Reconciling the irreconcilable
Reconciling the irreconcilable
MEDEF "Summer University"
conference, which was held late August at the Jouy-en-Josas HEC campus, broke an
all-time attendance record with more than 3,000 participants. During three days,
157 contributors from all walks of life spoke about various issues extending
well beyond sheer economics and politics, and thus participated in a
wide-ranging debate of ideas. Among topics ranging from "democratic
reconciliation" to "reforming social dialogue", via "the confrontation of
models", and before endeavouring a "global geopolitical assessment", the "fears"
formulated by the French vis-à-vis Europe and globalization were naturally
addressed. The aim of the conference was indeed to "reconcile the
Renowned French and foreign experts were
looking forward to the presence of Alain Juillet. The Chief Adviser on
Competitive Intelligence to the Secretary General for National Defence (the SGDN
reports to the French Prime Minister) elaborated on the role of the "Strategist
State" and ran through the reasons for which the latter should engage in
competitive intelligence, this although many firms well represented at
Jouy-en-Josas enjoyed, if not the full required capability, at least that
sufficient to begin involving themselves in that task, since the State cannot
obviously do everything on its own. This article ©, first published in "Défense"
issue n°123 dated 1st October 2006, is reproduced here with its
author's permission Joël-François Dumont (*).
opening remarks, José-Manuel Barroso, quoting a recent survey on
the "perception of globalization and market economy in 20 countries...
reported that "74 % of the Chinese support market economy, versus 65 % of
the Germans, and only ...36 % of the French !"
President of the European Commission, "France's opening to global economy is
not a figment of the imagination. Its present international exchanges of goods
and services account for 26 % of its GDP, which is much higher than the
corresponding 13 % for the United States. Globally, France ranks 5th
as exporter of goods and 4th as exporter of services. It is a leader
in direct external investments: 3rd host country and 4th
country of origin. Foreign investors are responsible for 45 % of French exports."
President of the European Commission
briefly wondered at "this discrepancy between opinion indicators and economic
indicators", then went on to analyse this phenomenon and the transformations
it has brought about: "globalization translates into an unprecedented
interdependence between economies through the combination of several complex
phenomena – the market of goods and services turned global, the 'transnationalization'
of firms, financial globalization, the revolution of information and
communication technologies, and an evermore intense international movement of
people. It is a fact that globalization creates new tensions and confronts us
with new challenges. These powerful and sometimes ominous forces bear upon local
and social balances that had hitherto withstood the trials of time. But to new
realities, new responses." Unfortunately, this is where the shoe
pinches ! One is at loss to comprehend how Europe, "the world's leading
commercial power", could check the globalization phenomenon. But try
and tell people who believe their jobs are being threatened that "we are
changing our paradigm.." that "economy is tending towards a society of
knowledge; the economic fabric is evermore specializing in high added value
products and services; and technological evolution is accelerating."
Even if this finding is correct, it does not rally in France
any more than in Portugal or in the Netherlands.
the 14th Conference of Ambassadors,
Catherine Colonna has perhaps very well analyzed the
reason why Europe does not rally any more: we must urgently, she said,
"give priority to the Europe of projects."
Minister Delegate for European Affairs
Delegate for European Affairs admitted that extension and globalization had
transformed into "destabilizing elements" for the conventional European model. "We
are now living in a world-scale open and competitive economy. Not long ago, the
European scale appeared to be extending prospects; its scale now seems to be
diminutive. Furthermore, Europe's performance remains for the time being
modest in this economy which is more competitive in terms of growth, employment,
or resources dedicated to research & development. Finally, the rule of the
market bears harshly on one of Europe's ambitions, which is to maintain a
balance between economic dynamism and social dimension."
probably for this reason that Mr. Barroso, taking the measure of the long way
still to go in that direction, did not hesitate to quote André Malraux: "There
aren't fifty ways to fight, but only one: that's to win" !
Ideally of course, to win with minimum risks and maximum glory...
most anticipated contributions at Jouy-en-Josas was naturally that of
who had been invited to explain the unexplainable: "how to justify economic
patriotism in a globalized economy, where even French firms position
themselves on foreign markets."
