Monday, February 22, 2010

Total, a French national champion

Marc explains the news from France

The story HERE.

A strike at refineries and depots of French oil company Total has created a strong likelihood for gas shortages in France. Total supplies about half of France's gas supply. The firm is the result of a takeover by privately owned Total Fina of state-owned Elf Aquitaine under the approving eye of "Socialist" prime minister Lionel Jospin. This is part of a philosophy of the French elite that France needs international "champions", powerhouses in each economic sector. This usually means that French firms need to merge. More recently, we've seen this in the takeover of state-owned Gaz de France by privately owned Suez in the field of energy and public services.  When a company is looking to be sold, the French government will impose as many impediments as possible to a foreign partner in favor of a French one.

One consequence is that there are inevitably more job losses in France, where all the duplication of central services is concentrated.  So why would the elite in the press and politics push these "solutions"? The answer, I think, is that it keeps the top jobs and the levers of patronage in the hands of the French elite, which moves so easily from government to the "private" sector and back.

Another negative outcome is what we're seeing with Total. By concentrating the country's refining and storage capacity in the hands of one firm, the country is more vulnerable to social unrest.

A history of the merger of Total, Petrofina, and Elf HERE.

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