JPRS ID: 9866 WEST EUROPE REPORT

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JPRS L/9866
23 July 1981
_ WEST EUROPE REPORT
(FOUO 34/81)
CONTENTS
TH1611TER FORCEB
FRANCE
Nuclear Artil.~ery'a Responaibilit3es Examined
(Phili~pe d~Anselme; AI~B.S D~AUJO~IBD~HUI, Jun 81) 1
� ECaN~IIC
FRANCE
Importance af Armg Exports $np~asized, Justifi~d
(Frarioois d~Oriva].; VA~SURS ACTUELT~3, 19 Jun 81)........... 4
ITALY
GIPI P7.ana for Auto, Air Indaatriee
(IL sOLE-24 O~tE, 23 M+~y 81) 8
~nda for Industry, by Maeaimo (}aggi
Tougher World Market Competit3.on
Longer Terma With Easier Credit
Auto Plans
Plan for Aeroapace Industry Unveiled
Qualitative Zeap in State Intervention, by
Vittorio Barattieri
Unfavorable Reaction to 30 Percent Import Deposit Measure
(IL COARIFRE ~LI,A 3ERA, 29 May 81) 21
Receseion Feared, by Alberto Capisani
New Measures Discusaed, by Paolo Glisenti
- a - [III - WE - 150 FOUO]
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POLITICAZ
_ FRANCE
Second Round Abstentione A.ffect I,egislative Elections
- (VALEURES ACTUELLES, 27 Jun 81) 26
GENERAZ
FRANCE
New SDECE Director Fierre MarionTS Past Outlined
(Jacques Rena,rd; L~EXPRESS, 26 Jun 81) 31~
Arianesp$ee Seeks 30 Percent of World Satellite Launch Market
~ (Pierre Zangereux; AIR & COSI~SOS, 13 Jun 81) 3b
SNPE Building Dimethylhydrazine Plant at Toulouse
(Pierre Langereux; AIR & COSMOS, 13 Jun 81) 42
-b-
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F'OR OH'N'1('IA1. USN: UNI,Y
TFiEATER FORCES FRANCE
NUCLEAR ARTILLERY'S RESPONSIBILITIES EXAMINED
Paris ARMEES D'AUJOURD'HUI in French Jur~ 81 pp 31-32
~Article by Col Philippe d'Anoelme*~
- ~Text~ The nuolear artillery, the u~e of which is �ubject to deciaion by the
preBident of the Republic, is pregared at all timos to perform itis miasion, thanks
to its specialized training, which is carried on at an intene�ve pace anc~ under
the most realietic conditions commeneurate with strict observr~nce of peacetime
safety requirementa.
Under its deterrent policy, France decided, around 1965, to e~uip itself with the
ANT ~Tactical Nuclear Weapon~. The ground-ground weapons system was placed under
the Ground Forces and entrusted to the artillery.
The first Pluton regiment came into being in 1973, and with it the nuclear artil-
lery--the fourth subdivision of that arm after the ground-ground artillery, the
ground-air artillery and the acquieition artillery. ~
- This new component occupie� a privileged placs among the diff~rent ones of the
Ground Forcee. By its presence ~lone, it bringe a permanent threat to bsar upon
all potential en~mies whiah i~ not meaourable in t~rm~ of conventional forcea and
which compels them to bear oonetantly in mind the risk tlsey wc~uld incur. Ita uae,
eubjec~ ae it i� to the deai~ion of the presidsnt of the Republic, hae an eesen-
tidlly politicdl signifiaance.
For all that, however, the nuclear artillery doee not operate independently of
the conventional forces. In fact, a strike having been decided, it must be
carried out with maximum military effectiveneas and must destroy a significant
* A graduate of Saint-Cyr (clasa of Extreme-Orient) and holder of a nucleaz tech-
nical certificate from the National War College, Col Philip~e Anselme, after
- aerving in the antiaircraft artillery and in ALAT ~Ground Focces Tactical Air
Support~, occugied successively positions in the Atomic Section of the DMA ~Min-
isterial Directorate for Armaments~, the 3rd Division Artillery Headquarters and
the Research Department of EMAT ~Ground Forces General Staff~. Presentl~, he is
r?uclear deputy and artillery chief of ataff of the 3rd AC ~Ar;ny Corps~.
1
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part of the forces opposing us. Thus, the nuclear artillery, while subject to
orders issued directly by the president of the Republic for its commitment to ac-
tion, is an integral part oE the line orgar.ization, af which it is a major but
not a distinct compon~nt.
Fully integrated into the conventional forces, to which it a3ds considerable
fighting capability, it takes part in maneuvers on the aame bsr~is as the other
formations. Subject to the same threate and the same hazards of combat, it has
the characteristics of flexibility and mobility needed to ac7apt constantly to
fluctuations in the battle.
Er,suring Interventional Capability at All Times
The nuclear artillery consists of five RAN's ~nuclear artillery regiments~
equipped with Plutons, each consiating of three artillery batteries equipped with
two AMX 30-type launchers per battery, plus one BRG ~general xeaerve battery~. The
launchers are capable of delivering warheads at a diatance of 120 kilometera with
an explosive power equal to one or three timea that of the Hi:oshima bomb.
The RAN, with an authorized strength of around 1,000 men, thr~e-quarters of whom
are draftees, ia basically charged with activating the warhea~s and launchers in--
volved in carr ing out the orders received from the higher echelon, to which it
assigns ECL's ~headquarters and liaison teams~ on detached service. To Eulfill
its mission, it has available many high-performance facilities, particularly in
the field of communications.
Artillerymen also man the two intermediate upper echelons in the ANT activation
_ chain, linking the national high command with the launchers: The artillery sec-
tions of army and army corps. Aasigned to the operations centers of these two
major headquarters and working in close liaison with the other aections, they are
basically reaponsible for the prepara~ion and execution of the strike within the
space-time framework ordered by the head of atate. The army artillery section is
specifically chmrged with de~ining the nuclear artillery miasiona and coordinating
ground-ground and ground-air nualear operations in its zone of interest; the army
corps sectiona are charged with responsibility for ordering the RAN'e into action
and defining the targete to be hit by each. To carry out their mission, these
sPCtiona are also equipped with their own specific majar rneans of communications
designed to quarantee reliable links among them and with the national high com-
mand.
Highly developed qualities of readinesa and know-how are required on the part
of the nuclear artillerymen to ensure that the ground-ground tac:tical nuclear
component will at all times be in a position to respond to the orders of the
president of the Republic with maximum speed, security and effectiveness. Their
actions must be characterized by inherent dynamism, strict compliance, expertise
and precision.
