This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 PARIS 000706 
 
SIPDIS 
 
SENSITIVE 
 
FOR DEPUTY SECRETARY AZAR; 
HHS FOR INTL STEIGER, BUDASHEWITZ; STATE FOR OES/IHA; EUR/WE 
 
E.O. 12958: N/A 
TAGS: TBIO PREL ECON SOCI FR
SUBJECT: SCENESETTER FOR PARIS VISIT HHS DEPUTY SECRETARY 
AZAR 
 
 
¶1.  (SBU) I warmly welcome you to Paris to meet with Health 
Minister Bertrand and sign a Memorandum of Understanding with 
the President of Institut Pasteur, Professor Alice Dautry. 
The Embassy works closely with the Ministry of Health on a 
range of matters, including avian flu, AIDS and the Global 
Fund, and biomedical research, as well as Institut Pasteur, 
and your meetings with the Minister and Professor Dautry will 
cement those ties.  I plan to accompany you to both events. 
 
Avian Flu Preparations 
---------------------- 
 
¶2.  (SBU) Former HHS Secretary Thompson visited Paris in 
December 2004 to attend a meeting of the Global Health 
Security Initiative hosted by then Health Minister Douste 
Blazy.  In a reshuffling of French cabinet portfolios in May 
2005, Douste Blazy became Foreign Minister and Bertrand moved 
up within the Health Ministry to become Minister.  In late 
August, I called on Bertrand to encourage French government 
participation in the International Partnership on Avian 
Pandemic Influenza (IPAPI).  Bertrand raised a number 
detailed questions regarding avian flu preparedness in the 
United States.  While meetings of experts on this subject 
have taken place since, I expect Bertrand to re-engage on his 
top priority, preparation for an avian flu pandemic.  Prior 
to your meetings on Monday, our Country Team, chaired by 
Deputy Chief of Mission Karl Hofmann, looks forward to 
briefing you on aspects of our own preparations against a 
pandemic, and U.S.-French issues of interest to you. 
 
Pre-elections Political Setting 
------------------------------- 
 
¶3.  (SBU) You will be visiting a France grappling with 
political, economic and social challenges at a time of 
international uncertainties connected with the Middle East, 
and globalization.  The political context is defined by 
maneuvering on the center-right and the center-left in 
advance of the 2007 presidential elections.  French popular 
rejection of the largely French-inspired EU constitutional 
treaty last May, combined with the unrest in the suburbs of 
late autumn, has spurred a lively debate about France's 
economic and social models and its influence in an enlarged 
European Union.  The jockeying among the political parties -- 
between PM de Villepin and Interior Minister Sarkozy within 
the UMP governing party, and among a plethora of candidates 
in the Socialist Party -- to succeed one of France's 
longest-serving politicians, combined with France's two-round 
election system, have rendered the outcome of the 
presidential nomination races more open than ever before. 
Notwithstanding Chirac's lame-duck status, he retains 
considerable power and prerogatives, especially in the 
foreign policy area, and remains interested in burnishing his 
legacy. 
 
Unrest in the Suburbs 
--------------------- 
 
¶4.  (SBU) The three weeks of unrest last autumn caused many 
to wonder about the nature of its origins.  It is true that 
most of the perpetrators of the urban unrest were of 
Arab-African and Black-African descent, members of France's 
racially distinct, recent immigrant underclass.  They were 
also predominately Muslim, by culture if not religion. 
However, there is general agreement that unemployment and 
lack of opportunity were the primary factors underlying the 
angry actions of these youths.  Discrimination was also a 
factor.  However, no links were found between the violence 
and Islamic extremism; the youths did not act on any "Islamic 
identity," nor were Islamic political groupings viewed as 
being behind the violence.  Moreover, the unrest manifested 
itself almost exclusively through acts of property 
destruction (primarily of cars, but also of some public 
buildings), but not individuals; only one death was 
attributed, indirectly, to the unrest. 
 