Chief Adviser on Competitive
Intelligence to the SGDN
appointment in January 2004 as "Chief Adviser on Competitive Intelligence" to
the SGDN, Mr. Juillet has never ceased reminding that competitive intelligence,
far from being accessible only to the initiated, was the business of all those
charged with assuming responsibilities. 
The State should set itself as a role model in that domain where
the French, for essentially cultural reasons, are lagging far behind Anglo-Saxon
or Asian countries.
While it is
hard to imagine France or Europe following the example of the American federal
State which allocates, according to former CIA chief (1991-93) Robert Gates, 40
% of its intelligence-gathering resources to competitive intelligence, one can
ask in what capacity should the State engage in this competitive intelligence
activity, when numerous firms already enjoy the required capability ?
should be no ambiguity concerning the role of the State, which is to support
and protect French firms, this implying neither protectionism nor unfair
practices" explained from start Alain Juillet, for whom "protectionism,
in addition to being adverse to our interests, simply cannot be contemplated
within the framework of our Community and international commitments."
As for suspected unfair practices, they should be resolutely ruled out by
stating that, "in France, competitive
intelligence is being conducted in the strict respect of national and
international rules", before going on to
legitimacy of a public competitive intelligence policy rests on the State's
regal powers and their structuring influence." For obvious reasons: "The
State is responsible for legislation, sets the technical standards, regulates
the markets and conducts international negotiations, all those tools
contributing to establish the rules of the economic game." Therefore, this
"Strategist State" stands "indeed at the core of competitive intelligence
since it acts as an 'uncertainty reducer' when it takes into account a
perspective that is generally much broader than that of the market. It can
therefore provide the latter, not only with 'signals', but also with relative
security in the mid-term." Last but not least, if the need arose "for
an extra justification of the State's action", it could still be found "in
the need to provide all our firms with the means to fight on equal terms."
it has been a step-by-step approach: after some thought was given to its
concept, competitive intelligence was
defined as being "the control and protection of strategic information for any
economic player." The Institute for Advanced National Defence Studies
(IHEDN) was the first institution in France
a specific course. An
awareness campaign aimed at the business world followed, together with
governmental actions in all sectors, including in
the public administration down to
regions. Persuading mentalities to change did not prove an easy task;
however, over two years, one can say that the progress recorded shows that with
determination and methodology "things are beginning to move."
the concept of "economic patriotism", and in the world media France was accused
of not being competitive and was branded as brandishing the standard of
protectionism ! Of course, there lies a wide gulf between this virtuous
indignation and the actual facts, and this is a godsend opportunity to recall
some facts and figures, including from foreign sources, which speak for
Control the drifts
of liberalism without checks by maintaining the perenniality of our industrial
Juillet, the emergence of this concept "is due to the need to control the
drifts of liberalism without checks in which the possession of wealth tends to
replace the sovereignty of States. The aim is to defend the major national
economic interests by including know-how, research and innovation, with
employment as the end result." Quoting the words of the Defence Minister,
Michèle Alliot-Marie, Mr. Juillet was crystal clear: "France shall in no
circumstance submit to its providers' goodwill, or be denied components or
weapons required for its national security. It is also normal for the State to
take political action, as it did for Alstom, in order to preserve a national
economic activity which creates jobs and innovation. The point is then to
maintain what is required to ensure the perenniality of our industrial tool and
of our defence capability in the long term. All major States, and the United
States first of all, have understood that." Thus, imagining "barriers to
prevent the normal interplay of competition and exchanges in our country"
would be "absurd."
"Economic patriotism at governance level means a commitment to not considering
systemically that the grass is greener in the neighbouring country.
It is also
a voluntarist approach which holds that the internationalization of exchanges is
not an excuse for any type of behaviour. To support economic patriotism is to
admit that, beyond its rights, a citizen firm also has duties. Frantic
competition and the desire to optimize profits should not lead to ethics being
forgotten and rules not being respected"...
explained Alain Juillet before concluding on this subject that "the point is
not to block anything, but to bring executives to think about their children's
future and to understand that the creation of value must be set in a much
broader domain than that of the sheer shareholders. Employment stands at the
core of economic patriotism."
