‘We Wish to Invest in the Future of Russia and in the Relationships between France, the EU and Russia’

On December 18, Bruno Le Maire, French Minister for the Economy and Finance, delivered an open lecture at HSE. The following article summarizes the key points of his talk.

On reforms in France

Transforming France is not an empty formula. We are proud of our welfare state and the equal society it ensures. We do not want to change that. But for too long, we have been addicted to public spending. Debt and taxes have become excessive and they weigh on our economy. For some, France had become synonymous with heavy taxes, but now when people think of France, they think renewal, recovery, innovation and competitiveness. Now we believe we need to create wealth before spending it.

We need to create the right conditions so that businesses can be profitable – so that they invest, innovate and create jobs. We have already changed our labour laws to make them more flexible and to make it easier for companies to recruit workers. We are overhauling our tax system. Our corporate tax will be lowered to 25% over five years. We are introducing a flat tax of 30% on capital revenues – to encourage both French and foreign investors to invest in our country.

We are encouraging innovation through a special tax credit. In early 2018, we will create a new fund of about EUR 10 billion to finance disruptive innovation. We believe that innovation is the key to a country’s success. Countries that will be able to support innovation, particularly disruptive innovation, will have an advantage. Those that fail to do that will be dependent on other countries, such as the USA and China. Even if we have a great relationship, we don’t want to have to rely on the USA and China for the innovative developments of the future.

Many more reforms lie ahead – for our pension system, our unemployment insurance system, and our educational and training system. We are determined to tackle all of these issues in the coming months. Our aim is to build a stronger economy where companies are able to grow, export their goods, and create new jobs.

On the position of France and Europe in the global economy and politics

The consequences of our reforming agenda are already being felt: the French voice is being heard once again in Europe. In other words, France is back. I’ll give you one example. In the space of a few months, we have managed to completely change the debate on taxation of internet giants, such as Google, Amazon, Facebook, Apple, and Microsoft. For too long, these companies have been able to make huge profits while paying very little tax in countries such as France and Germany. This cannot go on. It is not fair. Smaller local businesses pay their taxes, why should very successful internet giants not pay theirs? It also puts our welfare state at risk. Under France’s leadership, we received support from Germany, Italy and Spain. We presented a common project to all EU members, which has already been supported by 19 European countries. I am confident that we will have a new legally binding framework in place within two years.

We need a stronger Europe that stands up for its own interests and that is able to compete at the same level with the United States and China

Paris and Frankfurt are competing to become the new EU’s financial centre. Paris has a number of advantages. We are changing the taxation system and making it more attractive for foreign investment. I believe that Paris also offers a better financial regulation. In addition, France is now the leader in ‘green finance’, and the future belongs to it. I can give you one more reason: ask the ladies, where would they like to spend the weekend – in Paris or in Frankfurt?

I am deeply convinced that we need a stronger Europe that stands up for its own interests and that is able to compete at the same level with the United States and China. This is even more important in today's world with the United States taking more and more unilateral decisions that have a tremendous impact on the European and global economy. This is true for climate, the tax overhaul they are designing, and for sanctions.

Undoubtedly, the USA has the right to change its tax laws, as do we. But we have concerns that this reform will lead to double taxation of the U.S. companies operating in Europe and to them possibly leaving European markets, which would be a huge loss of jobs. This is why finance ministers from five leading European states have expressed their concerns in a joint address to the Trump administration.

China already has a clear view of its global role, but Europe has a position on the global stage as well. We should be united, we should be stronger, and we should transform Europe into a real economic and political power. This is the agenda for the next five years, and this is the goal being pursued by President Macron.

Bruno Le Maire, French Minister for the Economy and Finance

On the future of French-Russian relations

I am deeply convinced as a Gaullist that it is in our common interest to reinforce the links between Europe and Russia, and France can play an essential role in that. For us, Russia is a special country, a huge one with a huge history. You cannot talk about Russia without strong feelings. No one in Europe is indifferent to Russia. What we want in our relationship is pragmatism, honesty and clarity. We must be open and direct about our disagreements. We need to talk about them if we want to get rid of them.

