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DE RUEHFR #0669/01 1380906
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P 180906Z MAY 09
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TO RUEHC/SECSTATE WASHDC PRIORITY 6276
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UNCLAS PARIS 000669 
 
SENSITIVE 
SIPDIS 
 
FOR SECRETARY LAHOOD AND DELEGATION 
 
E.O. 12958: N/A 
TAGS: ECON ETRN EWWT ECON PREL FR
SUBJECT: FRANCE: SCENESETTER FOR SECRETARY LAHOOD VISIT 
 
Ref: Paris 0520 
 
¶1.  (SBU) Mission France extends a warm welcome to you and your 
delegation.  Your visit comes two years into President Nicolas 
Sarkozy's five-year term, a period marked by strong coordination 
between the U.S. and France on key strategic issues.  Your 
interlocutors will likely make a case for dedicated very high-speed 
rail (VHSR) passenger networks using the latest technology, as 
opposed to a shared freight/passenger system with incremental 
upgrades to existing U.S. infrastructure.  The French are anxious to 
understand the U.S. project selection process and the regulatory 
oversight for inter- and intra-state corridors.  Transport Minister 
Bussereau will also be keen to share France's accomplishments in 
financing infrastructure and staying on the cutting edge in 
transportation technologies and environmental protection, as well as 
combining modes of transportation. 
 
POLITICS 
-------- 
 
¶2.  (SBU) Arguably the most pro-American French President since 
World War II, Sarkozy should be credited with making the U.S.-French 
bilateral relationship the best it has ever been. The politically 
robust government-to-government relations do not mean for Sarkozy, 
nevertheless, that being "allies" leads to across-the-board and 
automatic "alignment" with U.S. positions.  President Sarkozy at 
times equates the health of the relationship with the strength of 
U.S.-French political and strategic cooperation in other parts of 
the world, rather than with the economic relationship.  The trade 
and investment relationship is substantial, with 17 USD billion in 
exports to France and 29 USD billion French imports to the U.S. 
(2008).  Recently, the new U.S. Administration has inspired popular 
support for the transatlantic relationship.  An April poll found 
that 54 percent of the French think that Franco-American relations 
have improved following President Obama's visit to France for the 
NATO summit in Strasbourg.  The press has complimented the President 
for bolstering the U.S. image, while contrasting him with President 
Sarkozy whose approval rate is at 36 percent. 
 
¶3.  (U) The global recession has not spared France.  GDP is expected 
to contract by at least 3 percent in 2009.  In response to the 
crisis, the GOF passed a 26 billion euro (USD 35 billion) stimulus 
package in February to help businesses improve their cash flow 
through tax measures, and boost infrastructure investments, 
including in rail.  Globally, President Sarkozy helped launch the 
series of G20 summits, and has been pleased with cooperation with 
the United States in that forum. 
 
ENVIRONMENT 
----------- 
 
¶4.  (SBU) The environment is a signature issue for the Sarkozy 
government.  One of his first initiatives was to create a 
"super-ministry" of sustainable development, consolidating the 
ministry-equivalents of energy, infrastructure, transportation and 
environment into a single entity.  The goal was to internalize 
environmental factors into decision-making on these policies. 
President Sarkozy has spoken of the need to rethink transportation 
policy to meet environmental challenges, including climate change, 
e.g. eco-taxes, increased investment in public transportation and 
eco-loans at zero interest to promote energy efficiency improvements 
in residential housing.  (Note: France will host the a Major 
Economies Forum (MEF) on Energy and Climate in Paris the day of your 
arrival, following onto the one held in Washington, D.C. last month. 
 End note.)  As a presidential legacy project, Nicholas Sarkozy 
unveiled his "Grand Paris" project on April 29 which calls for urban 
and transport overhaul to expand Paris city limits and make it a 
more sustainable and eco-friendly metropolis.  Beginning in 2012, 
the plan calls for construction of an automated, 90-mile metro line, 
and new and upgraded tramway, metro and suburban lines to alleviate 
mass transit congestion and integrate isolated suburbs.  The GOF 
plan represents 35 billion euros (47 billion USD) in new funds from 
both public and private sources yet to be identified. 
 
HIGH-SPEED RAIL 
--------------- 
 
¶5.  (SBU) Minister Bussereau and SNCF Group CEO Guillaume Pepy will 
make a strong case to compete for U.S. HSR development.  Although 
keen on the Asian markets, Argentina, and possibly India, the French 
clearly have shown renewed interest in the United States in the wake 
of the USG's announced "Vision for HSR" and the Invest in America 
Act.  French rail policy makers and companies are particularly 
interested in corridor development in California, Florida, and 
Texas.  In your conversations, they will likely make a case for a 
dedicated very high-speed rail passenger network using the latest 
technology, as opposed to a shared freight/passenger system with 
incremental upgrades to existing U.S. infrastructure. 
 
¶6.  (SBU) SNCF is gearing up to compete with outside rail companies 
in 2010 as part of EU agreements.  The government-owned French Rail 
Network (RFF) currently acts principally as a financial structure, 
delegating the majority of infrastructure management to the SNCF, 
but when competition opens up to EU countries in 2010, RFF is 
expected to build, maintain and renovate railway infrastructure on 
its own.  SNCF CEO Guillaume Pepy, whom you will meet, has noted 
expansion and upgrade of freight services will also be a priority in 
the next decade and has targeted East European markets as he aspires 
to make SNCF a multimodal European group with rail at its center. 
 
