Air France and Renault on new privatisation list: Mitterrand angered by decision to sell off 21 state-owned companies

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The Independent Online
THE FRENCH government yesterday announced its intention to privatise 21 state-owned companies including Air France and Renault, incurring the immediate wrath of President Francois Mitterrand.

Mr Mitterrand, whose first Socialist government introduced sweeping nationalisations in 1981, warned the two-month-old conservative government led by Edouard Balladur, the Gaullist prime minister, that some firms should stay in state hands 'in the nation's interests'.

The government hopes to raise Fr40bn (pounds 4.7bn) from privatisations by the end of this year, exactly the sum it is seeking from a bond issue announced on Monday as part of a package to stimulate the economy and create jobs.

The bond issue, seen as a measure to counter market discontent with budget correction moves that concentrated on increasing revenue, will be convertible into shares in privatised companies.

The list of firms to be privatised contains no surprises. Some of the companies would have been sold had the earlier conservative privatisation programme, enacted under the first left-right cohabitation from 1986 to 1988, been carried out to the full.

Then, however, Jacques Chirac, the prime minister, had to push the matter through parliament to overcome President Mitterrand's objections. Those privatisations were truncated by the 1987 stock market crash and the right's defeat in the 1988 elections.

Now, with recession, the government will have to proceed cautiously. Although Air France and Renault will obviously be the most watched privatisations, the poor financial state of both companies makes it likely that they will not be ready for sale for some time.

Nicolas Sarkozy, the government spokesman and budget minister, said that the government also planned to end the limit on foreign ownership in French companies - at present 20 per cent - a measure that should encourage foreign interest in the new sales.

The privatisations continue the 1986-88 programme to denationalise the main banks with the announcement that Credit Lyonnais and Banque Nationale de Paris will be sold.

Also in keeping with the last programme, run at the time by Mr Balladur who was then finance minister, is the decision to sell the UAP insurance company.

Other companies are the Thomson electronics firm, Aerospatiale, the Elf-Aquitaine oil company, the drugs and chemicals firm Rhone-Poulenc and Seita, the cigarette maker that produces Gauloises and Gitanes.

In contrast to Britain, the gas and electricity utilities and France Telecom will not be sold, in keeping with a stated reluctance to sell off monopolies.

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