The Economy and Reform 
---------------------- 
 
¶5.  (U)  During the past few years, the French economy has 
sputtered along with low GDP growth rates (1.1% in 2002, 0.5% 
in 2003, 2.1% in 2004, and 1.7% estimated in 2005), high 
deficits (3.6% budget deficit as percentage of GDP in 2004), 
high central government public sector debt (estimates range 
from 66% to 110% of GDP in 2005, depending on the accounting 
method), and high unemployment hovering around 10%. 
Structural issues such as the 35-hour work week, rigid labor 
laws, and the disruptive role of unions have made economic 
reform a political hot potato.  The large size of the 
government, high taxes, and France,s aging population 
further complicate the economic picture. 
 
¶6.  (U) Prime Minister de Villepin has taken credit for the 
slow but steady decrease in the unemployment rate, which by 
November had fallen to 9.6% from its peak of 10.2% in March 
through May 2005.  However, the private sector accounts for 
only a small portion of this decline.  French fears of high 
unemployment have resulted in less helpful policy making, as 
the GoF feels pressured to showcase 'economic patriotism' as 
a means to demonstrate that it is protecting French jobs. 
¶7.  (U) The PM is proceeding slowly with privatization, 
selling off bits of the national electricity and the gas 
utility companies, as well as some toll-roads concessions. 
In September, he announced plans for social economic growth, 
postponing promised income tax cuts (a Chirac campaign 
pledge) until January 1, 2007. 
 
Pharmaceuticals Sectors/Pricing 
------------------------------- 
 
¶8.  (U)  The roughly 300 pharmaceutical companies in France, 
employing 18,500 and spending USD 3.5 billion in R&D, have 
annual sales of USD 41 billion, of which USD 17 billion are 
exports.  Imports are about USD 10 billion.  Almost all top 
U.S. firms (Pfizer, Abbott, etc.) have a presence in the 
French market, and many have research facilities.  French 
firms account for only 40 percent of local production. 
France ranks third worldwide in sales, behind the U.S. and 
Japan.  Drugs represent about 22 percent of health care 
spending.  As part of a policy of containing health care 
costs, government intervention has led to prices generally 
lower than in unregulated European markets such as Germany or 
the UK.  Nevertheless, French OTC drugs, with 8 percent of 
the market, represent one of the smallest market shares in 
Europe, although it is growing.  Virtually the whole 
population is covered by medical insurance that reimburses 65 
percent of total pharmaceutical sales, though reimbursement 
rates vary by category of drug, from zero to 100 percent. 
The French government views pharmaceuticals as a key 
industry, hence its aggressive support of SanofiSyntholoabo 
in 2004 to buy Aventis to "save" it from the Swiss Novartis. 
 
 
Public Affairs Environment 
-------------------------- 
 
¶9.  (SBU) The outreach to Europe by the President and 
Secretary of State Rice early in 2005 laid the foundations 
 
SIPDIS 
for a more favorable public affairs climate in France, and 
French people continue to manifest their traditional like for 
Americans.  U.S.-European and U.S.-French common positions on 
several hot-topic areas, such as Lebanon, Syria, and Iran, 
have reinforced the positive with concrete examples of the 
U.S. and Europe working together to solve global and regional 
problems.  While much general anti-Americanism, especially as 
it relates to images of U.S. values and society, can be 
linked to France,s own malaise, France,s opinion joins much 
of the rest of Europe in specific areas, and lingering 
negative notes are sounded by many media and some opinion 
leaders in public fora.  Hurricane Katrina offers critics new 
examples of a society of inequality.  Skepticism about U.S. 
international participation in the interest of 'greater' 
common good appears often, and our failure to join Kyoto 
protocol closes ears to the many areas where the U.S. is 
leading in environmental problem-solving.   Guantanamo and 
the recent stories of CIA secret prisons and 'outsourcing' of 
torture filled pages, and reinforced negative perceptions of 
U.S. policy in Iraq and general non-adherence to 
international law and norms. 
 
 
Please visit Paris' Classified Website at: 
http://www.state.sgov.gov/p/eur/paris/index.c fm 
 
Stapleton