URBAN TRANPORT 
-------------- 
 
¶7.  (SBU) The French are equally proud of their global urban 
transportation groups.  Veolia is Europe's leading private public 
transport operator.  Keolis, the subsidiary of the SNCF is a world 
player and Transdev, a leading operator of urban public transport 
systems in France and Europe and of tram services globally, is 
expanding its international activities.  They will be eager to 
engage you on municipal transport plans in the United States, and 
your visit to Strasbourg will allow them to show you their solution 
to urban mobility while protecting the natural environment and 
promoting non-polluting means of transportation (tram, cycling, 
walking, electric vehicles). Future extensions of their tramway will 
be subsidized as part of France's economic recovery program.  One 
extension (projected completion in 2014) will result in a tram link 
with Kehl, Germany (cross-border cooperation is a major thrust of 
Mayor Ries' administration). 
 
OTHER TRANSPORTATION ISSUES 
--------------------------- 
 
¶8.  (SBU) Although your trip is focused on rail, other priorities 
for the French include aviation emissions and traffic control 
systems issues, and further opening of U.S. airlines to foreign 
investment under the current round of U.S.- EU Air Transport 
Agreement.  The French supported the European Parliament legislation 
which includes aviation in the EU's CO2 cap and trade system (the 
Emissions Trading Scheme -- ETS).  In the absence of progress 
towards a global CO2 emissions target (including through the UN 
Framework Convention on Climate Change), the EU ETS scheme will take 
effect in 2012 for U.S. carriers flying to and from Europe. 
However, the French are open to a greater role for the International 
Civil Aviation Organization (ICAO) in EU ETS implementation.  France 
also wants full access to cross-border mergers, and cabotage in the 
second stage of the U.S. Air Transportation Agreement. 
 
¶9.  (U) On maritime transport, Dominique Bussereau recently traveled 
to Hong Kong, China and South Korea with French port directors and 
Prime Minister Fillon was in North Africa to attract foreign 
investment in French ports.  President Sarkozy's reforms will reduce 
state control of the waterfronts and privatize container handling. 
Bussereau and his Spanish counterpart signed an agreement to invest 
30 million euros in the next five years to develop sea motorways to 
transport freight carrying trucks in an effort to reduce road 
congestion.  Another top French priority is international 
cooperation on the fight against maritime piracy.  They welcome the 
U.S. sense of urgency in tackling the problem of piracy at sea. 
 
¶10.  (SBU) On road transportation which represents 68 percent of 
pubic transport investment, new consumer incentives are planned to 
boost the GOF's existing "bonus-malus" or "fee-bate" system of tax 
incentives that favor the purchase of low-emission vehicles. 
President Sarkozy announced in February that the GOF will provide 
rebates of up to one thousand euros for car buyers who scrap older, 
high CO2 emission vehicles.  It will mobilize 400 million euros of 
public financing over the next three years exclusively for R and D 
on zero-emission vehicles.  France also aims to include 7 percent 
biofuel at the pumps by 2010, beyond the European targets.  The 
state will support some pilot projects for second general biofuel 
production (Reftel). 
 
YOUR VISIT 
---------- 
 
¶11.  (SBU) Your visit and pursuit of France's cooperation will be 
taken as a reassuring sign that the solid economic partnership 
between the two countries will continue.  Your European tour is also 
a signal that France is not the only competitive player.  Your 
French counterparts will welcome the opportunity to learn more of 
the new Administration's approach to a nation-wide rail network and 
the long-term financial investment it intends to make.  The French 
are anxious to understand who will regulate inter- and intra-state 
corridors and be the interlocutor for foreign firms.  They are also 
interested in the dynamics of the decision making process for 
project selection.  Finally, given France's experience in innovative 
cross-subsidization systems for financing transportation 
infrastructure (Public-Private Partnerships PPP), this will be an 
excellent chance to discuss lessons learned and the prospects of 
transatlantic partnerships. 
 
Bio of Dominique Bussereau 
- - - - - - - - - - - - - 
 
¶12.  (SBU) Dominique Bussereau, born in 1952, is the son of a 
railway worker.  After holding staff positions in several 
Ministries, he worked for the commercial department of the SNCF. 
Since 2002, he has held ministerial level appointments in 
transportation, budget, and agriculture, and in 2007 was appointed 
for a second time State Secretary for Transportation.  Bussereau is 
close to former French Prime Minister Jean-Pierre Raffarin who 
currently chairs a think tank for which Bussereau is Secretary 
General.  They have long-standing political ties to President 
Sarkozy's UMP party and to the western coastal region of 
Poitou-Charente.  Bussereau is Chairman of the General Council of 
Charente-Maritime department whose economic livelihood is based on 
maritime industry and is home to the French engineering giant Alstom 
which manufactures TGV cars and metro trains.  Bussereau has an 
active domestic record in introducing an eco-tax, based on 'user 
pays' and 'polluter pays' principles.  The tax is part of the 
"Eurovignette" Directive that allows EU Member States to charge 
heavy goods vehicles for wear on the road network and environmental 
costs with the ultimate aim of shifting freight away from roads onto 
less-polluting modes of transport (rail and waterways).  He 
understands some English but prefers to use an interpreter. 
 
Pekala