough to look after themselves in this sense, and don’t need to be afraid.

    Those who don’t have their own MNCs like Singapore and Ireland find another way to do this.

    “A Britain where all our work is done for decision-makers who are appointed elsewhere is a peculiar conception of democracy.”

    Well this is what happens in a lot of countries where British MNCs have been active. Look at the history of Latin America in this sense.

    “Wasn?t there an element of patriotism in the way German banks and companies worked together to build German industry?”

    Yep, but this is now a bygone era, as I’m saying. Now its ‘everyone who can, off to Bratislava, or similar’. Actually, at the end of the day, John, I’m just not a patriot for any country, for humanity as a whole, probably, but for any one group of human beings, I’m not, not even for my friends the Catalans. It’s a feeling, like the religious one, that I guess you either have or don’t have. I can understand and respect though that others have these feelings: this would bring us back to Maalouf and identity.

    “And wasn?t it precisely the lack of such long-term view solidarity between city chaps and grimy industrialists that was often cited as one of the things holding Britain back, in the days when we still had a manufacturing sector.”

    Well, maybe in part John, the other parts would be the lack of systematic commercial application of the undoubted scientific creativity of the Brits (the most recent example being Berners Lee and the WWW, we invent, you build the company and sell), and the German works council system which was normally very favourably compared with the ‘I’m alright Jack’ destructive dimension of UK industrial relations. Remember when Ronnie Dore’s ‘British factory, Japanese factory’ was all the rage. My, my, how things have changed.

    “you don?t have companies with any motivation to take decisions in the national interest.”

    I don’t think this is quite the case. Any democratic government has a whole host of instruments at its disposal which it can wield to influence decision making, from carrots to sticks. What you can say is that if they are ‘persuaded’ it will be for self interest purposes, and not for ‘patriotism’ which I think in the end may turn out to be an unreliable ally.

    Again, more problematic here are MNCs in the context not of mature democracies like the UK and France, but in weaker democracies with limited GDPs where the sheer size of the MNC can raise issues about using the local government as a ‘client’.

    Well, I’ve rambled enough, but I’m sure you’re getting the picture. The G5 countries are big enough players to look after themselves.

  27. Incidentally, the FT have a piece today on French trade minister Christine Lagarde which is quite relevant to this post:

    “French consumers are benefiting enormously from this unbelievable movement of goods and services around the world. And there are huge markets where we can sell our products,” she says.

    “France has a lot to win out of globalisation. We have incredible talents. We have great know-how. We have got a lot to offer,” she says. “We have 70m tourists coming to France every year. That is globalisation as well and that is not resented or regretted by the French people.”

    Ms Lagarde cites the success of France’s big multinational companies as evidence that globalisation works to the country’s benefit. “If you look at the French corporate scene it is pretty impressive to see how many large companies we have in key areas,” she says, citing Areva, Alcatel, EDF and Total.

    “But the comparative weakness of France’s export sector lies among the small- and medium-sized enterprises, which have not ventured abroad as successfully as their German counterparts. In 2004 Germany recorded a trade surplus of ?155bn ($188bn, ?108bn), compared with a ?8bn deficit for France.”

  28. “How will people in the USA react when McDonald?s or Coca-Cola will be bought by a Chinese firm?”

    Last I checked, China was a totalitarian dictatorship, so this a completely irrelevant question…. Unless, of course, you consider an economically powerful America to be as bad or worse than China.

    Let’s back up a bit. Dictatorship bad. Democracy good. Or, wait, is that maybe painting things in too broad strokes…

    Let’s make a more reasonable comparison. What would happen if an American “national icon” (say, a big Detroit carmaker like, hmmmmmm… Chrysler, let’s just say) were bought by a European giant?

    What would be the reaction then?

    About the most enlightening thing in this entire conversation is that the fact that Helmut Holzer, supposed defender of the French national interest, seems to think it’s relevant that Sarkozy’s mom’s a Jew.

  29. China is a dictatorship. But it is not totalitarian anymore.
    Nor is a democracy by definition good.

  30. @ Scott
    While I agree with you about Helmut’s last post (well sounded Edward) don’t you think there’s an issue about what proportion of a country’s major (non-strategic) companies can be controlled by foreign interests if it is to remain a real democracy?

    If you think 90% is acceptable, well, we can just agree to differ. If you think that 90% foreign control suggests that the country is not in control of its destiny, then why 90 rather than 80, or 70, or …

    I think European attitudes are pragmatic rather than ideological. To paraphrase President Grant, when we have got all we can out of protecting our family jewels, we too will adopt a more laissez-faire approach. That would be when there are more European controlled Global 500 companies per head of the respective US and European population than there are US controlled ones – so don’t expect it any time soon.

  31. “Nor is a democracy by definition good.”

    But it is, by definition, better than a dictatorship (no matter how you define “totalitarian”).

    John, I’m not trying to duck your question but the fact is I’m not sure. I will say that it’s a bit of a laugh to say that a Pepsi buy-out of Danone is somehow a threat to French democracy.