They are therefore subjected, in time of peace, to an intensive curriculum of in-
arruction and training. Spscific exercisea conducted at the national or regimen-
tal levels test the effectiveness of the apecific procedures far committing and
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using the AN~. Tactical exercises, within the framew~rk of the maneuvers of
large line unita, accuetom each of the teams to living in t.~ie operational environ-
ment and paae the forces might be called upon to endur.e.
From the safety standpoint, it is important to note that, inherently, nuclear
weapons present no particular dangers, becauee they conaiat of three distinct
elements that are not brought toqether until the moment of firing ~nd that, aepar-
ately, Are, as a resul~ ot their v~ry design, not dangerous. Moreover, so as to
avoid all pog8ibilities of aeaid~nt in time of psdce--negligible thouqh the prob-
abilities are--inert co~nponents havinq ~11 the aharacteristics of the real weapon
en~ble trait?irag to be carried out under aonditiorto that are in all respecte iden-
tical ~s those prevailing in time of arisie or wer.
In addition to their inetruction and treininq aottvitiee in ~ime o~ peace, the
RAN'~ aleo implement :.he securi~y of the depots in which the ac~i~e elements of
the weapona are kopt. To this e~feot, the RAN'e are equipped with ~ubatantial
tacilfti~a �ar keaping them const~ntly informed oE everything. that takes place at
theae sites, an8 enabling them to ~t?ut off ~voe~s as~d react instantly to any
occurrenca.
On the other hand, the RAN's are exempt from any territorial obligations, which
permits them ~o devote all tk~eir time to operatianal trainin~, on a wide-open
basia, and to the security of their installatione.
Ae a key ground forcea component at~d an importatst deterrent element, the nuclear
artillery occupiee a place of first order of importance in the lot Army. Through
its total integration into the forcea, it partioipate~ in all the possible forme
of modern combat.
COPYRIGHT: 1981 - Revue des forces armees francaisee "Asmeea a'aujour8'hui"
9238
CSOs 3100/798
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ECONOMIC FRANCE
IMPORTANCE OF ARMS EXPORTS EMPHASIZED, .TUSTIFIED
Paris VALEURS ACTUELLES in French 19 Jun 81 pp 23-25
[Article by Francois d'Orival: "Arnns for Export"]
[TexC] France ie condemned. to exporting arms--to pay for its
- oil, but also to assure its security. The king of Arabia's
vieit to Parie was not unrelated to this.
"Must aIl great politics necessarily be moneyless, frank and providers of charity?"
While lunching at the Elysee on 13 June, the minister of foreign trade must have
had in mind thie line from his latest monthly report (June, 198'1). The president
of the republic had placed him to the ri~ht of King Khalid. The minister had been
niclmamed Jobert of Arabia when, 7 yeare ago, Georges Pompidou appointed him
minister of foreign affairs and he negotiated in the Middle Eset some of the first
long-term oil contracts, namely with Arabia, more precisely the Emirates and Iraq.
Last Saturday the king of Arabia and the French chief of state said good-bye,
satisfied and reassured by one another of agreement on essential points, such as
condemnation of the Israeli raid on Iraq and the right of existence of the Pales-
tinians. But these were not the moet essential points for either leader.
"Large scale mechanics, nuclear energy and arms deaerve a better ~udgment than that
provided by emotions," Mr. Jobert also wrote in his lateat repo=�t. "We are too
vulnerable to sudden policy changea to take chances without risl:ing serious dis-
appaintments." Hie report was entitled: "Foreign trade, the imFeratives." In
sum, King Khalid eaid, "We will continue to rely on France and to buy from her."
In Middle Eastern strategy King Khalid ie a"fuse" for the free world. He is its
- principal eupplier of energy. Without him. the French, Italian and Japanese eco-
nomies (to mention only the most dependent) would cease to function. r'rance bought
39 mi111on tone of crude from him laet year, half of the oil we receive from the
Perei.an Gulf, at a price af ~7 billion franca.
I3ut the king has also signed building and public works contracts worth 6 billion
franca with Bouygues and Dumez. More important, 8 months ago he ordered 16 billion
francs worth of naval arms, helicapters and electronic equipment. Two weeks ago he
awarded a Franco-American consortium (Aerospatiale-Ford Aerospace) a contract to
supply Arabsat satellitea (one billion francs).
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Before initiating negotiatione for the enormoue arms deal concluded laet Octaber,
the Arabian court awaited the ma~ority`s victory in the March 1978 elections. What
was it going to do after Mitterrand's 10 May victory? Mitterrand got a head start:
he immediately sent his brother, General Mitterrand, president of Aerospatiale, to
Riyadh with a le~ter of invitation to Paris. And Aerospatiale was the f irm that
got the aatellite contract.
While King Khalid was lunching at the Elysee with the president, Jobert, Cheysaon
and Hernu, General Mitterrand wae at the I~e Bourgmt Exhibit~!un listening ta a e,peech
by the prime minieter, Pierre Mauroy, who was himself in the procese of reassuring
4,000 industrialiate and engineers in the fields of anas and aeronautics.
"I would like to empha~ize," he told them, "that our iraternational commitments in
the arms f ield, as well as in non-military areas, will be honured. French indus-
trialiste are and alwaqs will be steady and reliable partners."
French industr{alists breathed easier. Mauroy hadn't aven mentioned nationaliza-
tion, and had $ffirmed, "It will be necessary, within the framework of the commit-
ments made by the president, to maisttain the place which French aeronautical in-
duatry has reached on the world market."
The question was, then, what are these commitments of the president? Symbolically,
his attitude ane we~k earlier had caused apprehension.
The chief of state was auppoeed to open Le Bourget Exhibition on 5 June. On the
second, Mitterrand's spokesman.~ Michel Vauzelle, went to Le Bourget to prepare for
the opening. Did the exhil~its of arntamente, miseiles and arms systems frighten
- him? On the fourtY., the Elysee eant a message to the general ~anage~aent of the
Exhibition: please diaplay the French planes without arme during the visit of the
chief of state. The rockets and miasiles disappesared. (Their ~a3or private pro-
ducer, Mr. Lagardere, president of Matra, thought it would be better if he, too,
wer~ not present during the president's visit.) ~otion. What si.gnificance ahould
_ be attached to the president's gesture?
.
