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Sunday, 3 March 2019

Air France-KLM row shows new-found Dutch taste for French statism (FT)

Financial Times title: Air France-KLM row shows new-found Dutch taste for French statism

FT subtitle: Dutch state stake in airline shows rise of industrial nationalism in EU


"Dutch Prime Minister Mark Rutte was reaching the end of his routine call with Emmanuel Macron on Tuesday evening when he delivered one last piece of news to the French president: The Hague had quietly acquired shares in the Franco-Dutch carrier Air France-KLM, with the intention to match the 14 per cent stake held by the French state. The €744m shareholding would be made public within the hour. 

In Paris, diplomatic fury ensued. The next day, Bruno Le Maire, French finance minister, labelled the move “incomprehensible”. President Macron demanded “clarifications”. Aides lashed out about manners that resembled those of “activist funds”. Tongue in cheek, a Le Monde business columnist described it as an “declaration of war”. 

“It’s diplomacy like we’ve never seen before,” a French finance ministry aide said. 

The French were not the only ones caught off guard by a statist move that seems out of character with Dutch devotion to free markets. Throughout the EU, diplomats have taken stock of a shift towards industrial dirigisme embraced by even the most unlikely countries. The stakebuilding follows a Franco-German push to change the EU antitrust rules to allow the emergence of “European champions” able to compete with state-owned Chinese groups. 

“It’s an approach that is traditionally more associated with French governments,” Pepijn Bergsen, a political consultant at Flint Global, said of the Air France-KLM share acquisition. “The increasingly protectionist and interventionist international environment is pushing the Dutch, who used to be staunch defenders of free markets, to protect their vital industries and companies.” 

Insiders say The Hague has quietly changed its philosophy over so-called “strategic” industries. We “cannot be naive any more”, a Dutch official said. The Netherlands remains sceptical about Franco-German plans to rewrite EU competition rules following the rejection of the rail merger between Alstom and Siemens earlier this month. But the Dutch government is now embracing a more French outlook on how Europe needed to be “more assertive” about safeguarding its industries and jobs, the aide said. 

But the shift has sparked a fresh row at the heart of the EU, laying bare mounting tensions between the French and Dutch arms of Air France-KLM since their merger in 2004. 

KLM’s Dutch management has long complained about their French counterparts’ growing influence over the group’s key decision-making even as the Dutch carrier’s financial performance has outstripped that of Air France. 

Dutch exasperation peaked when the French group chief executive was forced to resign after a stand-off with the French pilot unions last year. On Wednesday the Dutch finance minister Wopke Hoekstra said he would seek to make the carrier “perform better”, in a clear swipe at the French subsidiary. 

The Hague started contemplating a stake in Air France-KLM to rebalance Paris’ influence two years ago. Jeroen Dijsselbloem, former Dutch finance minister, first raised the prospect of buying some of the French government's shares when Mr Le Maire took office in September 2017. The Netherlands has grown concerned about protecting the future of Amsterdam’s Schiphol airport. KLM’s main European hub is home to 65,000 jobs and runs over 300 international routes. 

“We want to sit at the table and not be surprised,” said Cora van Nieuwenhuizen, Dutch minister for infrastructure. 

Statism means politics is likely to interfere in the group’s management. This week’s timing is sensitive for both governments ahead of forthcoming EU elections. In France, diplomats fear it will give more fuel to anti-establishment figures like Marine Le Pen who accuse Mr Macron of privatising French industrial jewels. 

Meanwhile, a row with Paris is seen as likely to boost Mr Rutte’s creaking four-party coalition government. The Dutch PM is at risk of losing his majority in the upper house following local elections in three weeks. Support for his coalition has fallen to about 33 per cent. The acquisition of Air France-KLM shares has been welcomed across the political spectrum from Mr Rutte’s more liberal partners and his anti-establishment rivals. 

But any domestic victory could come at the cost of already strained Franco-Dutch relations. Mr Le Maire and Mr Hoekstra have spent the last year clashing over the future of eurozone, leaving Paris aggrieved at the Netherland’s determination to crush French proposals for the single currency. The two finance ministers meet in Paris on Friday. 

Mr Hoekstra insists the bad blood and cack-handed diplomacy can quickly be put behind them. 

“Our collaboration is a lot closer than it was 15 years ago,” he told the Financial Times. “There is more and more we have in common. We both see that the field on which we play is changing fast.” "

Source: https://www.ft.com/content/49609482-3b5f-11e9-b72b-2c7f526ca5d0

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