Press Interpreter

02/28/06 -- Le Monde Editorial -- This is the government that, in 2006, decided, organized, and announced under the authority of Dominique de Villepin himself, from Matignon,* without consultation of any kind, not even with social partners or the Brussels Commission, in the space of a weekend, the merger of the private company Suez with the nationalized enterprise Gaz de France [GDF], creating the world's second largest electricity and gas conglomerate. The operation was hastily carried out in the name of "economic patriotism" due to a threatened takeover by the Italian [gas and power company] Enel** and the strategic character of the (unconventional) power business of Suez.

Francois Hollande*** is not wrong to speak of "haste" regarding the shape of this merger. In effect, the government has disavowed, without any kind of explanation, the strong promise it made in 2004 to keep GDF in public hands, also in the name of the "strategic character" of the gas industry. In spite of the promise, today we're seeing the privatization of the very same enterprise.

One will also be astonished by the comings-and-goings in the industry: GDF was separated from EDF, on grounds that the market for gas is different from the market for electricity. But now GDF's gas is tied up with the electricity of Suez, which considers itself a competitor of EDF. The logic falters -- above all that of defending the public sector, despite the government's talk. The core reason for the merger is that the Suez group has wanted to buy GDF for two years: its CEO, Gérard Mestrallet, wanted to diversify in the energy sector, but the public company [was] too small to operate on a European scale. The plan was initially blocked by the government's promise not to privatize GDF.

The potential Italian hostile takeover offer has driven the government to reconcile its differences with Suez. And this is what is so regrettable. Mr. de Villepin is a proven protectionist, if not a nationalist. Yesterday, France said "no" to the European Constitution proposal. Today it says "no" to the Europe of energy.

How much less does Enel know about the strategic interest of Europe than GDF? When we saw Vladimir Putin cut gas to Ukraine a few weeks ago, the European Union discovered that it lacked unity in response to the Russian giant, its primary supplier, and that it was putting itself, as it were, at [the supplier's] mercy. Thus, everyone knows that Europe's gas-sector security depends on the establishment of large pan-European companies and not on the construction of "national champions".

This renouncing of Europe is bad for the consumer, who will see a sharp rise prices in the name of the defense of the "national champion's" industrial interests. It is bad for Europe, since the champions will no longer be able to merge. In 1998, the outflow at the top of the defense industries, all of which are also strategic, was created with the formation of EADS. The same path should be followed in the energy sector.

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* The residence of the Prime Minister of France. See http://www.ambafrance-us.org/atoz/matignon.asp .

**For more information, see http://www.enel.it .

***Deputy in the French National Assembly and the (rightist) chair of the French Socialist Party.

--Translated by Chris Drake and Ramsi Woodcock

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