The French know that there's nothing romantic about a coalition government

We are used to uneasy alliances being formed between people who have spent campaigns taking potshots at one another, says Anne-Elisabeth Moutet .

The French are watching the Cameron-Clegg lovefest with bemused eyes. We’ve had coalition governments galore; in fact, single-party domination is the rarity here.

We are used to uneasy alliances being formed between people who have spent campaigns taking potshots at one another and can barely stand to be in the same room. Think Mitterrand and the Communists in 1981, or Valéry Giscard d’Estaing and Jacques Chirac in any number of unhappy permutations.

When the troops all finally get to stand together on the steps of the Elysée Palace, nobody tries to put on a brave face. You can almost hear the whirring as minds calculate how best to trip up the chap with the job you want.

People argue that Clameron – that’s what they’re calling the happy pair on the internet – come from such similar male, white, expensively educated backgrounds that it’s normal they should find it easy to deal with one another. Think again. You would be hard-pressed to find a more narrowly homogeneous ruling class than the French. They all attended the same government school, ENA, and, 20 or 30 years on, still mention the exit ranking of colleagues with the same contempt or respect Britain would give to Cameron’s Eton schooling, or John Prescott’s cruise stewarding. Paris watched the Love, Actually remake in the garden of Number 10 and thought, to a French (wo)man: “Come off it, you two.”

Forgetting one’s differences and working together for the public good? We haven’t bothered with that since 1945, with de Gaulle. It lasted less than a year (although it did create our National Health system, la Sécurité Sociale, and nationalised Renault, the banks, insurance companies, utilities, and mines). One of our wilier politicians’ lines, “Promises only commit those who believe in them” generally obtains in the horsetrading that gives birth to most of our governments.

And in France, nobody is ever allowed to forget who won the most votes. Cameron may not be President of Great Britain, but the Tories have more than 300 seats. The idea that he would dilute his hold on the house by ushering in PR seems suicidal – and stupid – to us.

The Sarkozy way would be to entice the dozen or so MPs needed for a full majority to cross the floor, lured by plum jobs and gongs. The threat of PR is only used to divide your opponents: the elder Mitterrand stayed in power by introducing PR. It gave Jean-Marie Le Pen’s National Front a couple of MPs in the National Assembly and was abolished two years later, but that was enough to ensure the FNs political durability, while keeping marginal constituencies out of the Right’s hands.

The French do think, however, that Cameron was right to ignore those hard-liners who felt it might have been better to leave a Lib-Lab coalition to make a hash of things, before calling another election. Sarkozy has few Shakespearean traits, but he does understand about tides in the affairs of men. Victory should always be seized, he would say, and has a momentum of its own.

© Copyright Telegraph Media Group & Anne-Elisabeth Moutet 2010

Elites, élan et l'Etat

The Ecole Nationale d'Administration is a launch pad for meteoric careers in the civil service, politics and industry. Anne-Elisabeth Moutet asks how its unabashed elitism will serve France in the 2000s

They are all alike. Or at least they look it. Smooth, clever, quick with an analysis, sometimes impressively efficient; often infuriatingly flippant and detached from the nuts and bolts of the organisations they run. France is the only country – apart from Japan, with omnipresent Tokyo University ('Todai') graduates – which has a seamless front linking top civil servants, government officials, business leaders, even finance wizards. The President of the Republic, Jacques Chirac, is a member of the club. So is his prime minister (and Socialist political opponent), Lionel Jospin. So are their rivals within their parties. So are the chairs of France Telecom, Renault, oil giant Elf-Aquitaine, 17 of the 20 largest French banks, water utility giant Vivendi, four out of six broadcast television channels (public and private), half the French Cabinet, two-thirds of partners at Rothschild et Cie merchant bank. And so on, and so on.

All these people are graduates of the Ecole Nationale d'Administration, known in France as ENA. It is a government school whose students enter via a gruelling competitive examination (only 120 are admitted each year) and exit with a precise ranking that will determine their careers.

The influence of ENA has been compared with Oxbridge in the UK. It is at the same time more and less meritocratic, ENA-bred technocrats will argue almost convincingly. 'In France, you succeed and are integrated into the highest levels of society only through scholarship,' says one. 'In one generation, you can become a firm member of the establishment. In the US, in one generation you can become very rich but you will not become a Wasp. What is undemocratic is that once you belong to the elite, you will never fail. There are no sanctions, except for political ones, and these are not final, because the same people come back two years later. There is a network of solidarity.'