  32. “Last I checked, China was a totalitarian dictatorship, so this a completely irrelevant question…. Unless, of course, you consider an economically powerful America to be as bad or worse than China.”

    Hi Scott,

    I’m watching this from a distance now, as I’m getting ready to push off for a badly needed vacation. It’s so hot here. Summer in the city.

    However……….. as I’m saying on the Iraq/Kashmir post, what often matters most is not what is, but what ‘is perceived to be’. I don’t know if you caught the recent Pew global attitutes survey. This page is particularly interesting:


    It seems clear to me that the US is losing the ‘soft power war’, and India and China are evidently doing fairly well, while Europe is probably around neutral, which for all the work it is putting in at being friendly isn’t a very impressive bang per buck.

    These extracts seem especially to the point:

    In the developing world, however, views about China becoming as militarily powerful as the U.S. are markedly different. India’s population is evenly split, with 45% judging it a good thing, and 45% a bad thing. In Lebanon, a plurality (43%) favors a China equal in military strength to the U.S. while 35% oppose it (23% offer no opinion). Again, views in Lebanon are sharply divided, with 53% of Muslims in favor of China’s rivaling the U.S. in military strength and 55% of Christians opposed. And in other countries in the Middle East and Asia, substantial majorities favor the rise of China as a military equal to America. In both Jordan and Pakistan, more than three-quarters of the population endorse the idea of China as a military superpower. In Indonesia 60% of the public is in favor and 28% opposed; in Turkey, the margin is 56%-to-29%

    Attitudes toward the potential rise of China as a military power do not correlate directly with opinions about China’s growing economic might. In the United States, a 49% plurality sees net benefits to America in China’s growth, although 40% take the opposite view. Europeans are similarly split: While France and Turkey are dubious, small majorities (in the range of 50% to 60%) in Great Britain, Germany and the Netherlands (as well as Canada) judge China’s economic growth a good thing for their respective countries. In the Middle East, a slight majority in Jordan (52%) views China’s economic growth as a benefit but in Lebanon the public is more divided, with 43% calling China’s growing economy a good thing for their country and 37% calling it a bad thing.

    Again, views are uniformly more positive in Asia. By a margin of 53% to 36%, Indians see benefits to themselves in China’s economic emergence. Pakistan and Indonesia approve by still wider margins of 68%-to-10% and 70%-to-23%, respectively. Not surprisingly, the Chinese view their country’s economy growth positively (89%-to-4%).

    China tops the list of countries that are, on balance, satisfied with the way things are going at home, followed closely by Jordan. A striking 72% of Chinese express satisfaction while just 19% are dissatisfied. That figure is up significantly since 2002 when just 48% expressed satisfaction and 33%, dissatisfaction. Jordanians are nearly as content, with seven in ten satisfied (69%) and only 30% dissatisfied.

    What I am trying to say is that in terms of the way we in Europe see democracy, China is profoundly undemocratic. But its citizens might not see it that way. Also vis-a-vis Asia (which is where all the big economic action is going to be over the next generation) people would clearly prefer to have a Chinese MNC than a US one.

    I don’t imagine they have a much better opinion of European MNCs than they do their US counterparts.

    “I will say that it’s a bit of a laugh to say…”

    This is why I wrote the post in the first place, personally I think the thing is laughable, that’s why I made the joke, and John – I presume – started talking about La Sardane. The wheel has now come full circle. But then I’ve also been chuckling quietly away about CNOOC and Unocal: if you ask someone to dance, don’t then start complaining if they tread on your toes! Of course, La Sardane is danced in a circle, which is why it is much safer. Have a nice summer :).

  33. ““Nor is a democracy by definition good.”

    But it is, by definition, better than a dictatorship ”

    No it is not. A democratic state can be just as brutal and evil as any dictatorship. Especially if you are a minority

  34. Something does strike me as fishy about the CNOOC / Unocal buyout: when China’s economy is growing at some 9% annually, and the U.S. economy at 2%, why does a Chinese firm want to invest capital in the U.S.?

    The least suspicious answer I have is that CNOOC wants Unocal for its petroleum reserves, which seem likely in today’s world to provide a good return on investment, possibly also for its facilities in SE Asia, and is willing to accept only moderate returns from Unocal’s North American assets in order to acquire these.

    But if this isn’t the case, it may suggest that CNOOC thinks it is hard to get a good return in China today. And the follow-up question is if so, why, to which I have no good response.

    Alternatively, the purchase could be motivated by factors other than return on investment. But if so, what? Market power seems unlikely, given Unocal’s size compared to some of the majors. Or is Unocal simply a bad investment that, by some perverse motivation, nonetheless provides a benefit to CNOOC’s management?

  35. @ Robert

    “why does a Chinese firm want to invest capital in the U.S.?”

    What they need primarily is technology and management/organisational expertise. They also, in the case of Unocal, want to have some securer supply lines for their oil needs.

    Joseph Stiglitz is having an online question and answer session on all this care of the FT on August 2:

    You can find the link and more info this page:


    On specifically Unocal, Brad Setser’s weblog has had lots of interesting and relevant debates:


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