The man who sold the world

By Benedict De Meulemeester

By Benedict De Meulemeester on 12/05/2009

Do you know the David Bowie song later covered by Nirvana? The chorus goes “oh no, not me, I’ve never lost control, you’re face to face with the man who sold the world”. That phrase seems to apply more and more to the politicians that currently try to run Belgium. Selling off economic infrastructure to France seems to have become a natural reflex to them. We Belgians are still trying to figure out why our largest bank Fortis had to be sold to BNP Paribas, a French bank of course. This week we come to the even more surprising conclusion that not only a huge majority of our electricity production is in French hands, now almost all of it is. EdF is buying a majority stake in Belgium’s second largest power supplier, SPE/Luminus. Earlier, GdF merged with Suez, acquiring the majority stake in Electrabel, the biggest power producer. Both EdF and GdF have the French state as their largest shareholder. This brings us to the stupefying conclusion: 99% of the Belgian electricity production is now in the hands of the government of our Southern neighbors!

Do not understand me wrong: I have nothing against France, on the contrary. Recent economic developments have shown that the much vilified French economic model of ‘dirigisme’ has its merits. But having almost all your power production controlled by a foreign government, what should that do to our peace of mind? Especially since representatives of that government (including the president) have repeatedly made clear that for them energy supply is of big political-strategic importance. One French foreign minister said last year that according to him the next world war would be over energy supply. I can’t help but thinking that acquiring a majority stake in the power supply of a neighboring country must look like winning the first battle to him.

Visiting the Elysée presidential Palace in Paris as an official visitor must be an extraordinary experience. There is of course the grandeur of the City of Lights. The Palace is immense. A row of guards with helmets with feathers is awaiting you. And out of the door comes the vibrant Nicolas Sarkozy, hop/hop off the stairs and crushing your hands with his powerful grip. If you are lucky, you might even catch a glimpse of the President’s lovely wife Carla Bruni. The current prime minister Herman Van Rompuy and his predecessor Yves Leterme seem to enjoy it immensely, if measured by the number of visits that they have paid. I suppose that during these many talks they have uttered the word ‘energy’ at least as many times as ‘banks’. At some point, they have to start wondering whether they are still the prime minister of a sovereign country or whether they are the viceroys of a recently acquired French colony.

I know that our government will respond that they were not involved in the sale of SPE/Luminus to EdF. That’s true, but they were involved in the negotiations on the Suez – GdF merger. The government of Guy Verhofstadt obtained the option to get a ‘golden share’ in the new merged company. This would give the Belgian government the possibility of blocking strategic decisions by GdF – Suez that harm Belgian interests. The following government, headed by Yves Leterme and embattled in discussion over Flemish – Walloon relationships and its bank rescue attempts, failed to enforce this golden share option. I am not in the forecasting business, but I think there is pretty good chance that in the future we will look back upon that as a crucial step in the loss of control of Belgium over its own power supply.

One professor was quick to point out that it might be a good thing that SPE/Luminus will become part of EdF. EdF is one of the largest energy groups in Europe and its presence in Belgium as the number two player should strengthen competition in the Belgian market. I sincerely hope that the man is right. But experience so far is not really promising. EdF hasn’t used the cheap production prices of its French electricity to overflow the surrounding countries with cheap power. On the contrary, it rather generated extra income on the higher wholesale market prices of countries abroad to make up for the loss of income that it suffers in its homeland France, where it is obliged to offer lower regulated prices to the customers. But OK, EdF is indeed a powerful company with great achievements and I have met with many competent people from EdF. Let us have the audacity of hope and call upon them to use the newly acquired position to make things move in the right direction in Belgium. The development of a more transparent and trustworthy wholesale power market is on top of our wishing list. Let us hope that international politics is less cynical than it appears to be. Let us hope that the bosses of EdF and GdF-Suez will not be called to the Elysée if their Belgian branches engage in the sort of all-out competitive battles that liberalization was supposed to bring to us.


Keep up to date with E&C