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French corporate nationalism comes to fore with Carrefour veto



French economic nationalism is as old as mimolette cheese. The hard cows-milk variety was invented at the behest of Jean-Baptiste Colbert, finance minister under Louis XIV, in the late 17th century to rival Edam sold by the enemy Dutch. 

So it is easy to shrug off the French government’s recent decision to block the takeover of France’s largest supermarket by a Canadian retailer as true to a long tradition. But this latest colbertiste intervention on the grounds of “food security” was remarkable nonetheless. Rather than demonstrate the state’s resolve to protect France’s economic sovereignty, it may just show up the hollowness of the promise.

The veto against Couche-Tard’s €16.2bn offer for Carrefour was an avowedly political act. Barely two days after details of the talks emerged, they were killed off by Bruno Le Maire. The French finance minister issued a “courteous but clear and definitive No” at a cursory meeting with Alain Bouchard, Couche-Tard’s Québécois boss, who had flown to Paris overnight. The minister had the formal powers to block the merger under France’s foreign takeover rules — the food industry is categorised as strategically important — but he did not need to use them. The deal was dead.

There was no serious attempt to assess the Canadian group’s €3bn investment plan for Carrefour, the hypermarket pioneer. The French would not understand if the aisles were empty of rice or pasta, Le Maire said, without explaining why this would be any more likely under Canadian as opposed to its current owners.

The government feared a backlash had it allowed Carrefour, the country’s largest private sector employer with 100,000 staff and a big purchaser of French agricultural products, to fall into foreign hands. The coronavirus pandemic has amplified a pervasive sense of insecurity in France and a desire for the country to be more self-sufficient and led by a more protective state, says Emmanuel Combe, professor of economics at SKEMA business school. With a presidential election a little over a year away, the government wanted to send the message that it would defend the French against foreign capitalism.

“It is politically right but economically wrong,” Combe says.

The veto was applauded across the political spectrum. President Emmanuel Macron commended his minister for making “the right decision at the right moment”.

Macron’s change of tune has amazed his political opponents. The former investment banker made big efforts to court foreign investors, refusing, at considerable cost, to reinstate a wealth tax he scrapped when he took office. As a presidential adviser, then economy minister and now head of state, Macron supported the sale of French companies to foreigners, such as Alstom’s power business to GE. He wanted to privatise Aéroports de Paris.

Le Maire’s supermarket veto gives the illusion of sovereignty. Had Couche-Tard been an EU company, the government would have had no grounds to intervene. Combe points out that France’s competition authority, of which he is vice-chairman, recently cleared the purchase by Lidl of Germany of several hundred stores owned by a French low-cost rival. There was barely a political ripple.

The ministerial veto does not make an industrial policy. France’s shortcomings have been laid bare recently by the failure of its scientific-industrial base to produce timely Covid-19 vaccines or to provide its own manufacturing facilities to ensure adequate supplies of those purchased through the EU. France’s prestigious Institut Pasteur abandoned its project while Sanofi’s has been delayed. Valneva, a Franco-Austrian biotech, will make its vaccine in Scotland.

Having blocked a friendly foreign takeover, Le Maire is now objecting to an unfriendly domestic one. The French government would have supported an amicable tie up between Veolia and Suez to create a national champion in waste and water. But with Veolia’s bid turning hostile, it is no longer to its taste. “French capitalism cannot be a war of all against all,” he says. He has called for the market regulator to intervene. 

During the financial crisis, then president Nicolas Sarkozy set out to “moralise” capitalism. His successors want to politicise it. In a recently published book, Le Maire says with the pandemic “politics should reclaim the economy”. Exactly what that means in practice remains a mystery. But if it deters foreign capital, expertise and technology it will prove costly.

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Armenia’s prime minister claims military is plotting a coup




Armenia’s prime minister has claimed the country’s military is plotting a “coup,” and taken to the streets with his supporters after senior army figures in the former Soviet republic called on him to resign.

Nikol Pashinyan has faced months of protests demanding he step down after the defeat of Armenian forces in a six-week war with neighbouring Azerbaijan that ended in November.

The army weighed in on Thursday, calling on the prime minister to quit after he fired the first deputy chief of staff for criticising him.

