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From Yoghurt to Steel

The French response to Lakshmi Mittalâ??s takeover bid for Arcelor has thrown up old colonial stereotypes behind the new economic patriotism trumpeted by prime minister Domenic de Villepin in response to the Danone affair.

From Yoghurt to Steel

French Economic Nationalism in Defensive Mode

The French response to Lakshmi Mittal’s takeover bid for Arcelor has thrown up old colonial stereotypes behind the new economic patriotism trumpeted by prime minister Domenic de Villepin in

response to the Danone affair.


ast year the French economy stagnated at a mere 1.4 per cent growth rate, the government slipped deeper into debt, the balance of trade went into the red and unemployment stuck at around 10 per cent of the workforce. Meanwhile the country’s 40 leading public companies listed on the Paris stock exchange (the CAC 40) turned in record profits. This apparent contradiction is explained by the fact that these leading French corporations – the stars of the bourse – carry out much of their activity and generate a considerable proportion of their income outside France – the result of past foreign acquisitions and takeovers. Danone is one such company, a world leader in the global food processing sector, best known for its dairy products.

In common with other multinationals in the food sector like MacDonalds or Coca-Cola, through whom Danone distributed its water and soft drink brands in the US, the company’s corporate success rests on the development of its strong, globally advertised brands. It is as much a publicity producer as a food producer. Its globally advertised brands could be manufactured anywhere and sold in any country with a supermarket.


As a food multinational, albeit with a French face, Danone was clearly vulnerable to attack from anti-brand-name and anti-junk-food activists. A “Casseurs de Pub” group was set up in Lyon in 1999 on the model of the Canadian group “AdBusters”, and in 2001 Actes Sud published a French translation of Naomi Klein’s book No Logo. Danone presented itself as a prime target for such new-style activists alongside the French petro-giant

Economic and Political Weekly June 24, 2006 Total. To compound its fault in their eyes, in 2001, in pursuit of its globalised development strategy, Danone had closed down one of its French “Lu” brand biscuit factories, transferring production to a more efficient site in eastern Europe, with a consequent laying-off of staff. A “boycott Danone” movement was launched and the company reacted by initiating legal proceedings to close down the activists’ website – In a sense this looked like a replay of the campaign against MacDonalds launched by a group of British activists in the early 1990s, and later taken up in France by the US-educated activist, José Bové – derivative perhaps, but representing a threat to the corporate image of the enterprise under attack. But Danone was not MacDonalds. It was not a US multinational intruding into European space. It was a French national, corporate champion and, as such, had recourse to an alternative strategy of damage limitation.

Early in 2005 Danone terminated its arrangement with Coca-Cola for the US distribution of its water and soft drinks brands. These were not yielding the hoped for profits and the company’s current strategy was to concentrate on its traditional strengths, promoting, in particular, its new range of “healthy” yoghurts and dairy products. Some years of product research and development had gone into these “enriched” and “bioactive” yoghurts and allied products, which were launched onto the market under the “Actimel”, “Activia” and “Vitalinea” labels. The brands were boosted by an enormous publicity campaign, which made wild claims for their health enhancing properties. It was claimed that they ensured “le bon fonctionnement de la flore de la tube digestif” “regulation du système immunaire”, “renforcement de la barriere intestinal”, etc. Such claims targeting the enormous global market of middle class weight-watchers and hypochondriacs could establish “Actimel”, etc, as international “brands”, valuable, marketable assets for the company that owned them.

In February 2005 Afssa (“Agence francaise de sécurité sanitaire des aliments”) completed an investigation into the food quality of such new healthy yoghurts and published the results. On the whole the experts’ report acknowledged that these products were perfectly fit for human consumption but found little evidence to support the special health benefits claimed for them. Not exactly an endorsement!

Economic Patriotism to the ForeEconomic Patriotism to the ForeEconomic Patriotism to the ForeEconomic Patriotism to the ForeEconomic Patriotism to the Fore

At the beginning of July 2005 a rumour was floated in the French financial press that Pepsi-Cola was about to launch an OPA (hostile takeover bid) for Danone. The rumour was kicked around the media for a while, stimulating growing public concern at what appeared to be an American threat to a company that was a French household name. But while Frank Riboud, the son of Danone’s founder Antoine Riboud, remains at the helm of Danone, the enterprise has over the last 20 years transformed itself from a traditional family firm into a food multinational. Its products are now made and sold worldwide, only 12,000 out of its 90,000 workforce are employed in France and the bulk of the company’s shares are held by institutional investors, including Anglo-Saxon pension funds. But, regardless of contemporary reality, the defence of Danone from the real or imagined intentions of Pepsi-Cola stretched advertising metaphor to its outer limits, representing the company as a quintessential part of traditional France, entitled to public support in its stand against foreign aggression. The words of the company’s founder were quoted in its defence: “Danone c’est la cathédrale de Chartres, et on n’achete pas la cathédrale de Chartres”.

