29 September 2005 Blog Home : September 2005 : Permalink
PARIS, Sept 29 (Reuters) - The French government backed away from fully privatising a loss-making ferry company on Thursday to try to quell protests that have blocked the country's main Mediterranean oil port.
Prime Minister Dominique de Villepin said the state was prepared to keep a minority stake in the SNCM ferry company, shifting policy the day after ordering elite forces to storm a ferry hijacked by seamen protesting against the sell-off plans.
"I want to save this company," he told a news conference. "It has 2,400 workers, it has a public service mission."
It seems churlish to point out that its "public service mission" is connecting the island of Corsica with mainland France, something that is also performed by the Italian Corsica Ferries (and others IIRC) so it isn't as if the island of Corsica will lose contact with the world if SNCM ceases to exist. But of course Vile Pin needs an excuse to make it look like he is not completely craven in giving in to public protests by a few hundred people at most:
Overnight disturbances on Corsica, the French-run Mediterranean island served by SNCM, reflected the passions enflamed by the dispute. Protesters set fire to vehicles and threw stones at police in a three-hour standoff.
...
A sympathy strike by shipworkers at the Fos-Lavera oil terminal near Marseille ran into a third day on Thursday, but refineries that depend on the port were operating smoothly.
Part of the problem is that the French either don't have or don't enforce legislation on sympathy strikes and the like, which means that, as in this case, the extremist union members in one industry get support from their fellows in other ones. Another part of the problem is that the unions have already decided to have a major day of action next week and no doubt Vile Pin hoped that by settling this one he would remove one of the planks for that protest. To me this looks like bad strategy because it makes the government look weak and thus will incite the wackoes to demand even more stupid concessions.
Possibly the only good thing to do with the EU is their disapproval of state aid and in this respect it looks like the Vile Pin deal is going to face a good grilling:
Finance Minister Thierry Breton said he would go to Brussels on Friday to clear the rescue plan with European Union competition authorities. A private group also runs ferries between Corsica and mainland France.
"The question for Brussels is not how much is owned by the state and how much is owned privately," said EU Transport Commissioner Jacques Barrot on LCI television. "The question is working out whether the company will be able to respect the rules of fair competition," he said.
One wonders whether Brussels will be tactless enough to ask for more details in the HP 'complaint'. Mind you, of course, if SNCM remains in its current strike prone form it will not pose any threat to its competitors simply because no one will be willing to risk travelling on it so the only real result of the French government managing to subsidize it will be to decrease the chances of France complying with the Stability and Growth Pact. Perhaps the EU chaps will mention that to the French Finance Minster since France's budget is already under considerable criticism:PARIS (AFX) - France's budget deficit, already on track to exceed 3 pct of output this year, will widen even further in 2006, despite a series of 2006 budget promises aimed at reining in spending, economists said.
If, as widely expected, the public deficit overshoots the government's target of 3 pct of GDP this year, it will mark the fourth straight year that France has failed to respect the terms of the euro zone's Stability and Growth Pact.
Overall debt, for its part, will remain well above the pact's threshold of 60 pct of GDP both this year and next, a breach that was openly acknowledged by the government in its 2006 budget presentation yesterday.
In effect, the budget has been built on spending and growth forecasts, including economic growth of 2.25 pct next year, that few economists consider attainable.
'The growth forecast is a risky bet,' said Emmanuel Ferry, chief economist at Exane BNP Paribas. He added that the government's goal of keeping the debt-to-GDP ratio limited at 66 pct is 'totally unrealistic' -- he sees this ratio reaching 70 pct next year.
All in all it doesn't seem to me that caving in to union demands for more government spending is sensible but yet that is precisely what Vile Pin's lot are doing.