There are third-party sanctions hampering our economic relationship, and we all know that. There are also European sanctions – and for the time being the conditions have not been met for us to lift or alleviate them. I hope that will change, but it has not yet. But within those constraints, we can still develop economic partnerships. We should be enthusiastic where we agree – and this is where we want to act. Our two nations have always traded, and even though some channels are blocked, we can exploit others.

It is in our common interest to reinforce the links between Europe and Russia, and France can play an essential role in that

A few days after his election, Emmanuel Macron invited President Putin to Versailles. It was a reminder of Tsar Peter’s visit in 1717. It was a nod to history and a way to highlight the depth of our historical bonds. That day, Macron proposed to Putin that both countries should give a renewed impetus to our economic and industrial partnership. And we will do so. CEFIC (Franco-Russian Economic, Financial, Industrial and Trade Council) did not meet in 2015, but it was reinstated by Macron when he was Minister for the Economy in 2016, because he knew how important our ties to Russia are. And now, we have jointly decided to convene the CEFIC twice this year.

France and Russia have built strategic partnerships over time – on space programmes, energy, and car manufacturing. In space programmes, our cooperation began when Russia was still part of the USSR. As our partnership between Roscosmos and Arianespace illustrates, our cooperation has been strengthened over time. On energy, cooperation is alive and well as recent events in Yamal highlight. The work of Total and Novatek has been impressive (editor’s note: the companies are jointly building a natural gas liquefaction plant in Yamal). A revolution is coming in the power industry, and leading French companies are ready to invest more and more in renewable energy sources. The main issue here is the storage of such power sources, and we are ready to cooperate with Russia in this area.

Today, France is the top foreign employer in Russia with nearly 170,000 jobs. Almost all of our major listed companies – the so-called CAC40 – are present in Russia. But we don’t want to merely trade with Russia; we want to invest in the future of Russia and in the future of the relationships between France, the European Union and Russia.

We see that Russia is shifting towards a new economic model, and this is good news. Russian officials are setting new priorities, where the development of Russia’s own market is key. Russia wants to reduce the volume of imports and develop domestic companies. I believe Russia is right in trying to diversify its economy. The country wants to invest in innovation and new technologies, and this is essential for any country. The best example of this resolution can be seen in Skolkovo. This site is evidence of the vitality and dynamism of Russia. It is evidence of the talent of its young people. We believe that we have much to bring you in this global project.

On reciprocity

To develop our economic ties, we need them to be based on rules – mutually agreed and mutually respected. We are ready to help and play an active part in the Russia of tomorrow, but we need to ensure that cooperation is well balanced and mutually beneficial.

One aspect that is fundamental is reciprocity. I said this to our Chinese friends only a few days ago during my stay in Beijing, and I say it to all our partners. We believe in open economies. It benefits everyone. And we don’t believe in protectionism, which can only lead to economic wars. But no one can accept a lopsided and unbalanced relationship. We need a level playing field. I am convinced this will help improve relations between our countries and the economic situation in both France and Russia.

Research and innovation must be the driving force of our future relationship

Research and innovation must be the driving force of our future relationship. Together with Minister Orechkine, we are launching a common work on the ‘City of the Future’. I am convinced that it paves the way for fruitful cooperation between our companies for the citizens of our two countries.

In summer 2018, Russia is hosting the World Cup, and in May 2018, President Macron will visit the Saint Petersburg Economic Forum. These two events will be a unique opportunity to show that Russia’s relationship with the rest of the world is not only about geopolitics but also about citizens. Our societies and our companies can cooperate and share common passions: passion for sport, literature, music and the arts, as well as passion for innovation and for new technologies. I am relying on the students, the new generation, who keep these passions alive.

HSE’s Partnerships with France

• 70 active agreements with 38 French universities, including 14 double degree agreements;
• 10 staff members at HSE are French citizens;
• 4 French citizens are now studying in the HSE Preparatory Year; 12 French citizens are studying in our Master’s programmes; and 40 French students are enrolled at HSE as part of exchange programmes;
• The HSE Centre for Fundamental Studies provides annual support to around 20 international research projects with the direct involvement of French scholars;
• For more than a decade, HSE has been organizing ‘France and Francophonia Today’ - an international research conference for students;
• In 2017, HSE took part in an initiative to create the French-Russian Interdisciplinary Scientific Centre J.-V. Poncelet (ISCP), which aims to develop projects in mathematics, physics and informatics.