On the eight at the Praea Club, Mauro~ confirmed that this symbr~lic decision had
been made by the preeidant of the Republic himeelf. Mr. Joxe, minieter of induetry,
expla~ned that the nationali~ation of private arms producers i.~ a'4noral necessity."
Hernu, mini~ter of defense, epoke of "long-term ct~anges of direction" and "moraliza-
tion" of arms eales and added that eelection criteria of clients will he considered,
with "raciats and fascists" being eliminated.
"Well, ahould we disarm?" asked Jacques Chirac during the election campaign. His
- friends apread what an American induetrialist had said to his French colleagues.
"Well now you have your own Carter!"
While await ing new inetru~tions~ the management of international affairs to the
General Arme Delegation (the direct overaeer of the French arms industry) has
suapended ordere for over 2 months. Foreign delegations began cance111ng their
appointmente with SNECMA (National Company for the Study and Construction of Air-
plane Enginea), the national builder of airplane enginea, the day after Mitterrand's
election. At the Le Bourget Exhibition only two foreign cliente of France, Egypt
and Jordan, came with a high level repreaentative (chief of staff or minister);
Indonesia canae with ~ somewhat leeaer level represantative. The biggest clients
- were lese well repreaented than ususl.
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FUK UE'riClAL USE UNLY
The armament industries group (aeronautical, electronic, apace, weapons) employs
280,000 people and grosaes 60 billion francs, of which 30 billion come from exports.
This is 5 percent of our total foreign sales, or one quarter of our oil bill and
half of our trade def icit. On the world market the French are in third place (12
percent), far behind the Soviets and Americans (75 percent between them). But it
is a contested third place.
"We are witnessing a frenetic effort by the British since the election of Margaret
Thatcher," said a French exporter. "We have taken markets from them in areas which
were traditionally theirs (notably in the Middle East and Asia) and thev want to
win them back. And we forget about the Japanese, who will soon be going full steam
ahead. Juet 6 years ago they made practically nothing for their armed forces.
Today, they provide a wide asaortntent. Tom~orrow they wi11 be out looking for
foreign marketa, just like for their other producte."
Charles Hernu, who vis3ted the Satory Exhibition on Tuesday (this exhibition was
limited to ground wespons), knows thie and eaid so: the quality of our military
technology ie recognized throughout the world; this quality, like the price of our
arms, is due to maes production which allows export salea wroee prof its eupporC
reaearch and inveetmenta.
General Mitterrand said the same on 6 June at RTL [Radiotelevision of Luxembourg].
"Our domestic market is very limited and the ecope of our induaCry assumes that we
are looking elsewhere. So we are condemned to export."
At Thomson, an employees' group surprised management with the accuracy of its argu-
ment. The independent employees' union at an electrical appliances factory noted
that the effects of the arms industry contribute "not only to an equilibrium in
the trade balance" but also "to a steady level of employment in less profitable
branches, such as electrical appliances." (See box.) Matra's exporters reaff irmed
this: "Defense for export is a mark of confidence."
The European Airbug program is the biggest success and mainstay of our civil aero-
nautica industry (4c9 f irm or on-optior. orders have been received), but can it aup-
port itself without the help of Aerospatial's military exporta (13 billion in salea,
l~al.f foreign. inclu~ing 70 percent of motore and 80 percent of helicoptere)? The
interruption of arme eales to Iraq alone (moetly motore and hellcoptere) cuuld di-
rectly cause layoPfe at Aeroepatiale's Bourges facilitiea.
General Jacques Mitterrand himself eaid, "Exporte are a decisive trump cara for us."
Qn 6 June at RTL he sdded, "We must unequivocably maintain our competitiveness on
the int~rnational level. If we must orient our policies differently becsuse of
political choices, I cannot diepute this. But new contracts muat be prudently and
effectively negotiatad."
_ Thexe have been three indications of this effectiveness and prudence. General Mit-
terrand went precisely to Arabia to conf irm King ~halid's visit to Paris and to
announce the president's symbolic visit to Cairo before he goes to Jerusalem. At
the same time Mitterrand sent his other brother, Robert, a Polytechnic graduate and
industrialist, to Latin America, specifically Rio de Janeiro, to explain to the
Braziliane that they ahouldntt miainterpret French intentians in Chili or elsewhere.
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t~inally, another industrialist, Robert Pontillon, socialist senator and mayor of
Suresnes and representative to the Thomeon group, heads the interministerial com-
mission responsible for overseeing arms e~cport markets. Pontillon's office is in
the Matignon. He was with Mauroy on 12 June at Le Bourget when the latter stated,
"I confirn~ that the development of industrial enterprises and the diffusion of tech-
nological progress will be one of the gavernment's highest priorities."
As he said this, the prototype of ihe Mirage 3000 twin engine zoomed through the
sky above the Exhibition, comparing its abilities with those of the American F15
which an Israeli squadron usec~ to protect the: raid on Tammouz. Dassault still hopes
that Iraq and Saudi Arabia will be the sourcF~s for financing this Mirage, since our
Air Force has not been able to raise sufficient credit.
Aeronaut iCa and Armaments
1980 Employees Gross Receipts Exports
(in millions of francs) (percent of groas receipts)
Aerospatiale 36,800 13~000 48
Daseault 15,500 10,740 70
- Snecma 11,400 3,485 39
Thomsom 34,000 11,~00 44
' Matra 34,000 5~600 70
The above figures are for induatrial groups and not ~ust the parent company, except
for SNECMA, which includes only the main office and not the braztches. These data
do not differentiate between civilian and military. But they do shc~w, for five of
the main companies in this area (both natianal and private), the number of ~obs
which depend directly on exports.
- COPYRIGHT: 1981 "Valeura actuelles"
9720
CSO: 3100/SO1
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ITALY
ECONOMIC
C~Ip2 P1zANS FbR AU~O, AIR � INDUSTRZES
guiide �or Induetr+y
Milan IL SOLE-2q 0~ in Italiari 23 May 81 p 18
[Article by Massimo Gaggi]
[ Text ] ~n. '~he~ wake ~f the �]~~~tn~~iing day~. i~efore ye~aterday .of -
the plans for the automobile and aviatic,n' sectors, yesterday brougl~t �
another step forward, albeit merel~ procec~u~ral, toward translating the
industrial strategy announce3 by the govsr~ent into nuts-and-bolts
measures: the Senate has at Zast receiv~ecl.~the bill containing mea-
sures in support of applied research and technological innovation in
the "strategic" sectors of industry. The cabinet had apgroved the
bi11 last 16 April, but it has been hangi.ng in Limbo for more than 2
months for one reason or another� includ~.ng ministerial infighting.
