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Business

Mending the Franco-German Industrial Rift

French Finance Minister Nicolas Sarkozy meets with counterpart Wolfgang Clement in Berlin on Monday in an attempt to heal the recent rifts in Franco-German industrial relations with plans for a shipbuilding alliance.

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Sarkozy's interventions in numerous deals have caused anger in Berlin

French Finance Minister Nicolas Sarkozy travels to Germany bearing an olive branch in a bid to calm Berlin's anger over his recent interventions to protect French companies which have sometimes been at the expense of German rivals.

Sarkozy hopes to diffuse months of ill-feeling by presenting proposals for a new Franco-German shipbuilding giant, which could be based in Germany, when he meets with German Economics Minister Wolfgang Clement.

An interview with Sarkozy printed in the French financial daily La Tribune hinted at the possible creation of a new European shipbuilding giant along the lines of EADS, the defense and aerospace company formed in 2004 from a merger by French, German and Spanish firms.

"After the success that the French and Germans have had in building planes together, why shouldn't we succeed in building boats together," Sarkozy told the newspaper.

Asked whether he would be ready to see a new shipbuilder headquartered in Germany, Sarkozy pointed out that the European Central Bank is based in Frankfurt, Germany.

"Have I ever said that's unacceptable," he asked.

Germans: Time is not right

But German government officials said on Monday that the requirements to set up a binational shipbuilding giant will not be met for a long time.

The French finance minister had recently called for tighter economic coordination with Germany.

"We don't have the choice," he said, adding that France and Germany should synchronize their national budgets and share economic data and forecasts. "The price of oil is the same in Germany as it is in France."

Sarkozy, who steps down as finance minister next month to run for leader of France's ruling party -- a step seen by many as a move toward candidacy for the presidency in 2007, also signaled his determination to put Franco-German economic ties back on track before he goes.

Sanofi-Aventis deal angers Berlin

Aventis und Sanofi

Aventis and Sanofi merged at the expense of shareholders.

Sarkozy plans to discuss his controversial April intervention in the takeover battle for Franco-German drug company Aventis when he exerted his power to broker a Sanofi-Aventis merger, depriving Aventis shareholders of a potentially higher bid from Switzerland's Novartis. The merger created the world's third largest drugs company.

Berlin was angered by the intervention with Chancellor Schröder expressing his disapproval.

"Politics has no role to play in companies' decision-making processes," Schröder said at the time.

Siemens plans thwarted by Sarkozy

Shortly afterwards, the German government was again riled by Sarkozy's move to thwart the designs of German engineering group Siemens on its troubled French rival Alstom which prompted criticism of what Schröder called Sarkozy's "nationalistic" policies.

Hauptsitz von Alstom in Paris

Siemens was barred from bidding for Alstom subsidiaries.

Schröder has voiced concern in the last few months that France's current industrial policy is undermining the Franco-German relationship.

The German chancellor told the business daily Financial Times Deutschland in May that he found it "annoying" that Sarkozy refused to allow German engineering giant Siemens to participate in the takeover of Alstom subsidiaries.

Franco-German relations strained

"Regarding Almstom, I discover sometimes -- not by the (French) president -- but among members of the government, certain statements that merit reconsideration," Schröder told French daily Le Figaro in an interview published soon after.

"Everyone can understand that a finance minister is thinking about the next election, but it is a good idea to think about the day after the vote too," the German chancellor added in a thinly veiled dig at Sarkozy.

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