A letter to the prime minister signed by 40 senior officers warned Pashinyan not to use force against demonstrators, but did not say whether the army would act to remove him from power.

“The current government’s ineffective management and serious mistakes in foreign policy have put the country on the brink of collapse,” the officers wrote on Facebook.

Pashinyan later fired the chief of the general staff, Onik Gasparyan, ordered police to secure government buildings in Yerevan and told his supporters in the capital’s Republic Square to avoid violent clashes.

Demonstrators at an opposition rally in Yerevan demand the resignation of Nikol Pashinyan. They cheered as a fighter jet flew overhead © Artem Mikryukov/Reuters

Describing the situation as “manageable” the prime minister denied he was planning to flee the country and said the army’s statement was an “emotional reaction” to a dispute over the defeat in the Nagorno-Karabakh conflict.

“We have no enemies in Armenia. I am calling for calm,” Pashinyan said, according to Russian news agency Interfax. “Of course, the situation is tense, but we need dialogue, not confrontation.”

He later took to the streets with several thousand supporters and a megaphone — an echo of the 2018 “velvet revolution” that swept him to power following a march across the country that galvanised popular support. A few thousand opposition supporters gathered at a different square and cheered as a fighter jet flew overhead.

Pashinyan has fought off calls for his resignation since signing a Moscow-brokered peace deal in November that cemented territorial gains for Azerbaijan in Nagorno-Karabakh. The mountainous enclave in the South Caucasus is internationally recognised as part of Azerbaijan, but is populated by ethnic Armenians who seized control after a war that broke out in the dying days of the Soviet Union.

Azerbaijan, a mostly Muslim country and a close ally of Turkey, launched an offensive in September with the aim of retaking the entire enclave. Armenia’s army was ill prepared for oil-rich Azerbaijan’s modern drone fleet and significant backing from Ankara.

More than 3,300 Armenian soldiers died in the conflict, with a further 9,000 wounded. Thousands of civilians were displaced, including some who set their own homes on fire as they fled land now under control of Azerbaijan.

Russia, the traditional regional power broker and Armenia’s most important ally, remained neutral even as several previous ceasefires failed and has deployed 2,000 peacekeepers to secure the region.

Pashinyan admitted the terms were “unbelievably painful for me and my people” but argued the concessions were necessary to prevent further losses.

The devastating defeat sparked fury among Armenians who stormed the country’s parliament and attacked its speaker, demanding the prime minister’s resignation.

Pashinyan backtracked on a pledge to step down after snap elections earlier this month and remained in office in the face of opposition from Armenia’s ceremonial president, three parliamentary opposition parties, and key church leaders.

The Kremlin said on Thursday it was “following events in Armenia with caution” but considered them “exclusively Armenia’s internal matter”.

Dmitry Peskov, President Vladimir Putin’s spokesman, told reporters Russia was “calling on everyone to be calm” and said “the situation should remain within constitutional limits,” according to Interfax.

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German accounting watchdog chief to step down in wake of Wirecard




The head of Germany’s accounting watchdog is to step down following mounting political pressure over corporate governance shortcomings exposed by the Wirecard fraud.

Edgar Ernst, the president of the Financial Reporting Enforcement Panel (FREP), said on Wednesday he would depart by the end of this year. He is the third head of a regulatory body to lose his job in the wake of one of Germany’s biggest postwar accounting scandals.

The collapse of Wirecard, which last summer filed for insolvency after uncovering a €1.9bn cash hole, triggered an earthquake in Germany’s financial and political establishment.

Felix Hufeld, president of BaFin, the financial regulatory authority, and his deputy Elisabeth Roegele were pushed out by the German government in January for failing to act on early red flags suggesting misconduct at Wirecard. Ralf Bose, the head of Germany’s auditors supervisor Apas, was fired after disclosing he traded Wirecard shares while this authority was investigating the company’s auditor, EY. The German government is also working to revamp the country’s accounting supervision and financial oversight.

Meanwhile, criminal prosecutors in Frankfurt are evaluating a potential criminal investigation into BaFin’s inner workings and on Wednesday asked the market authority to hand over comprehensive documents, the prosecutors office told the FT, confirming an earlier report by Handelsblatt. The potential scope of any investigation as well as the individuals who might be targeted is still unclear. BaFin declined to comment.