As things stand now, the indu~trial policy picture fQr the automotiYe
sector could be sketc;~ed somathing like this: for the first tirae, the
government haa~ laid out (for the automotive and other eectors of indus-
try it considers in need of ~uidance on a"prior.ity" basis) a complete
~'line" of ir~,tervention coveria~ a11 pha~ea from early deeigiz to marke~-
ing of the final product. With refinancing from' the Italian Credit
Institute (IMI) for applied research, industry will g~et 2,400 billio~
lire to use in project desi~ and developmentof individual proj~cta;
in the second phase of off-line production the companies will be able .
to dip into the 1,$00 billa.on lire in the technological innovation
f und which will be managed by the Industry Ministry; in the actual
R mass-production phaae they will have accesa to PL 675 funds for plant
redesign. Lastly, for marketing, thPre will probably be a fund set
up for sales promotion o� industry products abroad.
The government deBerves full marks for putting forth, albeit after some
delay, an impressive effort in the selection of clearcut guidelines for
industrial policy.
Thore are, however, stil.l a few anarle to be combed out, as well as a
f~�~u ambi~uous pointB which might well blunt the effectiveness of the
plan and, in one or two ca+sae, might have untoward counterprodu,ctive
e~fects. Firet of a11, there is the danger that a sluggish passage of
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t;he research and innovation bill through Parliament would postpone the
practical deplayment of the investment support system at a time when
loss of competitive positiona in Italian industry has already reached
very serious leve]s. Much the same might be said of freeing the unused
surglus funds appropriated under PL 657 and of refinancing that measure.
In the s~cond place, there is the well-founded fear that the new plans
might turn out to be merely a repetition of past experience with burea-
cratic delays and red tape that have thus far impeded the workings of
PL 675 and even the IMI research fund.
Then there are two concerns in connection with the content of the plan
for the automotive industry: the first has to do with the commitment
_ to increase employment in the sector which, given current market con-
ditions, does not look very realistic, to say ~;he least. This is a
point on which every effort must be made to avoi d the riak of exces-
sively zealous interpretation. The second concern centers on the com-
mitment to integration of c~raponent production through formation of
industry consortia, and to construction in the South of a new production
center dastined to serve the automotive indu,stry in that area. The
automakers; however, already have their own auppliers operating in the
Southland and prod~zcing everything they need with the exception of some
components which, for reasona of economy of scale, are produced in a
si*~gle ~plant in the North. It would be advisable to get more clarity
as to the needPar keeping the policy af ~'reetoring territorial balance,
necessary though it may be, consistently compatible with the demands of
productivity.
Tougher World Market Competition
Milan IL SOI,E 24-ORE in Italian 23 May 81 p 18
jText) "We had long taken a very positive attitude toward the plan for the automo-
tive industry, and now our view of CIPI's decision to launch the operational phase
of the policy in our sector is equall~ positive."
Clearly, Ettore Massacesi, president of Alfa Rt~~ueo, is convinced that
with the other night's decision the govern~ent has lr~id the groundwork
for a new start for our automotive industry.
"I am not, however, unaware," Massacesi noted, '~that there is still a
gap between the availability of the regulatory structure and the actual
operational readiness of the financial structures; that gap must be
closed bp Parliament, with its approiral of the enabling legislation for
support for applied research and technological innovation, and with new
appropriations for implementation of PL 67$. And here, given the un-
certain~y as to the time it wi11 take to get those votes through, there
is room for legitimate concern."
~Questionj Could a delay in~Ymplementation of the plan give rise-to
= massive slipp~~n in your inveetment p~ane~ And i.f so, what would the
cori~0quencea k~e?
(,AI1SWeT'~ Tt~e world aut~mobile market is ,~oing through a difficult plase
r~i.~;t~t �ow. The trickiest bit for automa.kt~rs will probably come around
19H3-~4~ when alI oP t hem w311 be bringing out a 1ot of new models
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in an at~empt to scratch out ~hares of a market increasingly inadequate
to world supply. That means that we have to go into battle at least as
well armed as our rivals. We have certainly not been waiting for the
sector plan to design our new models, partly because these days the de-
sign and development of a totally new automobile takes a minimum of 4
years lead time. If we are to sustain this research and design acti-
- vity, though, we shall certainly be needing government incentives, some
to finance the investments we must make in new assembly lines; and
here the achedules are tight, since it takes 12 to 24 months just to cut
the dies for bodies."
[Question] Speaking of streamlined machinery: unlike the plan origin-
ally proposed by the Cossiga II government, which called for shortcut
procedures for appropriations to fuel the sinking fund, the present go-
vernment's bi11 ~alks of placing those funda in interest-bearing accounts
and calls �or ~lightly more coraplicated procedurea. What do you think
of this?
[Answer] Appropriations for a sinking fund are certainly simpler, even
if the pro~edure~ are not neceasarily any quicker. I have already told
you,that I cons~.der the rapidity with which the government moves to be
very important indeed. I might add that, in the cass of the autamotive
~ ir~dustry, investraent programs for the production of a new model, for in
stance, ~should not call for overmuch scrutiny since they are, so to
speak, an incontrovertible fact. I do believe, though, that whatever
formulas are adopted ought to a11ow for whatever comments might be forth-
coming from the EEC.
Then, as for the financing tool of help with interest on loans, I have
no particular objections: we are not looking for money as a free gift;
all we are asking for is to be able to get the capital we shall have to
invest with a modicum of convenience and below prevailing market rates.
[Question] The CIPI decision includes expanded employment as one of the
plan's primary ob~ectives. Doesn~t this eeem to you to be a pretty un-
realistic a3.m, given the state of the market?
[Anawcr] It is as things ~stand now. But if there really is n measurable
increase in productivity, our hei@;htened penetration abilities will
~~;imulate increased demand and henc.: more ~obs. I ahould say that we
are moving inta a two-phase operation: the first phase muat usher in
an increase in productivity along with some temporary 1ag on the job
front, painful but necessary to get our production rolling. In the
second phase we should see an increase in demansi greater than the rise
_ in productivity, and that will make room for new jobs.
[.Question] What do you think of the plans' commitment to encourage
c~oser integration among component producers and to set up a new inte-
grated parts and component center in the South?
[Answer] There you have a very delicate issue. On the one hand, while
- reorganization and standardization moves patterned after what has
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been done in Japan are necessary of course, we cannot overlook the
fact that in Italy we have a highly developed components industry.
