What Price Will France Pay?

Despite a partial Thawing In Franco-US Relations, The Threat Of Some "Consequences," Whether Diplomatic Or Economic, Still Hangs In The Air

By Marsha Johnston in Paris

So far, the greatest consequences of French President Jacques Chirac actively working against the US invasion of Iraq are the result of US consumer boycotts of French products and the risk that French companies will be denied a share of lucrative Iraqi reconstruction contracts. Diplomatic punishment, particularly within NATO, will be harder for US officials to achieve - even if they try.

At Forum 2003, a special conference held by the Paris-based Organization for Economic Cooperation and Development (OECD) just over two weeks ago, French Minister of Economy, Finance and Industry Francis Mer told The Inquisitor of a recent conversation with Howard Leach, US ambassador to France.

"We agreed that we cannot control the individual reactions of consumers," Mer explained. Nonetheless, he added, France does not expect any US boycott of French goods to have a significant impact on the two countries' balance of trade.

Others within the French diplomatic and business communities are not so optimistic. "Over in France, you do not realise the size of the problem," said Paul Bensabat, the American-based president of Frances Council of Foreign Trade for the northern US, in a recent interview with French news magazine Le Nouvel Observateur. "The malaise is real, without precedent and lasting. Frances positions were absolutely not understood. If we dont make up for it, were headed for a wall." The stakes are high - about $22 billion worth of French products are sold each year to the US, primarily in pharmaceuticals, beverages and perfumes. French wine producers have already suffered a drop of up to 20% in their US sales.

While US trade representative Robert Zoellick recently indicated that the White House may not be seriously considering economic sanctions, the US Congress seems inclined to prevent France and others from participating in Iraqi reconstruction projects. Congressional bill HR1441, introduced by Rep. Darrell Issa (Rep-Calif), would require the US Agency for International Development and the US Department of Defense to give preference in awarding contracts to American companies and to choose the USs Code Division Multiple Access system for wireless telephony created by Qualcomm as the standard in any telecommunications contracts. The bill is currently in committee, according to the Legislative Resource Center in Washington.

Any 'blackballing' of France over Iraqi reconstruction would have substantial consequences for French industry, which exported around $660 million to Iraq in 2001. The goods included industrial equipment (50% of exports), automobile parts (20%) and agricultural products (6%), according to the French Ministry of Economy, Finance and Industry. Given UN sanctions over the export of 'dual use' technology which could have either civilian or military applications, the export of industrial equipment was only allowed for certain specified products: telecommunications equipment (mainly by France's Alcatel group), electrical equipment (Alstom, Schneider and SDMO), and automotive parts (Peugeot and RVI). At the same time, Frances agricultural exports to Iraq have actually declined over recent years while those from Australia, India and Russia have increased.

Pragmatic trade does continue between France and the US, however, and some measure of pragmatism remains. A US subsidiary of the French-owned AREVA nuclear waste-handling group recently won a $29.7 million contract to help design and build a new nuclear waste dump in the desert near Las Vegas. France's electricity industry has long been mainly powered by nuclear energy and the country has developed some of the world's most sophisticated waste management techniques.

Speculation is also rife that Bush administration hawks, especially within the Pentagon and Department of Defense, will move to marginalize France's role within NATO. Technically, there may be a way to do so. NATOs two main decision-making bodies are the North Atlantic Council (NAC), which includes all members including France, and the Defense Planning Committee (DPC), from which France departed under President Charles de Gaulle in 1966.

For until the fall of the Berlin Wall in 1989, all NATO decisions relating to its military structure - in effect, almost all of them - were made in the DPC.

Post Cold War, however, the 1990s saw France enter into discussions about rejoining NATOs integrated military structure, and its diplomats and troops actively participated in peacekeeping duties and political initiatives throughout the former Yugoslavia. "As a result of the rapprochement of France and (its work in the) Balkans, lots of decisions formerly taken only in the DPC were sent to the NAC, which has become the dominant force over the last nine years," one NATO official recently told The Inquisitor.

NATO sources note that while the Bush administration could theoretically try to exclude France from NATO decision making by bringing all votes on important issues back to the DPC, this would be unlikely to work in practice.

"If the French continued to be difficult over issues," the NATO official explained, "the US could try to use the DPC, but would still need approval of the NAC, and there would only be one nation opposed to excluding the French. As long as the French are behaving very badly, and everyone is in agreement, the tactic could be used. But if people believed the US was trying to punish the French, and the French were not behaving badly, it would not work."

However distasteful Washington may find Paris's attitudes these days, other key NATO members such as Britain, Germany, Italy and Spain are more likely to seek a more inclusive approach. After all, France is also a vital trading partner within the European Union.