:00:12. > :00:15.Medecins Sans Frontier. Now it is time for HARDtalk. Where is the
:00:15. > :00:19.leadership that can pull Europe out of its current financial and
:00:19. > :00:23.economic chaos in? That is a question being asked with ever
:00:23. > :00:30.greater urgency in a Germany and in France, the two most important
:00:30. > :00:33.pillars of the eurozone. My guest today is Laurence Parisot, head of
:00:33. > :00:38.the French business federation MEDEF, and a member of the Board of
:00:38. > :00:42.the French bank, BNP Paribas. With its banks farmer will, its
:00:42. > :00:52.President under pressure and is population restive, can France lead
:00:52. > :01:15.
:01:15. > :01:19.Laurence Parisot, welcome to HARDtalk. Thank you. As I said,
:01:19. > :01:24.there are many in Europe right now looking for leadership from France.
:01:24. > :01:31.But is the real question, just how vulnerable is France in this
:01:31. > :01:38.economic crisis? Not so much. What I mean is, all Europe is vulnerable.
:01:38. > :01:44.The issue is a European issue, not just a German or French issue. Of
:01:44. > :01:52.course, as you said, France is one of the most important pillars of
:01:52. > :02:02.Europe. We have to address the problem. But we either find the
:02:02. > :02:13.
:02:13. > :02:16.solution altogether, or it will be the failure of Europe. But it is
:02:16. > :02:20.difficult to find a grand plan and come out with ambitious new
:02:20. > :02:25.proposals for the future of the eurozone and Europe when you look
:02:25. > :02:28.inside your country, as you do, as the head of a business federation
:02:28. > :02:38.responsible for tens of thousands of businesses across France, and
:02:38. > :02:44.you see lack of growth, joblessness, and an economy that is stalled.
:02:44. > :02:50.You are right. I would also add a very difficult psychological
:02:50. > :02:55.situation, the public opinion. The people wonder what will be the
:02:55. > :03:03.future and are very anxious and nervous. That means that first we
:03:03. > :03:09.have to be clear about what is the origin of the problem. And that is
:03:09. > :03:15.debt of the European countries. Not only the Greek debt, but also the
:03:15. > :03:22.French debt, the Italian won and so on. The first thing is that we have
:03:22. > :03:31.to understand that we have to deal with this debt issue. We have to
:03:31. > :03:39.overcome the problem. Then we will find a path to a more global
:03:39. > :03:47.solution. Let's talk debt for a moment. And remember that you sit
:03:47. > :03:50.on one of France's biggest banks, BNP Parabas. A very important back.
:03:51. > :03:57.Why was it that in the summer when the first talks starter,
:03:57. > :04:02.particularly in the US and the UK press about the potential weakness
:04:02. > :04:10.of French banks, that he dismissed all that? You said the speculation
:04:10. > :04:17.was nothing more than the orchestration of overseas interest?
:04:17. > :04:27.I recognise that there is a problem because the European banks and the
:04:27. > :04:31.French banks hold the sovereign debt. Let's be clear. How much
:04:31. > :04:41.sovereign debt? If we talk about Italy, how much sovereign debt do
:04:41. > :04:41.
:04:41. > :04:48.you hold? I cannot give you the figure. But you must know. Maybe we
:04:48. > :04:55.do not have to say that directly. Enrique Europe, the banks hold
:04:55. > :05:00.sovereign debt. This is very different from the US. -- in Europe.
:05:00. > :05:09.They do not hold the US debt in the same proportion as the banks in
:05:09. > :05:15.Europe have done do. -- have to do. That is why the banks are facing
:05:15. > :05:20.difficulties. This is because they hold the sovereign debt. That is
:05:20. > :05:27.true, and you do not want to tell me, but I have done reading on this,
:05:28. > :05:35.and your bank holds many billion euros worth of debt. That is a
:05:36. > :05:41.significant sum. A I emphasise that point. If we want to solve the
:05:41. > :05:46.problem, first we have to address the public debt issue. If you focus
:05:46. > :05:50.on the problem by saying that this is just a back problem, you will
:05:50. > :05:55.not solve the situation. The situation comes first from the
:05:55. > :05:59.public debt. Understood by the banks have a duty to be transparent
:05:59. > :06:05.about what kind of debts they hold on to. The people of your country
:06:05. > :06:14.need to know, given they would like to think you'll bank is safe for
:06:14. > :06:21.the future, what you're going to do to recapitalise the bank. Do you
:06:21. > :06:29.think that Italy or France will one day defaults? It is impossible.