We must somehow reach some framework of agreement and understanding
among the component suppliers and among the automakers as well. And
as you know, we are looking for partners to work ovith.
Longer Terms With Easier Credit
Milan IL SOLE 24-OP.E in Italian 23 May 81 p 18
[Tex~tJ Increased competition among autamakers internationally for
shares of markets; the need for increasingly swift development of
product innovation policies to grapple head-on with the energy problem
and not to let aurselves be beaten by the competition in the use of new
- technologies such as electronics; and lastly, the rising cost of re-
search investmenta have for some time motivated FIAT to concentrate its
att,ention more vigorously than in the past on the research and clevelop-
ment sectors.
On research alone FIAT is already spending, at the holding company level,
some 400 bill.ion lire per year, almost 250 billion of it earmarked for
automotive R and D. This is a staggering commitment, and to strengthen
it the Turin corporation has on the one hand reached out for interna-
- tional agreements (like the one with Peugeot-Citroen for production of
a new engine), and pushed, on the other, for adoption by the government
of a clear-cut plan for industr~al policy"in ssupport of so vital a sec-
tor as the automotive industry.
When the governraent day before yesterday launched its plan for the auto-
motive sector and with the bill, approved on i6 April by the cabinet,
for refinancing the IMT fund for applied research and for establishment
of the special revolving fund for technological innovation, the govern-
made has responded to the sector's problem~.
'1'his "line" of patterns For government intervention (discussed in det ail
elsewhere on this page) indeed eeems to cover all the key sectors of
industry� As to the workabil3ty of the machinery adopted, however,
quite a few people are dubious. And on the sector-wide plan and utili-
zation of PL 675 funds, criticiam frorr. induetry quarters has more to do
with the timing thafl with the manner of implementation, and the govern-
ment's proposals in the area of research arouse far greater con~ern.
In connection with the new technological innovation fund, even FIAT ex-
presses the fear that there will be a repetition or sorry past experi-
ence with other relief legislation, when the rigidity of the standards,
the long drawn-out procedures, and delays in payment of grants wound up
practically diacrediting the whole saheme.
As Fnr aid to innovation, in particular, there is not much enthusiasm
:i.n indu~try circles for the choice of easy-term loans as the instrument
i'or providing it, particularly when it is compared with the tools embo-
cii.ed in last Au~a.st~s "auper-decree," which became moot when the govern-
m~nt ~ell. FIAT's managing director himself, Cesare Romiti, recently
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remir~ded me that thon ~he same machinery propoaed, based on paymente
into a capital eccount, met those "criteria of incisivenose, expedi-
tiousness, and clarity which everybody a~rees are indispensable, espe-
cially in the field of irinovation."
Today, though, with caany months wasted while the problems grew more acute, we have
' taken a step beckwards by replacing an instrument "as simple and clear as a contri-
bution, with a rattletrap mechaniam based on eaeg-term loans."
~ Auto Plans
Milan IL SOLE 24-ORE in Italian 23 May 81 p 18
_ [Text] Program Objectives
The Italian automotive industry, after hitting its all-time production
record with some 1,80~,000 cara in 1973, has been going through a slow
process of erosion in its competitive stanca. Production has gradually
declined to around 1,4$O,OOU in 1980, with a consequent loas of jobs
and a lot of red ink in the balarice of trade.
The Italian autumotive industry must cope, on the home market as well
a+sonthose abroad, with a very tough competitive situation. The major
foreign automakers are committed to increasing their competitive mar-
gins in the conviction that their growth potential is tied essentially
to pruning back the market shares of rivals who cannot keep up with the
pace of innovation in the auto-buildit~g process and in the product it-
self .
The basic aim of the program is to upgrade the competitive position of
- the Italian automotive industry so as to climb back by 1985 to ~he pro-
duction levels of the Seventies, and. so to, make room for increased em-
ployment in ~he sector ~s we11 as a sunny little surplus in its balance
of trade.
This boost in competitive ratinga ia to be achieved through the syner-
gistic action of eeveral faators: heightened product innovation, grea-
ter plant flexibility, increa~ed productivity, so as to brin~ Italy,
up r,a tha EEC 1eve1, and brinQinQ "new" Italian production up to the
,~rc~a leval, ot' productivity. The competitivo up~radin~ ie to be further
promoted by improvementa~ in work oraanization and in better labor rela-
tione.
~rr,e machinery to bring a11 this to pasa will be the easy credit terms
called for under P~, 675/77�
Equally necessary will be the use of the devicea called for under the
~overnment bi11 recently approved by the cabinet: economic interven-
tion on beYtialf of the ~ectors of the economy officially deemed to be
of vital national importance~ and expansion of the respons~bilities
and channels for intervention via the special IMI fund for applied~re-
. _
aearch, eatabliahment of the special revolving fund for technolo-
gical reaearch, as well as the bill (also recently given cabinet impri-
matur) concerning measures in support of marketing abroad.
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'r}ie main goal of the plan is etill to build up the muscle of this sec-
i;or of the econoniy by means of plant design improvernents to provide
~ greater flexibility and tosustain the cruc3,a1 phases of automobile
produc~ion in Italy by any availa~le means, i.ncluding encouragement
- and support for agrc�eem~nts with foreign com.panies planning to build
new plants in Ita1y especially in Southc~rn Italy with a high
strategic content to Italian industry.
In this sense, most government intervention wi11 be required to turn
both to companies that manuf acture and assemble the final product and
to those that produce components and sub-assemblies. Similarly, govern-
ment action designed to encourage technological innovation will have
to be directed not only toward producers of the finished product, but
also to consortia producing spare parts and components.
_ Access Criteria
Restrictions: considering the shape the industry is in, the statutory
goals of PL 67$/77, and the limited financial resources available to
~vork with, the basic criterion for access to the fund for 3ndustrial
restructuring and reconveraion must be earmarking investments in the
production of eubetantially new models, in the production of new com-
ponents with hig~h added-value ratings, and in plant improvements.
To qualify For benefits under the law, applicants raust submit a clear
picture of their corporate situation and their individual long-term
plans. Further, they will be required to spell out the details of the
features of the models for which they require redesign of their produc-
tion lines and equipment, along with descriptions of the planned sit-
in~ for the entire production cycle and of any modular assembly processes
they plan to introduce, i~.cl~w.ding guarantees that the models to be pro-
duced on the new assembl,y lines will indeed be substantially new.
In other words, candidates for aid must involve plant improvements and
rec~uire investments for turning out new models rather than ~'restyl ed"
models: ~~facelift" modifications to existing models will get short
shr~tft .