ENA was created on October 9, 1945, by a decree signed by General Charles de Gaulle, then heading the newly liberated France's provisional government. He wanted to remove once and for all the largely Napoleonic French administration 'that sadly had shown in 1940 how obsolete it had been allowed to become'. Behind this lay an old French fear – the defeatism and failure of its elites, as shown by the large number of high-level collaborationists in the Vichy government during the Second World War. Much the same had happened in 1871, when Professor Emile Boutmy created the Ecole Libre des Sciences Politiques, later IEP (familiarly known as Sciences Po) directly after the French defeat in the Franco-Prussian War.

The school was the brainchild of a future prime minister, Michel Debré, who would later draft the Constitution of the Fifth Republic in 1958. He said he wanted to give 'young students of all conditions' access to the kind of studies until then 'the preserve of the children of the rich Parisian elite, studying at the Institut des Etudes Politiques'. Ironically, Sciences Po, which had fulfiled its promise in 1914, had failed in 1940 to vote for the government of Marshal Henri Pétain, and was nationalised in the same legislation that created ENA.

No one could have known, in the flush of liberation, quite how much influence ENA graduates, or énarques, would eventually wield in France. Yet their image – there are now around 4,500 énarques in France – evolved to evoke some of the very things ENA was created to dispel: a haughty, inbred caste of privileged young men (and about 20% women) firmly believing that their destiny is to rule the country in close association with other énarques, with little more than contempt for whoever is not cast in their mould.

The scarcely concealed real power is evident when you start listing famous ones. According to another study, only 10% of politicians are énarques, yet they hold almost all the high-profile jobs. Of all France's presidents of the Fifth Republic, only two – Valéry Giscard d'Estaing and Jacques Chirac – were young enough to attend the new institute. De Gaulle tended to pick old Resistance companions as his chief ministers, with the notable exception of Georges Pompidou (who, like his contemporary Jean-Paul Sartre, taught French literature in a lycée during the Occupation).

Pompidou's resulting inferiority complex made him pick his own best and brightest from among the énarques, rather than from the ranks of historic Gaullists, whom he felt would always remind him of his wartime attentism, or lack of political commitment. Hence the brilliant careers of politicians and industrialists such as Chirac, Raymond Barre, Michel Jobert, Jacques Calvet and Edouard Balladur. Similarly, the Left had its own énarques: Lionel Jospin, Michel Rocard, Jean-Pierre Chevènement, Laurent Fabius, Pierre Joxe, Jacques Attali, and later, Martine Aubry and Elisabeth Guigou, among others.

The former Speaker of the Assemblée Nationale, Philippe Séguin, as well as his successor, Fabius, are énarques. The governor of the Banque de France, Jean-Claude Trichet, is an énarque. Autodidact big bosses, who may harbour their own opinion of énarques, still hire a few – so that those crucial telephone calls or discreet meetings can always be arranged between 'old colleagues'. Foreign governments send a few of their best and brightest to ENA to have someone who will help them understand France: there is a special programme for foreigners at the school, the only notable differences are that they are not ranked (ensuring they have a better time among the fiercely competitive students) and spend only three months doing a practical trainee stint (le stage) in a French administration, as opposed to two stints of six months for French students. Such high-flyers as the German Joachim Bitterlich (currently tipped to become the European Union's foreign policy representative) or the Briton Matthew Kirk of the Cabinet Office attended ENA; most European nationalities are usually represented, as well as Japan, South America and Africa.

Edith Cresson, that famously crusading anti-énarque, who ordered the school's removal in 1992 to Strasbourg in a failed attempt to lessen its influence, still employed three énarques in the top jobs among her staff when she was prime minister. Probably the most accurate criticism I have heard of her was that 'she didn't know how to pick her énarques. The ones she got were absolutely the wrong ones, no charisma or organisation. They let themselves be trampled all over by everyone else's énarques during inter-ministerial staff meetings. Of course, later she gave up on énarques and hired her dentist.' Thus speaks another énarque – a chief of staff for one of Cresson's former ministers.

You can rise pretty high in France without belonging to this caste but, as the example of the late prime minister Pierre Bérégovoy shows, you are never allowed to forget that you are not quite top drawer. You will not be forgiven your mistakes. Bérégovoy – driven to suicide in the early 1990s by the disclosure of an interest-free loan he was given by a shady business friend of François Mitterrand – was the target of cruel jokes from members of his own government. Interior Minister Pierre Joxe, himself an énarque and the son of a Gaullist minister, once 'defended' Bérégovoy against criticism by remarking: 'You only have to look at Pierre Bérégovoy's socks to know he's an honest man.'

