VZCZCXYZ0000
PP RUEHWEB

DE RUEHFR #4617/01 3341638
ZNR UUUUU ZZH
P 301638Z NOV 07
FM AMEMBASSY PARIS
TO RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 1324
INFO RUEHRL/AMEMBASSY BERLIN PRIORITY 6719
RUEHLO/AMEMBASSY LONDON PRIORITY 6768
RUEHMD/AMEMBASSY MADRID PRIORITY 2744

UNCLAS PARIS 004617 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FOR SECRETARY PETERS AND DELEGATION 
 
E.O. 12958: N/A 
TAGS: ECON PREL FR
SUBJECT: FRANCE: SCENESETTER FOR SECRETARY PETERS AND 
DELEGATION 
 
¶1.  (SBU) Paris extends a warm welcome to you and your 
delegation.  Your visit comes close to six months into 
President Nicolas Sarkozy's five-year term, a period in which 
the strong U.S.-French bilateral relationship has been 
reinvigorated.  Sarkozy's personal initiative is already 
visible in new approaches to politics and foreign policy, the 
economy, and the environment.  There are clear signs that 
environmental concerns are causing France to begin to rethink 
transportation and infrastructure policy.  France will 
continue to build on a strong record of accomplishment in 
financing and building roads and bridges and developing 
cutting-edge technology such as its high-speed train system. 
 
Politics 
-------- 
 
¶2. (SBU) Through effective use of the media and by co-opting 
leading opposition figures into his government, Sarkozy has 
established himself as the dominant figure on the domestic 
political scene.  He has been assertive in pushing an 
ambitious program of reform aimed at revitalizing the country 
and liberating its economic potential.  While still enjoying 
substantial popular support (above 60 percent in most polls), 
a difficult international economic environment and France's 
budgetary constraints are restricting his room to maneuver. 
A week of nationwide strikes by transportation workers and 
civil servants in mid-November provided the first political 
challenge to his reform program, which he appears to have 
successfully met for the time being. 
 
 
¶3. (SBU) In foreign policy Sarkozy is intent on reasserting 
French leadership in Europe and in making his mark on the 
international scene.  He has moved to improve his relations 
with the U.S., breaking with Chirac's view that saw France as 
the natural leader of opponents of U.S. "unilateralism."  We 
have seen new warmth in public expressions of friendship for 
the U.S. as well as dramatic shifts in French policy on Iraq 
and NATO, and a toughened approach toward Iran and Russia. 
Despite convergence with the U.S. on these key issues, 
Sarkozy has repeatedly emphasized that being "allies" does 
not mean across-the-board and automatic "alignment" with U.S. 
positions.  He has not hesitated to identify specific areas 
of disagreement with the U.S., including admission of Turkey 
into the EU, climate change and GMOs. 
 
 
Sarkozy's Economic Agenda 
------------------------- 
 
¶4. (SBU) President Sarkozy wasted little time in moving 
forward with a broad economic policy reform agenda.  Labor 
market reform, tax changes that encourage overtime work 
beyond the 35 hour work week, mortgage deductibility to 
encourage home ownership, further pension reform, smaller 
government, the provision of minimum services during strikes 
and possible changes to France's collective bargaining system 
are highlights of the policy initiatives that are either 
underway, or in the offing.  The outcome of this process 
could well determine whether the United States has a newly 
confident, dynamic, forward-looking economic partner in 
France. 
 
¶5. (U) Trade and investment between our countries is 
significant.  On average over one billion dollars in 
commercial transactions take place between France and the 
U.S. every day, with the U.S being France's third ranked 
supplier and its fifth largest customer (France ranks as the 
U.S.' eighth trading partner for total goods (imports and 
exports).  There are approximately 2,300 French subsidiaries 
in the U.S. that provide more than 481,000 jobs and that 
generate an estimated $178 billion in turnover.  The U.S. is 
the top destination for French investments worldwide. 
Concurrently, the US is the largest foreign investor in 
France, employing over 600,000 French citizens with aggregate 
investment estimated at $65.9 billion in 2006. 
 
Environment 
----------- 
 
¶6. (SBU) The environment has become a signature issue for the 
Sarkozy government, which created an environmental 
"super-ministry" incorporating energy, infrastructure, and 
transportation.  It is headed by the third-highest ranking 
Minister in the French Government (Jean-Louis Borloo), and 
includes a "State Secretary" (Dominique Bussereau) who is 
 
responsible for all transportation issues.  In its first 
major undertaking, the new ministry recently concluded 
broad-based national environmental consultations (the 
"Grenelle de l'Environment.")  At its conclusion, Sarkozy 
underlined his desire to rethink transportation policy to 
meet growing environmental challenges, including climate 
change. 
 