Fur~thermore, applic ant plans must include evidence of fuel economies
achioved and oP lowerod exhaust ~as emiseions. The goal is a 1$-percent
reduct.ion j.n �uol consumption as compared with earlier modela similar
in cy:L.i.~ider a~pucity and performance, coupled with ~r~adual compliance
w3t;h tha exhaust gas emmi~s~ion standarda embadied in amendment 14 to
x~e~;ulatioi~ 15 promulgated by the Economic Committee for Europe (ECE).
Prioilty: Given the recognized urgency of ~he program designed to pro-
vide izew processes and adaquate plant f acilities to produce new models
in the automotive industry, access will be provided, as a general rule,
to direct loans as stipulated in article letter a), of PL 675/77�
- ~or purposes of granting the loan with the ceiling of 50 percent of
bank financing as called for in the Coramittee decision of March 23,
1y80 priority will go to plans for redesign of production processes
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for new-model production lines planned to shrink l~ad times to less
than 40-4,5 months from design completion, and from which full-scale
mass production could ~e expected well before 1985�
Priorities also went to orojects which could promise presentation o`=
new-model de~ign concepts within 10 to 14 mor~ths of the date of pro-
- mulgation of the order; wit~in 20 to 26 months is the timeframe for
submission of completed deeigri for new plant facilities for production
of the new model; 30 to 38 montha are allowed for presentation of a
prototype of the new model and for deaign of a small-scale production
~ine. (Additional priorities will be granted to pro~ects displaying
particular attention to plant improvements keyed to greater production
flexibility and to significant modifications in job organization.
Intervention to Upgrade Skills and Product
Production structure and streamlining of the component industry--the
present purpo~se: Here the objective must be to set up final assembly
lines for increasingly complex and integrated sub-+asaemblies built
off-line or purchased from component man~ifacturers. In this context,
preference sha11 be given to technical cooperation arran~ements between
automaking companiee, between component and aub-assembly producers, and
between the formar and the latter, even those involving foreign concerns.
[The same shall apply] equally to agreements calling for cloae collabo-
ration f'rom initial deBi~n to mass production phase~ for new models,
- in such a way a~ to aseure availability in the production phase of a
broader range of major sub-assemblies and atandardized parts.
Establishment of integrated component and subaasembly groups calls for
close coordination among producers in the field. This coordination
must be assured through the creation of consortia whose responsibili-
ties are spelled out in PL 374 of 10 May 1976 and in subsequent amend-
ments now before Parliament.
To this end a committee for the advancement of the component industry
will be set up in the Ministry for Induetry, Trade, and Crafts, made
up of representatives of all government agencies concerned as well as
epoke~men for the companies and labor unions involved. This commit-
tee shall, within 4 months of its establishment, report to the industry
minister on ita findings and, on the basis of that information, the
miniater ahall grepare a report, with his practical recomraendations,
�or the CIPI.
The establishment of consortia or explicit agreements on technical col-
laboration between or amon~ component producere for joint production of
major aubassembliee in large quantitiea, as well as of components with
a high innovative content, shall constitute a claim for priority in ac-
cess to the Reatructuring and Reconversion Fund.
Restoring Territorial Balance: Given the presence in the South of au-
tomobile production plants owned by the two major domestic producers,
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. . . _
it appears imperative to encourage establishment of ~ component produc-
tion center in the S~uth. The site for this component, sub-assembly,
and spare parts center, whose primary purpose will be to supply Southern
assembly plants, will be chosen very shortly ar.d made available to con-
� sortia of. manuf acturers of components and spare parts, as will access to
European Community funds.
In view of the pro-South provisions contained in PL 675/77, priority
for~ access to the zndustrial restructuring and reconversion fund will
go to projscts i.nvolving conCiauous meas~res to restore territorial equi- '
libriurr~.
U~:grading Worker Skills
The jobs commissions ior the regions concerned, called for under PL
675/77, wi11 be required to come up with programs f or retraining workers
in new skills within a very short space of time, as required under arti-
cle 28 of PL 675/77, using resources available at the national level
and utilizing Community sources, particularly those of the European
Social Fund, for the purpose.
The Labor Minister shall report to CIPZ on the imple~entation status of
these guidelines within $ months of the date of this ruling.
Applied Research
It is clearly essential that the IMI fund be given supplementary appro-
pi~iations for applied research, as provided in the bill on intervention
in nationally critical sectors of the economy now before Parliament.
The program as it stands, laying particular stress on the extremely
high costs for building a new model from in3tial de~3.gn to the probo
type phase, neceseitates availability of ~peci�ic atructures for in-
t~:rven~;ion a~ provided in article 3 of the said bill,
'1'he aim of this bill, among others, is to aupport corporate programs
dcaigned to introduce sub~~antial tested teahnologiaal improvement in
new products or production processes, or to improve existing products
and processes.
Intervention in support of technological innovation must be sharply
or~iented in the direction of component manufacturing dnd toward the ef-
fort to astablish an integrated components and spare parts industry
in the Mezzogiorno endowed with economically viable structures and
market out~ets for its products.
Foreign Trade
Encoizragament to efforts to market Italian products abroad will include
.i.ncenti.ves through the finalized program~ s section on ~'Expansion and
u.p~rading of operational structures for marketing Italian industrial
products abraad."
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Meanwhile, acta.vation of a foreign marketing fund, as called for under
the bill submitted to Parliament by the :~foreign trade minister and ap-
proved by the Cabinet, is deemed urgently necessary.
_ Plan for Aerospace Industry Umreiled
~ Milan IL SOLE 24-ORE in Italian 23 May 81 p 18
[1`ext ] Progrs~ Goals
The basic objective of the plan as finalized is to be achieved through
balanced development of planning and production capaaity, as well as
of markPting tools for the Italian aviation industry in all three of
its sectors (airframes, enginea, equipment). To this end there must
- be a reduction in ~echnol~gical, dependence in certain areas, an increase
in the v~lue-added aontent ~omestically, improved penetration of for-
eign markets through sales of systems, sub-assemblies, and allied tech-
nical assi~stance, as well as sales or licenazng of k.-~ow-how and ancil-
lary aervices.
Every sector of the industry must aira toward products which are corapati-
ble with those of the other ,~ectors in order to augment Italian indus-
try's capacity to utilize Italian-made componenta in Italian-produced
systems and sub-systems.