By the time the Pepsi-Cola/Danone question came to the formal attention of the deputies of the National Assembly on July 21, 2005 public opinion had been mobilised in a mood of national defence. Danone was no longer perceived as a multinational food enterprise foisting dodgy health food on a gullible public; sacking staff and delocalising production, it was a national treasure. The cry had gone out, “il faut sauver Danone”. The assembly captured the public mood. Barely three months had passed since the country’s political leadership had received a slap in the face from the electorate, which had voted “Non” to the European constitution in flagrant disregard of their exhortations. Political leaders and their parties, looking forward to the presidential elections by then visible on the horizon (2007), were all concerned to recuperate this “Non” vote – be it that of the ‘altermondialiste’ left or the ‘nationale-frontiste’ right – if indeed there was any such distinction. No seriously ambitious politician could afford to pass up the opportunity to stand forward as a defender of Danone – or indeed, by extension, of any French company confronting a similar challenge. French economic nationalism was about to get a strident and official public voice.

The president of the National Assembly’s economic affairs commission, Patrick Ollier, was the first to comment, expressing himself “very worried to imagine that Danone risked passing under the domination of Pepsi-Cola”, a view which was rapidly and universally endorsed by his fellow deputies of all hues. Jean-Louis Borloo, minister of employment, expressed his firm opposition to any such OPA describing Danone as “more than a fine flower, a special business because it results from the balance of our agricultural system, and which is also an organising factor of French and European small businesses”. The Trade union movement, small as it is in France, was not absent from the rally. LeMetayer, head of the FNSAE, the French farmers’ union close to Chirac, reminded the public that Danone “purchases a billion litres of milk each year from French producers, and could not operate without the milk of French producers” hinting that they might be unwilling to sell this heavily eurosubsidised production to a non-French company. The CGT, the union traditionally close to the Communist Party, searching its archives for ideas, proposed nationalisation.

The finance minister Thierry Breton instructed the AMF (the French stockexchange supervisory body) to investigate the situation of the Pepsi/Danone OPA. On July 26, 2005, the AMF was informed by Pepsi-Cola that they had, in fact, no current intention of launching an OPA against Danone. But by then the Pandora’s box of French economic nationalism had been opened. Some commentators muttered darkly that Pepsi was merely waiting till September to strike, while others cried “victory” claiming that the clamour had frightened Pepsi off and saved Danone. We will never know, but what is certain is that the focus of the politico-media hype had already widened beyond this particular case. Government and media were drawing up lists of other prominent French companies that might become the target for foreign takeover bids and were discussing various strategies to strengthen their resistance. The prime

Economic and Political Weekly June 24, 2006

minister Domenic de Villepin seized the opportunity to play the hyper-patriot and announced “I hope to rally all our national energies around a real economic patriotism”.

However questionable Danone’s French identity, the company’s fabricated image had slipped down as readily as its massproduced yoghurts, and it had been relatively easy to represent its products as more wholesome, traditional and locallyproduced than those of its international competitors, who were indiscriminately lumped together as American junk food manufacturers, regardless of their actual national identities or the quality of their products. The left leaning Nouvelle Observateur claimed

Danone, under Frank Riboud’s leadership, has shrewdly made the move into “alicaments”, those products based on good health, well-being and the environment, in opposition to the American food industry giants (Unilever, Kraft, Nestles, Coca-Cola) purveyors of junk food, those massproduced products guilty of spreading obesity and cholesterol.

It was not so easy to represent France’s nuclear-generated electricity or French steel as more wholesome and traditional than that of foreign producers; but, it was in these sectors, particularly steel, that the next and most serious challenge appeared.

Arcelor-Mittal AffairArcelor-Mittal AffairArcelor-Mittal AffairArcelor-Mittal AffairArcelor-Mittal Affair

The announcement by the Indian entrepreneur Lakshmi Mittal of a proposed takeover bid for Arcelor arrived in the wake of the Danone/Pepsi saga and of Villepin’s rallying of the nation against foreign economic predators. It also followed a year in which the French National Assembly had passed a law requiring the schools to teach the positive achievements of French colonialism, and which had culminated in the outburst of the immigrant youth in the ‘banlieus’, expressing their alternative memory of French colonialism.