What is conveniently forgotten is how weighted the scales are in favour of those students who already know what the game is all about, usually because their families have been there first. The oral examination that ends the round of written tests to get into ENA is as much a test of social ease, a certain type of detached repartee, of social background, as it is of general knowledge. The selection committee, which in addition to professors, includes old boys and girls of every variety, tries to put the student off, with questions such as: 'What trade did [JM] Keynes' wife practise?' (One student who actually knew the correct answer – a Ballets Russes dancer who ran with the Bloomsbury crowd – was still not passed: he had committed, he recalled with bitterness 30 years later, the cardinal sin of shooting back his answer 'too earnestly, as if I were sitting in a quiz show instead of making a flippant joke of it'.) 'Who, for you, is the woman who best represents the average French female?' 'Do you prefer Athens or Sparta? Talleyrand or Fouché?' The same unlucky candidate gave Michèle Morgan as the epitome of French femininity, only to be countered languidly by a white-haired diplomat with: 'But what about Brigitte Bardot?'

The two-year course includes a practical stage in an administration, state-owned company or even a foreign country, as well as lectures in public law, economics, history and political science. Tension is kept at a high pitch; the final exam includes a ranking that effectively will decide the énarques' future career for the next 40 years. Only the top 15 students of their 120-strong year at ENA (la botte) can join the civil service grands corps (Inspection des Finances, Cour des Comptes and Conseil d'Etat). These are inter-ministerial bodies that control state finances and procedures of the state administration. Inspection des Finances is by far the strongest network – they are superénarques who believe they are a different breed from all other énarques. Most of them then go on for a stint at the French Treasury: no anti-Frankfurt advocates need apply. The rest will become préfets, diplomats, and so on, their networks never as high powered as expected; their careers and pay never quite hitting the heights.

The result of this inbreeding, critics have repeatedly warned, is to create structural weaknesses in the French economic and political fabric, a tendency to do deals with one's peers rather than let them assume the full weight of their decisions – witness the constant bailing out of ailing French companies by the government, from Dassault to Air France.

The French elite rise to the top without any business experience; they apply to every situation the strong authoritarian hierarchic mould they learnt in the civil service; they are remarkably insular and ignorant of the world outside France. For example, Jacques Attali insisted that an 'Anglo-Saxon plot' had cost him his job at the European Bank for Reconstruction & Development, not his lavish spending on the bank's headquarters. They demoralise the majority of civil servants, politicians, and businesspeople who, knowing they are not members of the club, realise that most top jobs will escape them, even if they have spent an entire career in their company or political party.

Unlike Whitehall civil servants who come from a slightly more varied academic background, even if a great many are Oxbridge, they have read an infinity of different things there, énarques have spent their formative studies swotting on narrow subjects. 'While the studies were of a very high level,' remembers one British énarque, who enjoyed his time at the school, 'I found it impossible to have real debates with my classmates. They were amazingly bright but they would never "waste time" in conversation or intellectual debate when they could be gaining the few points that meant a difference in ranking. All they always wanted was "the right answer" – it dismayed many of our lecturers.'

The danger with Oxbridge graduates can be dilettantism; but it has advantages – a sense of distance that the average énarque cruelly lacks. On the other hand, it does not much matter what your social background is when you have been to ENA; the school makes you. And in France, accent and delivery have got to do with education, not background. However, the snobbery is confined within the school. The Inspection des Finances actually prints its own annuaire (listing of past graduates of inspection), distinct from the less exalted annuaire de l'ENA. Anyone thinking that Jospin (ranked in the 80s, foreign ministry) is on the same level as Chirac (ranked tenth, Cour des Comptes) or Fabius (first, inspecteur des finance) is missing a key nuance in French politics.

Through France's mathematical and scientific tradition, and because the only other school that approaches ENA in terms of social promotion is the top engineering school Polytechnique – which your brightest énarques, from Giscard d'Estaing to author Alain Minc, have also attended, énarques are usually much better plugged into technology and business. One example is Michel Bon, chairman of France Telecom, universally acknowledged to be the best among European telecommunications chiefs. Bon, an atypical enough inspecteur des finances that he headed the hypermarket chain Carrefour for several years, really understands what industrial policy is about.