Access Criteria
Constraints In view of the atate of the aector, the purposes of PL
675~77, and the objective conditions impoaed by the paucity of financial
resources available, the basic criteria for access to the restruct~ring
fund must be implementation of substantially new proorams to be under-
t aken in Italy with priority going to the Mezzogi~rno or approved
participation in collaboration progrants. To be eligible for benefits
under the 1aw projects must include a statement on c~rporate status,
along with the relevant multi-year programs.
Under considerati~n in the light of these guidelinea are intervention
in reatructuring development activities, in production startup, and in
. technical capital investments (including plant) for. 3mplementation of
a new aeronautical program or for si~nificant and subatantial improve-
ment of an exiating program, as well as for design changes and modi-
fication calling far recertification.
Alao eligible for benefite under PL 675/77 is financing for moderniza-
- tion oP production plants deeigned to improve the company's competitive
atar~ce and necessitated by the advance of the atate af the art inter-
nationally.
Th~se benefita will also be applicable to reconversion operations to
replace obsolete lants already in existence in the areas specified in
article 8 of Dpr ~presideritial decree] 902 of Sep 11 ~.976, through
building new aircraft plants in the Mezzogiorno.
Priorities Without prejudice to the objectives set forth above, Fund
interven~ion,a~ stipulated in article 3 of PL 675~ pr~iority will generally
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be given to undertakings involving forms of cooperation among corpora-
tions, particularly European corpor~,ii~ns, where~rer feasible.
Priority conside~ation wi11 go to programs calling far steadily increas-
121g utilization of camponents built by the Italian aircraft industry.
Similar priority consideration wi11 be given to prog:^ams for bringing
out new aeronautical products utilizing new tochnologies which will
reduce energy consumption and pollutian rates, thus enhancing the com-
petitive appeal of such products on the international market.
In view of the peculi.ar features of the sector with regard to the length
of the product cycle which is usually f ar in excess of 2 years, the con-
straint cited in article 2, para $ of Dpx I2$~ of 22 December 77, sha11
not constitute an impediment to eligibili~y for PL 675 benefits for air-
craft programs.
Such programs a~s may reasonably expec~ special Defense Ministry f~znd-
ing for restructuring and,f~or reconversion shall not b~ eligible for
the special assistance provided for in PL 675/77~ I'urthermore, accESs
to such assistance sha11 not be provided to programs which are clearly
competitive with one another.
Applied Research
With a view to achievement of an industry policy goal in the aviation
sector, technological and eeientific researeh activity must be expanded
in relation to aircraft-related produc~s to be developed and manufac-
tured in Italy.
To this end, additianal appropriations for the IMI Fund for applied re-
search will be esaential, as provided in the DH1 "on the establish-
ment of the Fund for technAlogical innovatian, additional funding for
tho special Fund Por applied research and intervention on behalf of the
steel industry," ae approved by the Cabinet.
The program as fina~.ized, laying particular stresa on the immense cost
of design and development of new aircraft products from concept to ini-
tial production, requirea provision of specific ins~rumentalities for
interventian, such as those listed in article 3 of the said Ddl, with
establishmant o� a revolving fund for technological .innovation. One
= of its purposes is to support corporate programs designed to introduce
major tested advances in technology for new products or production pro-
cesses or improvements to existing producta or processes.
Tticre will also be additional appropriations under PL 184/~1 for imple-
~ mentation of ~u,ch intervent3on.
Rc:search and development projects falling within the requirements of
_ t}?e pro~�ram as finalized will be assigned priority for purposes of
F;] i.~:ibil.i.ty for the incentives provi~led in article 10 of PL 675/77 and
will be looked upon with particular favor far purposes of granting the
maximum allocation provided for under article 10.
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New Initiatives for Industry
Advancement of Marketing Abroad Encouragement and assistance ir~ mar-
keting Italian aviation products abroad will be pro~�ided through suit-
able measures such as:
a�.~ bringing existing machinery and standards into line with those al-
ready in effect in other countries in the area of credit assistance
and insurance coverage for exports;
b. broader application of exchange-rate guarantees and introduction
of guarantees against production coet increases;
c. expanded opportunities for utilization, through suitable amendments
to account3.ng practice+s, of Defenee etructures and personnel in promo-
tional activit3e~s and in traia3ng and logiatic support;
- d. support for training activities connected with ~ales;
e. direct intervention to cut the cost of collegial participation in
_ exports, as well as those of concept preaentations and flight demon-
strations;
f. encouragement and support for associations among Italian corpora-
tions in the form of sales consortia and the like.
- International Collaboration It is clearly vital to the future of
this sector of Italian industry to participate in international colla-
borative efforts, in gart with an eye to greater involvement in pro-
duction for the civilian market. To achieve this go~l, the Minister
for Indu~try will take auitable steps toward the drafting and adoption
� o~ regulatory measurea, in a~ Porm consonant with thafc in use in other
countries.
Improvement+s in Government Contractin~ Practiceg The aviation industry
is called upon to de~ign and build product~s which involve a high techno-
lo~ical content and a high degree of sophistiaation, which entail high
~inancial exposure for companies en~a~ed in it. The current regula-
tions in the area of contracts g~.ve riae to probltms in terms of addi-
tional financial burdens and cumberaome procedures. This poses a re-
quirement for adminiatrative procedurea designed to lower the financial
ri~~s involved, and with them the costs of production.
Coordia~ation The Minister for Industry will move within one month
of the date of this plan to set up a committee includ.ing representa-
tives of all government agencies concerned, of labor, and of manage-
ment from both state-participation and privately owned companies.'
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Qualitative Leap in State Intervention
~tilan IL SOLE 24-ORE in Ttalian 23 May 81 p 18
- [Article by Vittorio Barattieri, chairman of the Aeronautical Planning
Committee and managing director for indust'rial pro~uction at the Mi-
nistry for Industry]
[Text] The newYy ~inaliz2d program ~or the aviation industry, which the CIPI
approved at its 21 May mee~ing, embodiea governraental intervention as
coordinator in an, extremely important sector~ of industry.
The Italian aviation industry, even with a higher growth rate in the
airframe and helicopter sectors of recent years, has been steadily ex-
panding its productive capacity. Jobs have increased from 31,500 in
- 1975 to 10,'700 in 1980, and billing has risen from �60 billion lire to
1,500 billion. The industry does not, for the moment at least, appear
to be in anything like a crisis position. Notwithstanding all this,
however, far-reaching government intervention is clearly essential for
a number of reasons.