:06:29. > :06:33.France is one of the biggest countries in the world. It is true
:06:33. > :06:39.we have to manage a fiscal consolidation. But we will not be
:06:39. > :06:46.false. You just mentioned Italy. Is it really impossible that Italy
:06:46. > :06:56.could before? A national debt over 100% of GDP? This is serious but
:06:56. > :07:06.Japan is holding 200 % of GDP since years and they're still very strong.
:07:06. > :07:08.
:07:08. > :07:17.I think we are at exaggerating the problem. That is why I said that in
:07:17. > :07:27.August, just after the US was downgraded, we saw all the Anglo-
:07:27. > :07:32.Saxon newspapers, a lot of commentaries saying that the
:07:32. > :07:40.problem was coming from Europe. They were saying that the US were
:07:40. > :07:46.not the problem. But I consider that by doing that it was a self-
:07:46. > :07:55.fulfilling prophecy. Everyone thinks that the problem is Europe.
:07:55. > :08:00.But I think it is exaggerated. is the counter case for --. For a
:08:00. > :08:08.long time we have had the feeling that Greece will not default. Now
:08:08. > :08:12.it seems they must default. Other people said, banks have been
:08:12. > :08:18.stressed tested and will not go under. We have just seen the Dexia
:08:18. > :08:21.Bank, which is partly owned by France, and Belgium interest. That
:08:21. > :08:27.has gone bust and had to be fair that. People say things will not
:08:27. > :08:31.happen but they do happen. I wonder that, as a director of BNP Paribas,
:08:31. > :08:39.how you tell your people that his bank will be made safe for the
:08:39. > :08:43.future. I am pretty sure that this bank is 100% safe. What about
:08:43. > :08:50.capital ratios? They are not as high at your bank as they are at
:08:50. > :08:56.many other international banks. On the contrary. BNP Parabas always
:08:56. > :09:03.said they will meet the new Basel III ratio by the end of next year.
:09:03. > :09:13.By the end of next year! There is a crisis right now! It is 9%! 9% of
:09:13. > :09:15.
:09:15. > :09:19.capital ratio! Some major American banks do not have this ratio!
:09:19. > :09:23.President Jose Manuel Barroso look at this question of capital ratios,
:09:23. > :09:26.that is the amount of readily accessible cash banks have in
:09:26. > :09:30.proportion to their balance sheets. He said it is not adequate and
:09:30. > :09:36.until it is banks should not be able to pay dividends to
:09:36. > :09:42.shareholders, should not be able to pay the vast bonuses to their staff
:09:42. > :09:52.until they raise these capital ratios higher. Of course. Since the
:09:52. > :09:52.
:09:52. > :09:59.beginning of September, things have changed. The markets have fallen.
:09:59. > :10:07.The situation is changing every day. The problem is that governments and
:10:07. > :10:17.the European institutions were not able to decide to act to settle a
:10:17. > :10:17.
:10:17. > :10:23.new agreement between the different governments. Each day the crisis is
:10:23. > :10:27.worse. That is the uncertainty. The system that affects all the
:10:27. > :10:30.businesses you represent. A final question about banks. In France
:10:30. > :10:34.officials have made it plain that they believe it recapitalisation of
:10:34. > :10:40.the big banks has to happen it will come from the French government. It
:10:40. > :10:46.will not be funds drawn from the eurozone stabilisation fund for the
:10:46. > :10:52.ECB. My question is, if that is the case, how can France hang on to its
:10:52. > :10:56.AAA credit worthiness rating? We're talking about vast sums of money.
:10:56. > :11:01.The French government will have to put into its banks to guarantee
:11:01. > :11:04.their long-term security. I hope that if we have to recapitalise the
:11:04. > :11:14.French banks, I hope they will be able to raise capital on the
:11:14. > :11:18.markets. All with private partners. I hope we will not have to go to
:11:18. > :11:25.the public gate and asked for public funds. The only problem is
:11:25. > :11:32.that French banks have lost half their share value recently.
:11:32. > :11:40.Injections of cash is unlikely. This is a vicious circle. If we
:11:40. > :11:48.raised public funds, come that means the debt of the state will
:11:48. > :11:54.increase. If that happens, there will be a problem for the capital
:11:54. > :11:59.ratio of the banks because they hold the dead. We are creating a
:11:59. > :12:09.initial -- a vicious circle. -- they hold the debt. Do you see a
:12:09. > :12:11.
:12:11. > :12:17.way out of it? Yes. The way out is we have to extinguish the fire by
:12:17. > :12:24.saying that that the stability fund must be able to repurchase
:12:24. > :12:33.sovereign debt or to help the banks. At the European level. And secondly,
:12:33. > :12:37.at the same time, the Europeans governments have to say they are
:12:37. > :12:45.ready for a more integrated Europe, that they are ready for a new
:12:45. > :12:55.treaty, that they are ready for a new economic governance. We really
:12:55. > :12:55.