Ernst came under pressure as the parliamentary inquiry commission uncovered that he joined the supervisory board of German wholesaler Metro AG in an apparent violation of internal governance rules, which from 2016 banned FREP staff from taking on new supervisory board roles.

Last week, the former chief financial officer of Deutsche Post filed a legal opinion to parliament defending his move. He argued that his employment contract was older than the 2016 ban on board seats and hence trumped the tightened governance regulations.

The German government had subsequently threatened to ditch the private-sector body which currently has quasi-official powers.

In a statement published on Wednesday evening, FREP said that Ernst wants to open the door for a “fresh start” that would be untainted by the discussions around his supervisory board mandates. “FREP is losing a well-versed expert in capital markets,” the body said.

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Putin and Lukashenko’s ski fun shows cold shoulder to EU




As news of new EU sanctions against Russia began to leak out of a meeting of bloc foreign ministers on Monday afternoon, Vladimir Putin and his Belarusian counterpart Alexander Lukashenko were discussing a different challenge to the Russian president.

“You can try to compete with Vladimir Vladimirovich,” Lukashenko, in ski gear, said to his son, Nikolai. “But you probably won’t catch up,” he added, with a smile to Putin as the Russian leader pushed off down the slope.

Putin and Lukashenko are the men behind Europe’s two repressive crackdowns over the past six months, who have both jailed or exiled their most prominent opponents and seen their security forces violently assault and detain thousands of peaceful protesters.

But in a summit in the snow-covered mountains of Sochi, on Russia’s southern coast, they revelled in their twosome of leaders shunned and sanctioned by Brussels, in a calibrated message to the EU that the cold-shoulder was mutual.

For foreign policy experts there were few details to digest, despite the complex negotiations going on behind the scenes as the two post-Soviet states seek to recalibrate their future relationship.

Putin is keen to deepen integration on Moscow’s terms. Lukashenko is desperate for Russian investment and trade co-operation but is loath to relinquish sovereignty. Yet in place of diplomatic negotiations and policy pronouncements, photographs and video footage of the two leaders enjoying each other’s company were in full display.

At the outset, Putin, in jeans and an open-collar shirt and blazer, greeted his guest with a handshake and a hug. “Even our appearance, clothes and so on, suggest that these are serious negotiations in ordinary clothes,” Lukashenko quipped. “It suggests that we are close people.”

Pleasantries exchanged, it was time for the salopettes and ski boots, and a shared chairlift to the summit. Putin, pushing off confidently, set off down the gentle slope, Lukashenko in his wake.

After a short ride on snowmobiles back to their chalets, discussions continued over more than six hours — and what appeared to be three different sized wine glasses.

“The optics for the international audience is that they have been able to maintain their positions and nothing can be done against them,” said Maryia Rohava, a research fellow at Oslo university specialising in post-Soviet relations.

“Now we’re talking not just about sanctions against Belarus but also against Russia,” she added. “And it seems like they look at that like, ‘Well, we don’t care . . . We’re just enjoying our winter break like autocrats do.’”

To be sure, the fun on the slopes was not wholly without power games. Putin was clear to underscore he was the senior partner, from wrongfooting his guest at the top of the ski lift to releasing photographs of their meeting showing Lukashenko scribbling notes as his host spoke.

But the mood music was in sharp contrast to Lukashenko’s last visit to Russia in September. Then, with protests raging and the Belarusian leader’s position looking shaky, Putin reprimanded his guest for mishandling the unrest and risking the toppling of an ageing post-Soviet regime that could weaken his own.

Then, in a businesslike and cold atmosphere, Lukashenko pleaded with Putin that “a friend is in trouble” and was granted a $1.5bn loan from Moscow — but not before his host remarked that Belarusian people should be given a chance to “sort this situation out”.

The absence of such language on Monday also sent a subtle signal to other illiberal regimes, particularly those on the outer rim of Europe who, like Belarus in the past, find themselves lured towards Brussels by economic opportunities but repelled by the reforms and democratic standards demanded in exchange.

The message to the likes of Georgia, Moldova, Armenia and Turkey is that Putin, whose relations with the EU are at rock bottom, is always ready to talk.

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