COMMENT & ANALYSIS Stereotypes can be deceptive. In the debate on the rising protectionist tide in many industrialised countries, the French are invariably depicted as the bogeymen. They may have coined the term “economic patriotism” but in practice they have been behaving in a pretty pragmatic fashion.
Take Total, the French oil group and the country’s most valuable company. Last week it brushed aside the presence of a Chinese sovereign wealth fund in its share capital, saying it was used to having state funds as investors. After all, it added, these funds are no different to other shareholders.
This is a stark contrast to Margaret Thatcher’s reaction two decades or so ago when the British champion of the liberal economy and free trade blocked the Kuwaiti Investment Office’s attempt to buy a 10 per cent stake in BP. This week it was the turn of the US to warn that SWFs and other foreign investors would be facing far greater scrutiny by US regulators in the vetting of foreign deals on national security grounds.
The Organisation for Economic Co-operation and Development is now weighing into the debate after the finance ministers of the world’s leading industrial countries asked the Paris-based organisation to develop guidance for countries targeted by SWFs on how best to deal with these new investors. Its initial recommendations appear perfectly consistent with the OECD’s long-held philosophy that countries must continue to keep open their doors to foreign investors.
Indeed, the OECD experts believe that SWFs are bringing benefits to both home and host countries. Sure, they acknowledge that SWFs must act as commercial investors and need to be transparent. This part of the exercise has been entrusted to the International Monetary Fund, which has engaged in a dialogue with resource-rich countries to arrive at a voluntary set of best practices in managing state funds. The OECD, which is focusing on the approach recipient countries should be adopting, believes good governance and transparency will obviously ease political concerns.
It also concedes that countries have every right to safeguard national security. But they should not use it as an excuse to engage in broader protectionist policies. Instead they should adopt restraint and apply restrictions only to investments raising legitimate national security concerns. Clearly, giving a foreign government control of or access to defence-related technologies does raise such concerns. Yet too often countries have used the national security argument as a cover for protectionist policies to block foreign investments that pose no significant threat.
The OECD also suggests that industrialised countries must continue to co-operate with their new resource-rich peers. They urge both sides to become better acquainted. One obvious way would be by stepping up their intergovernmental dialogue to help increase acceptance of the prominence of SWFs in global finance.
These funds are undoubtedly the new actor on the international financial block. As long as they adhere to accepted standards of good behaviour and best practice, they should be given the same fair treatment as any other investor, the OECD insists. It also wants to give G7 finance ministers a simple, reassuring message: these funds can bring all the benefits normally associated with traditional foreign investment, such as stimulating business activity and creating jobs.
Welcome to the Styx
Eurotunnel may at last be in the black, but the Channel tunnel has so far failed to live up to its early promises of reviving the rust-belt northern region of the Pas de Calais. Instead, it seems a relatively small-budget French film is doing the trick.
A comedy about a civil servant sent to work in a post office in northern France, Bienvenue chez les Ch’tis, is breaking all French post-war box office records. Nearly 17.5m have already gone to see the film, beating the previous record held by another popular comedy made in 1966. The film pokes gentle fun at the culture of the north and dismisses the idea that the region is a dump compared with sunny Provence and the Riviera. As a result the Nord-Pas de Calais is enjoying an unexpected revival, with a 30 per cent increase in visitors to the region where the film was shot.
For the film producer and distributor, Pathé, the film is turning into the legendary goose that lays golden eggs. It cost just under €11m ($17m) to make, with financing from some big television groups including Canal Plus and TF1. It has been showing in cinemas across the country for six weeks and has already grossed €100m at the box office.
The producers have sold the film rights to other Francophone countries and are preparing to launch it on the rest of the world market with the English title Welcome to the Sticks. Perhaps “Styx” would have been better, given the region’s ambivalent relationship with the Channel tunnel.