:12:55. > :13:01.need this signal. Today we think that... If we want to stay in power,
:13:01. > :13:05.we have to go further. You keep saying that we need to, but the
:13:05. > :13:13.problem is that the European public do not seem to buy your argument.
:13:13. > :13:17.You are right, but they could not buy the argument. Governments and
:13:17. > :13:23.decision makers do not speak to the public. They do not tell to the
:13:23. > :13:27.public what is happening. So, you want one Treasury for all of the
:13:27. > :13:31.eurozone? One system of economic governance so that tax rates and
:13:31. > :13:36.public spending is set from Brussels and Frankfurt? Never mind
:13:36. > :13:45.if that is acceptable in Athens or Lisbon, is that acceptable in
:13:45. > :13:52.Paris? It is fifty-fifty. Just imagine if we did the opposite. We
:13:52. > :13:59.give up the Euro, we go back to a very national way of thinking about
:13:59. > :14:03.the economy. At the same time globalisation is spreading and the
:14:03. > :14:13.emerging countries are more and more powerful. We will lose
:14:13. > :14:14.
:14:14. > :14:20.everything. We will lose everything. If we want to stay countries with
:14:20. > :14:25.prosperity and power, we have to move forward. And that will take
:14:25. > :14:29.many years. In 2005 the French public rejected a referendum on a
:14:29. > :14:33.limited treaty change, a constitutional treaty change.
:14:34. > :14:40.rejected that because there was no real debate about the future of it
:14:40. > :14:46.-- the European future we want. They rejected the for internal
:14:46. > :14:51.political reasons. It is a moment of truth. It is an urgent moment of
:14:51. > :14:56.truth. Your recipe for a long-term, radical overhaul of the way the USM
:14:56. > :15:00.and the EU works may and may not be fine but whatever is it will take
:15:00. > :15:05.an awful long time. Let's consider where France is in the short-term.
:15:05. > :15:15.Your job is representing business in France. What is going to get
:15:15. > :15:16.
:15:16. > :15:19.We need to conduct structural reforms. To boost growth. Two years
:15:19. > :15:28.ago France was able to go through a very important reform, the pensions
:15:28. > :15:38.reform. I am pretty sure that we are able to conduct some other
:15:38. > :15:38.
:15:38. > :15:41.structural reform, healthcare for example. A more flexible job market.
:15:41. > :15:46.Sarkozy shows no interest in pushing new structural reform. It
:15:46. > :15:53.took him a large struggle to get through his limited pension reform.
:15:53. > :15:59.He moved it from 60-62 when the requirement date in the UK is 67.
:15:59. > :16:04.He did it. He did it without the sense of impending meltdown that we
:16:04. > :16:10.have today. French people are wary. Look at all the polls. Sarkozy's
:16:10. > :16:18.approval rating is lower than ever before. Do we think he will go on
:16:19. > :16:27.another round of reforms? First of all, everybody has terrible polls.
:16:27. > :16:36.There is no good rating for any government. But you know that we
:16:36. > :16:43.are in a presidential campaign. This is the beginning of it. You
:16:43. > :16:50.can counter and business people to debate the presidential campaign.
:16:50. > :17:00.These structural reforms are part of it. President Sarkozy was the
:17:00. > :17:03.first since Francois Mitterrand to be able to conduct a those reforms.
:17:03. > :17:06.We want to keep this brief. There are a lot of different questions on
:17:06. > :17:09.the French economy. Are you disappointed with the degree in
:17:09. > :17:14.which President Sarkozy has failed to deliver on his promises?
:17:14. > :17:24.France is not easy. We have some difficulty sometimes to implement
:17:24. > :17:26.
:17:26. > :17:29.reforms because it is quite easy to have demonstrations in our country.
:17:29. > :17:31.And you have strikes today. The limited austerity package of the
:17:31. > :17:38.last few months is provoking another round of public sector
:17:38. > :17:48.strikes. It was not very important. The austerity package is enough to
:17:48. > :17:56.
:17:56. > :18:06.respect our engagement in terms of budget. Not if uour growth figures
:18:06. > :18:09.are wrong. They are being revised down all the time. It seems to me
:18:09. > :18:12.to be living in, if I can put this politely, a fantasy world. You are
:18:12. > :18:15.an opinion pollster as well. You run one of France's leading opinion
:18:15. > :18:18.polls companies. The clear majority of the French public are against
:18:18. > :18:22.what they call the capitalism of globalisation. The Socialist Party
:18:22. > :18:32.is having a debate, in some senses led by a candidate who is calling
:18:32. > :18:36.for deglobalisation on the far right of French politics. We see
:18:36. > :18:39.traction for the message that globalisation has failed France.