Transportation and Infrastructure 
--------------------------------- 
 
¶7. (U) Building on an earlier announcement of the end of 
major new road construction projects, Sarkozy has promised to 
focus on the key problem of traffic congestion in cities by 
directing resources in the future away from road transport. 
He vowed to build 1500 kilometers of bus corridors, bike 
paths, and streetcar lines in the Paris region, and to 
construct 2000 kilometers of new high-speed rail lines in 
France.  Dedicated freight rail lines and investment in sea 
and river port facilities would mean 3 million fewer 
north-south truck passages by 2020, he said. 
 
¶8. (U) These proposals come on the heels of strong investment 
in French transportation infrastructure in recent years ( 15 
percent in 2007), with about 45 percent of the total directed 
toward roads. Highlights of recent budgets include continuing 
expansion of France's impressive high-speed rail network 
(TGV), and the development of multi-modal transport through 
rail and sea conveyance of trucks.  The latest TGV line 
linking Paris to Strasbourg in Eastern France was put into 
service in February, and work is underway on lines in Eastern 
and Southern France, including one that will eventually put 
Paris 5 1/2 hours from Barcelona.  The French have been 
particularly encouraged by international interest in TGV 
technology (including a recent sale to Morocco) and visits by 
a number of US delegations considering the TGV for possible 
use in the US (particularly from California). 
 
¶9. (U) Key parts of transportation infrastructure in France 
also have been reorganized through partial privatization or 
by decentralization to regional or local governments.  The 
French national railways (SNCF) was separated as an operating 
company from the underlying infrastructure in 1997. State 
holdings in toll-roads were privatized in 2006.  Some local 
airports and ports will be ceded to local governments, just 
as a large chuck of secondary roadways passed from national 
to regional control in 2006.  Labor unions and some localities 
have questioned this policy, raising concerns that the French 
state is abandoning its historical commitment to providing 
transportation as a public service. 
 
¶10. (SBU) France began to introduce new approaches to 
financing its transportation infrastructure after 1993, due 
to European Community competition concerns with the system of 
cross-subsidization that was originally used to build and 
extend the French highway system.  Each public-private 
partnership project under the current system must be 
economically viable in its own right, with public subsidies 
clearly identified if needed.  Concessionaires design, 
finance, build and operate state-owned highways and bridges, 
in exchange for a long-term grant of toll revenues, subject 
to periodic review.  France will also begin experimenting 
soon with a new form of "partnership contract" in which the 
state will pay concessionaires directly over a 20-30 year 
period. 
 
Other Transportation Issues 
--------------------------- 
 
¶11. (SBU)  Several other transportation-related issues may be 
on the minds of French officials you will meet.  The GOF was 
supportive of the US-EU Open Skies agreement, but continues 
to hope for further opening of US airlines to foreign 
investment.  They would also like to see a speedy and 
favorable decision on Skyteam's pending application for 
anti-trust immunity.  We have encountered many expressions of 
concern about new requirements for 100 percent scanning of 
US-bound maritime containers since the passage of the 9/11 
act in September.  And finally, there is considerable 
interest in the status of the European Aviation Defense and 
Space Company's (EADS) bid to sell refueling tankers in 
partnership with Northrup-Grumman to the U.S. Air Force. 
Since much of the production would take place in the US, this 
would provide a politically palatable way for the company to 
move production offshore in order to counteract the increased 
 
 
value of the Euro. 
 
 
Your visit 
---------- 
 
¶12. (SBU) State Secretary for Transportation Dominique 
Bussereau is expected to brief you on the recent 
reorganization of his ministry, the priorities of the Sarkozy 
administration in transport and infrastructure planning and 
financing, and to discuss how France is approaching the issue 
of traffic congestion.  A preliminary meeting with the 
Transportation's head of traffic management for the Paris 
region should provide an opportunity to discuss the issue of 
congestion in greater detail.  The American Chamber of 
Commerce will host an informal discussion with infrastructure 
companies over lunch, and officials from Vinci will discuss 
the company's experience with infrastructure development, 
tolls and concessions and parking in a separate meeting.  A 
presentation and tour of the A86 tunnel to the west of Paris 
will conclude your program. 
 
Please visit Paris' Classified Website at: 
http://www.state.sgov.gov/p/eur/paris/index.c fm 
 
 
STAPLETON