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France's FM extends support to Mittal

Thierry Breton sought to calm the escalating row by admitting that Paris had no power to block Mittal Steel's bid.

india Updated: Feb 03, 2006 20:43 IST
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France's Finance Minister Thierry Breton broke ranks with his government's policy of aggressive opposition to the bid by Lakshmi Mittal for Arcelor.

Breton sought to calm the escalating row over what is being described as "Gallic protectionism" by admitting that Paris had no power to block Mittal steel bid for the European steel group.

Breton described the offer as "normal business life". He added, "It's shareholders who are going to decide, not states." He pointed out that the only European government with the power to decide was Luxembourg which held five per cent of Arcelor's shares, indirectly saying that his Government had no right to intervene.

Breton went so far as to bring out what most suspect was one of the primary reasons for the opposition to Mittal's bid, his being an Indian citizen. Some French politicians had allegedly denounced Mittal as an "Indian predator" although his group is based in Rotterdam and operated from London.

Breton told Europe 1 radio, "I would like to remind everyone to keep their heads. (Mittal) is a European company which is based in Luxembourg. The nationality of the shareholders has nothing to do with this affair."

Breton's intervention is seen as a snub to his cabinet colleague, the Industry Minister Francois Loos who only two days ago said that the French Government was "opposed" to the success of Mittal's offer for Arcelor.

Breton's comments were even more surprising as they came after Spain and Luxembourg had rallied round France in opposing the bid. Also according to sources, the meeting between Mittal Steel executives and the Spanish government failed to reach any agreement, although Aditya Mittal called the discussions as "good and constructive".

The reason for the surprising attempt by Breton to calm the row appears to be the rather tough stance adopted by Commerce Minister Kamal Nath when he was in London. Two days ago he said relations with France were "good" and he hoped that the issue (of the bid) would not be subject to political considerations. He also said the situation was being watched closely.

Sources also said that with President Chirac due to visit India in three weeks, the French government is concerned that the row may damage its relations with New Delhi and affect French business interests.