Thierry Breton, Mr Juillet warned the executives in the audience:
should not shift from economic patriotism to economic nationalism and confuse
protectionism, which is dangerous, with patriotism, which is a normal
behaviour in every country. Patriotism has never been an aggressive attitude,
as nationalism can be, since it expresses a reaction of defence and safeguard."
foreign investments should be welcomed in our country, since they bring along
jobs, create wealth, and enable us to benefit from imported techniques and
or defending our national champions when interesting solutions are available
at national or European level can only contribute to the public good. I
found that we are not the only ones to think that way, but paradoxically, we
are the only country where some are shocked by this attitude. In fact, all
countries act that way, but in different forms. Some will block an operation
in order to protect technologies that are indispensable to the maintenance of
their national sovereignty, others will restrict it by means of regulated
domains with a view to safeguard their national independence and to protect
their economic heritage, others again will set up extremely restrictive
regulations to deny the buyer any operational control following his purchase.
Even in the United States, free enterprise stops when apparently required by
national interest, and in that case, everything goes, in contradiction with
international rules governing free trade. I note that India or China are going
that way too."
What criteria to
define a firm's nationality ?
As we have
seen in the case of Arcelor, it is not always easy to "define" a firm's
nationality. Basically, the important criterion does not lie in the firm's
capital, but in the way this capital is being managed within the firm. Defining
a firm's nationality by the location of its head office or by who controls the
majority of its shares is outdated, since more than 40 % of the CAC 40 firms are
in that case.
is convinced that, at present, "we lack a multi-criterion assessment guide,
as used by American embassies or by the British in the defence sector. To
the latter, a foreign firm which, on British territory, creates jobs, develops
research, produces added value, gives local executives a chance, participates in
the societal life and respects the standing social and economic rules, must be
treated as a British firm." It is the case for Thales in the United Kingdom
or Sodexho in the United States !
offices and research centres be maintained on our national territory ? Head
offices are indeed "more emblematic", but given the harsh competitive
struggle which is waxing between emerging and developed countries, relocating
research centres would be a mistake, admits Mr Juillet, for whom "Our only
weapon to remain competitive is our innovation capability, this in order to
remain one technology ahead or invent really new products, in industry as well
as in services."
Even if they
are "unavoidable" in contracts with emerging countries which see there "a
cheap means of making up part of their industrial and technological lag. This is
why we should preserve our future by never giving away our latest
technology"..."The State can edict strong rules", elaborated Mr Juillet,
for activities that are deemed strategic, and this is what the Americans,
the Japanese and the Swiss do. Likewise, "the State should make sure that
firms are made aware of the risk of diversion or copy of patents, and of
The stakes of
greatness of patriotism – whether economic or other – is to transcend personal
interests to benefit the common good. Ensuring that our firms and the others
compete on equal terms in France as well as abroad entails that the State sees
to it that the rules of the game are strictly respected by all the players. This
is the application of the principle of reciprocity, since there is no reason for
French or European Laws to be less protective than those of other countries. To
this end, and in order to anticipate which actions should be taken, all the
necessary information must be collected, which entails an actual public/private
partnership. We must stop being naive" 
explained Alain Juillet, pleading, as President Chirac also
did recently, 
for Europe's capability to be "a
reference political player", for "a Europe of projects",
for a real "European economic patriotism".
now time to stop hiding behind an obsolete protectionism, but to regroup our
forces to proceed in the same direction and firmly assert our global
interests. European preference has a meaning: it reminds us of our duties
towards each one of our fellow citizens."..."Defensive
behaviours" are not shocking at all, and "the State plays its role there"
recalled our Chief Adviser on Competitive Intelligence, whose action is
beginning to bear fruit beyond our borders, before concluding:: "France is
not Monsieur Seguin's goat, and anticipating crises does not mean building
the Maginot Line
cannot be protected by building a Maginot Line .
