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Sell-off row ends unity in France

For a few hours after the Port Royal bomb in Paris last Tuesday it looked as though the French government was off the numerous hooks on which it has impaled itself since the summer. In adversity, the French rally around the republique and the politicians were quick to exploit the sense of national danger.

The majority Gaullists called for national solidarity. The UDF, the junior partner in the coalition government, stopped sniping at the Gaullists and called for unity. Pressure for a cabinet reshuffle was dissipated and Mr Chirac's brief statement of outrage and sympathy from the steps of the Elysee seemed to satisfy the popular clamour for an "address to the nation".

The trade unions, keen to show themselves as responsible members of society, called off planned strikes and demonstrations in the capital, and the lorry drivers were back at work - or sacked. In short, the political coast looked clear until Christmas at least and a highly unpopular government suddenly had credibility to spare.

However, any sense of cool competence and national purpose was shortlived, shattered by an announcement that the privatisation commission, a body of seven wise (and usually yes-) men had vetoed the planned privatisation of the Thomson defence, technology and media group.

The project had been highly controversial because the chosen buyer was not the favourite and because the deal involved the further sale of a Thomson subsidiary, Thomson Multimedia, to the South Korean Daewoo. The price, a symbolic one franc had raised traditionalist and patriotic hackles and the unions were up in arms.

With the announcement that the deal was off, all the political capital that had accrued to the government after the bombing evaporated. A terse statement from the office of the Prime Minister, Alain Juppe, said that the group would still be privatised. The Economy Minister, Jean Arthuis, offered convoluted statements yesterday about how the offer would be reframed "in full transparency" - implying that the previous deal had been decided by Mr Juppe without the appropriate ministry being consulted.

The unions and the Socialist opposition were euphoric, the public at large bemused. On the one hand, people had never believed that a French company such as Thomson could be making a loss and disliked the foreign element of the deal. On the other, they had just been presented with a colossal government U-turn without any explanation or resignation.

This was the second time in a month that the government had called off a privatisation: it shelved plans to sell off the CIC savings bank last month saying the bids were unsatisfactory, then sacked the (government- appointed) head of the parent company for allegedly obstructing the privatisation.

The Thomson debacle was far worse: not only had a buyer been found and agreed, but the government had gone out of its way to defend the deal. Now, a hitherto rubber-stamp of a committee had rejected it on the grounds (which seemed to support the public's worries) that the large government subsidy provided to Thomson as a condition of the sale would find its way into South Korean pockets without any real guarantee that jobs would be created, or even saved, in France.

At once, those of the government's supporters who would naturally have favoured the privatisation - the same people who accuse the government of capitulating to the lorry drivers and on welfare reform - were asking themselves again about the Prime Minister's competence. Those who opposed the privatisation in general and the buyer in particular - the same people by and large who supported the lorry drivers and opposed the very principle of welfare reform - were rejoicing over a victory for Frenchness and common sense.

The result is that, three days after a bomb attack that paradoxically seemed to come to the government's aid, Mr Juppe's isolation and the public's cynicism are even greater than before.