The steel industry and India have both, in their different ways, played a role in the construction of the French nation’s collective memory. Old school atlases, in use until recently, showed the French empire of the ancien regime prior to 1757. About two-thirds of India and most of America from the Mississippi Basin to Hudson Bay are shaded blue as French territory. Thanks to generals Clive and Wolfe these dubious claims to French sovereignty were abandoned, and in the twilight of the ancien regime Abbé Raynal in his magisterial Histoire des Deux Indes (1774) defined the policy to be adopted in that early post-colonial moment. The French monarchy should, he felt, offer its support to local powers resisting Anglo-Saxon expansion.

France subsequently acquired a second “republican” empire in Indo-China and Africa and Raynal’s conception became but the leitmotif of French imperialist ideology. The Republic’s empire based its legitimacy on the claim to be bringing colonised peoples within the orbit of civilisation. Protection from the ravages of Anglo-Saxon liberalism and free trade was but an additional blessing which French rule conferred upon them.

In 1945, following the experience of Vichy, de Gaulle, and the intellectuals who had rallied to the Resistance, wondered how France was to reestablish its position as a “Great Power”. It was taken for granted that France would retain or recover its colonial territories – the badge of “Great Power” status. But as Raymond Aron, amongst others, noted colonies alone did not confer “Great Power” status. It also required access to iron and coal, and France sadly had little. In the inter-war period the French had attempted to secure access to these resources by the establishment of a puppet state in the Ruhr backed by French Senegalese troops. The post-war alternative was the European Iron and Steel Community (EISC) of which Arcelor is the longterm descendant.

One significant group of intellectuals who contributed to shaping France’s postwar sense of national identity were those around Emmanuel Mounier and the journal Esprit. As good Catholics Mounier’s group endorsed the anathemas against liberalism and individualism pronounced in 1864 by Pope Pius IX, whose resistance toItaly’s national liberation movement was backed by French troops despatched by Napoleon III. The condemnation of liberal individualism by Mounier’s “personalist” philosophy overlapped with Marxist denunciations of “bourgeois democracy”, but the coincidence was merely verbal. Nevertheless Mounier’s ideas have a continuing influence amongst French socialists, such as Jacques Delors and Pascal Lamy.

The Esprit group were shocked by the brutality of French colonial practice but they did not support colonial liberation movements. Restating a theme going back to Abbé Raynal they argued that granting full independence to French colonies would merely establish weak nation states incapable of protecting themselves against the pressure of Anglo-Saxon free-trade liberalism – better for them to remain under the protective umbrella of France.

In the run-up to the World Trade Organisation (WTO) meeting in Doha, Pascal Lamy, mandated as Europe’s representative to defend the Common Agricultural Policy against its developing country critics – notably Murasoli Maran

– informed Le Monde,

We Europeans are characterised by a concern for development, and a sort of capacity for universal thought, which derives from our colonial heritage. This sensibility puts us in the position of intermediaries between the United States and the developing countries…the developing countries are pretty largely victims of the United States.

Back in 1954 Jawaharlal Nehru saw, India’s steel industry as part of its socialist pattern of society. At that time the French steel industry was secure within the EISC and France was occupied with its colonial war in Algeria. The marriage of Mittal Steel and Arcelor, issuing as they do from such contradictory pasts, would indeed be a strange alliance. Opposition has, however, come not from the rank and file workers in Arcelor, whose jobs might well be more secure with Mittal, but from the management led by Guy Dollé, who has recently produced a “white knight” to block Mittal in the shape of the Russian oligarch Alexei Mordashov.

Appearing to justify this preference on French radio, the “Indianist” Christian Jaffrelot offered a curious amalgam of old imperial ethnography and current ‘altermondialiste’ rhetoric. India, he explained, is a society rigidly divided into castes with a hyper-exploited substratum of untouchables. Its recent governments have adopted Anglo-Saxon free-market policies, which have further accentuated these traditional inequalities.

The French response to Lakshmi Mittal has revealed some old colonial stereotypes behind the new “patriotisme economique” trumpeted by Dominique de Villepin in response to the affaire Danone. We will see soon witness the outcome of the Arcelor/ Mittal affair. mrn

Economic and Political Weekly June 24, 2006

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