But then French culture is about top-down industrial policy all the way from Louis XIV: anything that requires massive investment and infrastructure, from the high-speed TGV trains to fibre optics, telecommunications, etc. Your average énarque, however, is blind to the 'bottom-up', that 'post-industrial revolution that takes place in the bedrooms of 14-year-olds', as the writer Adam Gopnik once put it. The Internet baffles them – they cannot comprehend that it has no centre.

And yet most members of this elite still feel they have to prove themselves in different areas, always with the detached attitude of the amateur. The solution in France? Literature, of course. Attali, Jean-Yves Haberer, Juppé, Giscard d'Estaing have all written rather bad, bloodless novels. Jean-Claude Trichet writes poems and essays on poetry. Banque Nationale de Paris' Michel Pébereau, even in the middle of the bank's current hostile takeover bid for Société Générale and Paribas, reviews science fiction books for a highbrow magazine. Having monopolised almost all positions of power in France, énarques still crave recognition from circles that they know have little power.

© Copyright The European & Anne-Elisabeth Moutet 1999

Credit Lyonnais bought a studio but loses script

Anne-Elisabeth Moutet looks at the hubris of a French bank that overreached itself

The European, 28 March 1996

THE persistent rumour in Paris is that Jean Peyrelevade, the chairman of Credit Lyonnais, is seriously thinking of jumping ship and joining Lazard Freres as a senior partner. It surprises no one.

Until a year ago, his bank was commonly known as "Discredit Lyonnais" , and it sometimes seemed as though there was no loss-making venture in Europe in which Credit Lyonnais was not involved. However, Peyrelevade was recently able to announce that the bank was in the black for the first time since 1991; although he was not expecting wild praise, he did hope for some modest kudos.

The bank posted token 1995 profits of Ffr13 million ($2.5m) for an overall gross banking income of Ffr43 billion - the latter down by five per cent from last year. Provisions still stood at almost Ffr6bn, encouragingly down from Ffr14bn last year. Overheads were down by 3.4 per cent.

But few French analysts or fellow-bankers were in anything but a scathing mood, pointing out that even after the biggest bail-out in French banking history, estimated at Ffr45bn by the European Commission when it gave it a reluctant go-ahead, 1996 projections were so sombre that it was unlikely that Credit Lyonnais would stay in the black.

Peyrelevade forecast that the fall in French interest rates would cost Credit Lyonnais an additional Ffr1bn to finance its loan to CDR (Consortium de Realisation), the state-backed body established last year to administer much of its debt.

Privately, most Parisian experts believe the cost of this loan will be closer to Ffr2bn. CDR borrowed Ffr145bn from Credit Lyonnais at a variable rate, while Credit Lyonnais refinanced it at a fixed rate on the markets.

THE Credit Lyonnais saga has occupied, and fascinated, the French political and banking scene for almost five years, although measures to contain what may eventually amount to a Ffr100bn catastrophe started only on 10 November 1993, when Jean-Yves Haberer, the bank's chairman since 1988 and the main architect of its all-out expansion, was finally sacked by Edouard Balladur's government. In the meantime, the bank had posted Ffr1.8bn losses in 1992, and was about to announce Ffr6.9bn losses for 1993.

That Haberer stayed so long in office has everything to do with the French system of governance of stateowned enterprises. Credit Lyonnais' boss, like his France Telecom or Thomson counterparts, is appointed by the Cabinet, and usually plucked from the small, incestuous ranks of the upper French civil service, bred in elite schools, mostly ENA (Ecole Nationale d'Administration, Haberer's alma mater); and sometimes Ecole Polytechnique. As the losses mounted and the scandals surfaced -- bankrupt Credit Lyonnais creditors from Robert Maxwell to Giancarlo Parretti made world headlines -- it was distasteful for ministers who had themselves graduated from the same exclusive establishments to throw a colleague to the dogs.

Haberer belonged to ENA's creme de la creme, the Inspection des Finances, a state body that creams off only the five best out of each 120-strong ENA class annually. He had then headed the French Treasury during the presidency of another Inspecteur des Finances, Valery Giscard d'Estaing, before branching out into the private sector and chairing Paribas. Cross the Inspection des Finances with the senior ranks of the Treasury's alumni, and you find a list of a couple hundred men -- and few women -- who are the most powerful figures of France.