:18:39. > :18:46.This, rather than economic liberalism, is the mode in your
:18:46. > :18:49.country. You're right. This is a danger. This is 50-50. At the same
:18:49. > :18:54.time we have also lots of people who say that they love the
:18:54. > :19:04.companies they work in. They think than this is very important to
:19:04. > :19:08.support small and medium-sized companies because they create jobs.
:19:08. > :19:12.I know you respect polls very much because you work for a polling
:19:12. > :19:18.organisation. Far more Chinese people think capitalism works well
:19:18. > :19:24.today than French people do. I know that, but in the French point of
:19:24. > :19:29.view there are two things. The theoretical point of view and on
:19:29. > :19:35.that, yes, we are reluctant about capitalism. But there is also the
:19:35. > :19:40.practical point of view and on the practical side we're very happy.
:19:40. > :19:46.EADS is producing the best planes in the world. With Airbus. We are
:19:46. > :19:54.very happy with some important companies. For example we are very
:19:54. > :19:57.supportive of AREVA for our nuclear energy. You're choosing companies
:19:57. > :19:59.which are national champions where the French government has also in
:19:59. > :20:08.the broadest way projected these companies on the international
:20:08. > :20:11.stage using French government support and help. Is that still the
:20:11. > :20:18.French model? Far from really liberalising the economy you're
:20:18. > :20:24.making it an Anglo-Saxon model. do not support this model. I think
:20:24. > :20:29.it is time to invent another model. A more Anglo-Saxon model? More
:20:29. > :20:32.Anglo-Saxon. Do you think you can persuade the French public of that
:20:32. > :20:35.even when they seem to be absolutely opposed to it? Yes, but
:20:35. > :20:45.I think the Gaullist model is the model of the politicians from the
:20:45. > :20:46.
:20:46. > :20:53.right to the left. And what the public opinion says is what they
:20:53. > :21:03.hear from the politicians. That's why more and more business leaders
:21:03. > :21:06.
:21:06. > :21:09.like my counterparts, we want to go into the public debate. The French
:21:09. > :21:19.business confederation that you chair will be very active in the
:21:19. > :21:19.
:21:19. > :21:27.presidential debate. We will put this in some TV shows. We will give
:21:27. > :21:30.our own views. Have you already decided, given the nature of debate
:21:30. > :21:37.on the socialist and the far right side and the Front National, that
:21:37. > :21:43.you will support Sarkozy for election? It is much too early to
:21:44. > :21:49.say that. You know what the policies are of the others.
:21:50. > :21:55.Protectionism is a way that is now routinely used in French politics.
:21:55. > :22:01.Yes, but we do not know yet who will be the Socialist candidate.
:22:01. > :22:11.And we do not know yet what will be his programme, his project. And we
:22:11. > :22:13.
:22:13. > :22:17.do not know anything either about the new vision of Nicolas Sarkozy.
:22:17. > :22:20.I suppose that during the campaign he will propose. So I do not want
:22:20. > :22:23.to say today that we will support this or that candidate. We have to
:22:23. > :22:26.wait. Are you worried that protectionism and cutting France
:22:26. > :22:32.off and maybe even Europe off from the globalised economy could be a
:22:32. > :22:42.major trend in this election campaign? Yes, I am worried about
:22:42. > :22:46.
:22:46. > :22:49.that. It could be a trend in the French presidential campaign. Also
:22:49. > :22:51.in the American presidential campaign. I am because at the
:22:51. > :23:01.global level we see countries and political parties asking for global
:23:01. > :23:07.protectionism. We see a very inward-looking France. Yes, and
:23:07. > :23:10.that is why I published a book recently. I think the far-right
:23:10. > :23:13.political parties and the leader of the far right, the National Front,
:23:13. > :23:23.Marine Le Pen, her ideas are very dangerous for the economy and
:23:23. > :23:25.
:23:25. > :23:31.democracy also. Few polls would suggest for one second that she
:23:31. > :23:35.will be the next President of France. Suspicion of globalisation,
:23:35. > :23:40.a belief that protectionist policies have to be used in France.
:23:40. > :23:43.These ideas to have traction. I just wonder how worried you are
:23:43. > :23:50.about the future of the French economy, given the political mood
:23:50. > :23:53.of the French people? I am worried if we are not able to explain that
:23:53. > :24:03.these inward ideas, the temptation of nationalism, to argue, if we are
:24:03. > :24:10.