Regretting "the purely defensive features of the measures that have been
announced, this when competition in a globalized economy also requires an
offensive approach", Sorbas Von Coester, a highly respected expert in
the security domain and more particularly regarding State sovereignty issues,
has long been recommending a more European approach, even if it has to be
limited to a hard core that would stand as a role model." Confronted to the
paradigm change in international business, the promotion of our interests and
the optimization of our firms' marketing position cannot any more be based on a
preactivity policy and a logic of 'coups', but will require a finer, proactive
and largely upstream approach. This finding pleads for the creation of
geostrategic investment funds, albeit necessarily together with our European
partners, this for critical mass and influence reasons.
or not, no European State is today in a position to base its economic security
and sovereignty strategy on its own resources and on its own single action.
The defence of French interests goes through strategic regrouping, resource
sharing, and increased cooperation in sensitive domains, this if not at
European Union level, at least at the level of a hard core of European States
that share the same vision and the same ambitions. Obviously, the path won't
be easy, since mentalities will have to change and some intellectual habits to
be done away with. Without a real political will to quickly steer into that
direction, with open, competent and convinced people at the controls, our
future bodes darkly, a future not of vassals, but of serfs."
the day will come when the Europeans will have "to leave the option they
have been dwelling in for too long '
be strong and you will have friends, be weak and you
will have a protector' or to think seriously about it." 
If sometimes we cannot "reconcile the irreconcilable", let us simply become
realists, and, to quote a favourite line of Alain Juillet, "let's do away
with ideological fantasies and bring the debate to the harsh reality of facts." .
Auditor at the Institute for Advanced National Defense Studies
des Hautes Études de Défense Nationale -- IHEDN) and deputy editor in
chief of Défense magazine.
(Translated from the French by
Défense is the bimonthly review of the Union of IHEDN (Institute for
Higher National Defence Studies) Auditors Associations. Subscriptions: BP
Competitive Intelligence in France in
2004: Three rules for success by Alain Juillet (30
"The grass is not greener on the other side" (see Alain Juillet's editorial on
HRIE website). Is French economy more
restrictive than other national economies ? An OEDC study published in January
2006, titled "Competition on product markets and economic performance in France"
and drafted by Jens Hoj and Michael Wise, states that the United States and the
United Kingdom are among those countries that are the most restrictive
concerning foreign investments on their territories, while France stands among
the less restrictive. A proof of openness, the "IPO Watch" study by the
PriceWaterHouseCoopers professional services firm states that Eurolist has
enabled 16.2 billion € to be raised in 2005, thus placing Euronext at the top
rank in European stock exchanges in terms of raised funds, ahead of London (12.5
billion €) and Frankfurt (3.5 billion €).
The OECD Convention: "The adoption, in 1999, of the
OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions is seen by the general public as a watershed
breakthrough in the struggle against practices that: undermine global economy;
destroy trust, which is the cornerstone of a modern and highly financial
economy; trap developing economies inside a vicious circle which links
corruption to under-development; finally, that feed international criminality,
based on the "dirtying" of clean money with a view to paying commissions, an
activity perfectly complementary to that of money laundering, to which weapons
or drugs traffickers have to resort to.
some experts, while not denying the need to fight corruption, think that the
Convention is the result of an instrumentalization of International Law by the
United States in order to provide its national firms with an important
competitive upper hand." Excerpt of "Thinking
beyond the OECD Convention", a study published by Sorbas von Coester
in issue n°10 (Summer 2002) of the "Prospective stratégique" review of
the Centre for Strategic and Prospective Studies (CEPS).
Opening remarks of the
14th Conference of Ambassadors by Jacques Chirac, President of the French
Republic, at the Palais de l'Élysée. Paris, 28 August 2006.
"French jobs cannot be protected
by building a Maginot Line": a critical analysis of the Report of
the Finance, General Economy and Plan Commission on the Finance Bill for 2005,
(October 2004) by Sorbas von Coester, Managing Partner, Gheran, a graduate
of École Polytechnique, Ph.D (Econ.) of the London School of Economics. By the
same author, also read:
A quote from Admiral Guy Labouérie of the Académie de Marine in his "Nicolas
Polystratu's letter to John Smith"
Articles related to Intelligence published in Defense magazine
by the same author :