Haberer's fantastic ambitions for Credit Lyonnais become clear from a list of its major fiascos. In 1990 it financed, to the tune of $1.3bn, Giancarlo Parretti's takeover of MGM studios, through its Dutch subsidiary Credit Lyonnais Bank Nederland. During the 1994 National Assembly parliamentary inquiry hearings into Credit Lyonnais, it emerged the decision to go ahead with the MGM deal was taken in half an hour by the Credit Lyonnais executive in charge of foreign subsidiaries, Georges Vigon.

Vigon, who had not even consulted his direct boss, Alexis Wolkenstein, had previously been forbidden by Haberer in writing to grant any new loans to Parretti. But this did not prevent him from stepping in after Time-Warner withdrew from a similar deal a few hours before the projected closing. Episodes like this were common under Haberer.

Such was the bank's gung-ho culture at the time that Vigon was congratulated rather than sacked. Parretti has since been declared bankrupt by American courts, while his Credit Lyonnais-financed partner, Fiorino. Fiorini's Swiss company SASEA, now insolvent, is the object of a Swiss judicial inquiry. Credit Lyonnais still owns the loss-making MGM, which it has unsuccessfully tried to sell off ever since.

In 1990 Credit Lyonnais also bought, for Ffr250m, a controlling interest in the indebted International Bankers bank from its owner, Jean-Maxime Leveque, another Inspecteur des Finances and Haberer's predecessor as Credit Lyonnais chairman. A flamboyant right-wing establishment figure, Leveque, having chaired French bank CCF before its 1982 nationalisation, fancied himself a banker; and it would have been bad form for a fellow inspecteur to deny him. Not only did International Bankers specialise in risky property financing it turned out that several of its top executives had been receiving illegal commissions to extend loans. International Bankers is now in receivership, with few of its Ffr8bn debts expected to be recovered.

Since 1977 the maverick businessman, politician, film actor, and football impresario Bernard Tapie had enjoyed a special relationship with SdBO (Societe de Banque Occidentale), a wholly owned Credit Lyonnais subsidiary specialising in financing buyouts of bankrupt companies.

BASICALLY an asset-stripper, Tapie outreached himself with the buyout of Adidas in 1990, which Credit Lyonnais forced him to sell two years later to a consortium headed by former Saatchi & Saatchi chief Robert Louis-Dreyfus for Ffr1.6bn, as his outstanding debt to SdBO stood close to Ffr2bn.

Since Peyrelevade's arrival, the Tapie affair has degenerated into a blood feud. Peyrelevade, a born Marseillais of modest origins, resents Tapie's political ambitions in Marseille as well as his flamboyant, Credit Lyonnais financed lifestyle. He ordered that Tapie's 18th- century town-house and antique furniture be publicly repossessed in the summer of 1994.

Tapie is suing Credit Lyonnais. He claims that he was forced to sell at a loss; Adidas was successfully floated on the Frankfurt stock exchange last year, and stands at a Ffr11bn market capitalisation.

Credit Lyonnais' nose for a bad loan was unrivalled; its poor customers include Eurotunnel and the developers of Canary Wharf, Novalliance venture capital and the Jacques Fath couture house. If Credit Lyonnais was not top of the list of French banks hit by the property crisis, it is partly because losses sustained by other banks were even better publicised. In fact, the Lyonnais shared the property disaster, mostly with the developer Michel Pelege.

Pelege, like La Défense developer Christian Pellerin, is still afloat -- entirely propped by Credit Lyonnais, which feels it would stand to lose more in bankruptcy proceedings. SdBO is stuck with an unsaleable property portfolio -- the "assets" unsuccessfully stripped by its stable of dubious 1980s turnaround specialists, such as the disreputable Pascal Jeandet, who was bankrupt when he died two years ago, costing SdBO Ffr1bn.

The European Commission gave its agreement to the government bail out on condition that Credit Lyonnais sold 35 per cent of its foreign banking network. This leaves Credit Lyonnais with a reduced income basis at a time when even sound banks find it hard to make money in commercial activities. Haberer's ambitions of creating a German-style universal bank are dead: Credit Lyonnais has also been forced to shed most of its industrial portfolio.

Reduced to the state of a chronically unprofitable rump, Credit Lyonnais is short of expectations, and bereft of hope. It is hard to fault Peyrelevade for thinking of jumping ship.

© The European & Anne-Elisabeth Moutet, 1996