Elf's management had firmly believed France's interventionist-minded Socialist government would protect it from the unsolicited proposal, the biggest of its kind in recent European history. However, the following day, in a move that sent the stock prices of both companies soaring, Finance Minister Dominique Strauss-Kahn declared that if the deal went through, he would not impose a governmental veto. The veto power stems from a minority share the state kept following Elf's privatization in 1994 in order to block any merger that threatened national security. Socialist France is isolated in the European Union with a rigid, archaic, centralized, state-controlled system of governance that contrasts with moderate, leftist governments elsewhere. Economic weaknesses abound, with economic growth nowhere near the 3 percent expansion promised by the Socialists for 1999.
Unemployment remains at double-digit levels.
The Socialist-led coalition government of Prime Minister Lionel Jospin is weak, divided, and ideologically motivated, threatening the nation's sovereign rights in the European Union. But social, economic, and political changes are accelerating faster than many people realize. In the June 13 European Parliament elections, French Socialists triumphed, while far more moderate British Labor and German Social Democrat candidates were defeated. Contrary to popular belief, France is operational inside NATO and with its EU allies, notably Germany and the United Kingdom, and is pressing for a European defense pillar within the alliance. Economic growth next year, according to most forecasts, will rise by between 2.5 and 3 percent, up from 2.3 percent growth expected this year, with gradually falling unemployment.