Companies producing aviation materials are of marked strategic impor-
tance in that they operate on the cutting edge of the most advanced
technologies. Fallout from research performed in the aviation industry
or,to the most disparate sectors of industry is a fundamental factor in
keeping our country amon~ the top leaders in international technologi-
cal development.
The high technological content of aviation products airframes, en-
gines, and components means that their makers must incur heavy costs
which can be amortized only when the product actually goes into mass
production on a certain scale. Since the domestic market can absorb
only a relatively small share of that output, these companies are in-
creasingly setting their sights on outside markets (~i0 percent of their
output was sold abroad in 1980).
Quite naturally, the Defense Ministry has been interasted in the sector
for year~. This could hardly be otherwise in view of the high techno-
. l~gical contant of aviation products, combined with the prudent concern
with preserving a domestic production system as autonomous as possible.
However, out of that intere~t has growr a more general development of
production for mil3tary uae and slower g'rowth for production for civil
aviation.
Now, as we move into the aighties, predictdble developments in techno-
lo~ies and ~;rowing Poreign competition on international markets are
bringin~ a great many ma~or alementa of uncertainty into the overall
picture .
Thc~ final pro~ram represente a genui,r~e qua~itative leap in government
intorvention, which in the process takes on a global conplexion. The
t~overilment as a whole recognizes the crucial nature of the sec-
tar For purposes of the technological development of all of Italian
industry (only electronics which is itself the target for govern-
mental support measures-- has a comparable level of technological fall-
out), and conaequently is stepping in to foster harmonious and well-
balanced growth for all sectors of Ita1y's aviation industry.
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~
The program as approved was drafted by a special commission which in-
cluded people from the major companies in the sector as well as the
labor unions.
The working philosophy recommended by the commission which the CIPI
adopted in its 21 May decision is one of swift intervention in a
realistic way at the nerve centers which govern competitiv~e stance,
and active presence in markets abroad on the part of our aviation
, companies.
The primary thrust of government intervention and coordination on be-
half of the aircraft industry might be summed up as follows:
foster balanced development in the three principal sales areas:
airframes, engines, and equipment) and between the civil and military
- sectors;
encourage greater autonomoua growth capacity in 4ur industry by
means of adequate industry-wide provisions such as new appropriations
for the IMI fund and establiahment of a~pecial fund for technologi--
cal innovation. Removing the barriers to a farflung network abroad
dealing with liceri~res~, patents, a.nd components would simultaneously
expand Ita1y's oppartunities for qualifying participation in interna-
tional collaboration programs, preferably in Europe ~ahen feasible;
deviaing and pinpointing marketing tools= resorting to specific
measures where indicated, so as to guarantee Italian companies a chance
to meet foreign competition on an operationally equal footing;
move towa:~d an updating and streamlining of government contracting
procedures for the sector, so as to restore equity to a situation cha-
racterized by heavy additional financial burdens~upan companies and
aggravatingly cumbersoma paperwork �or both contracting parties.
Th~ plan as a dynamic tool for orientation and coord:ination cannot be
conf ined to spelling out its object3ves. It therefore provides that
within the fraraework of exiating regulations a gpecial committee be
set up as a forwn Por dialectical confrontation between the interested
parties, thus aasuring continuous adjuatment of the plan to keep step
- with an ever-changing situation.
- The plan, realistically rooted in the quest for the best possible uti-
lization of available legal tools, is deaigned to achieve practical
goala in a timely manner. All this, while from one aspect it may
soem modest by comparison with establish3n~ ad hoc agenciea (which, by
the way, takes a very lon~ tirae to do), reeponds to the basic objective:
to use our fine-turiing capabilities as our top forei~n competitors do,
_ to provide more ~obs at home and to improve the industry~s balance of
trade over~ the Eighties.
COPYRIGHT: 1981 Editrice I1 So1e-24 Ore. s.r.l.
6182�
CSO: 3104/284
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ECONOMIC ITALY
UNFAVOKi~3LE REACTION TO 30 PERCENT Il~4PORT DEPOSIT MEASURE
Recession Feared
Milan IL CORRIERE DELLA SERA in Italian 29 May 81 p 13
[Article by Alberto Capisani]
[Text] As of yesterday, imports are locked into the monetary
"cage," but the lira is ahowing no improvement; there are fears
of a recession. Our currency shows only minimal gains against
the dollar (1,160) and against other EEC curxencies. Prime rate
drops in the United States, but rates remain high abrc>ad.
Confindustria seeke exemption from deposit payments for raw
materials.
The first day after announcement of the new currency measures saw the lira move up-
- ward only slightly against the dollar and other currencies, but there is no saying
whether that gain was in response to thE new restrictions or a reflection of over-
all trends on the international markets.
The U.S. dollar declined by 3.25 points from the record level (1163.7.~) hit on
Wednesday. However, it ae~med to be softening on other marketa as well in the
wake af lowered rates on the U.S. rrarkete (Chase Manhattan dropped its prime from
20.50 to 20 percent, as did the Manufacturers Bank, carrying with it the rates on
Eurodollars).
Does this mean that the flutter of recovery in the lirg does not stem from any in-
nate sturdinese, but rather from a momentary weaknesa in th~ dol~ar? For the
moment, it is hard to say. First of all, one muat bear in mind the fact that in
so~e observere' view yesterday's decline was excessive, :~nd helped along by the
fact that the Zurich, Frankfurt, and Paria exchanges were closed for the Ascension
Day holiday. Forecaste as to the future behavior of U.S. rates, and hence of the
dollar, are contradictory: whila Treaeury Secretary Regan and Commerce Secretary
Baldridge predicted yesterday that they would go down, the chief economist at
Solomon Brothers, Mr Kaufman, said that they would start to rise again, albeit by
fite and atarts.
- For the time being, anyway, returne on investments in Eurodollars are still very
high (19 3/8 perc~nt on loans up to 6 months). Along with the extremely high
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rates reached on the European market for French francs (25 3/t3 percent for a month
and 24 percent for 6 months), they constitute one of the ma~or causes for concern
among our monetary authorities, in that the; might serve to lure capital abroad.
- Even though the confused international picture yesterday made it impossible to
make a full assessment of the effect of the measures taken to stop such a flight,
there were, however, a few encouraging signs.
Yesterday, for exaatple, the lira strengthened its position within the EMS, where
it still stands second only to the mark in the strong currency standings.
In any event, the next few days will tell us more clearly ~ust where we are head-
ing. Qne reason is that we shall have to see whether or not there will be any ad-
justments, such as the exemption Confindustria is seeking. Ia a telegram to the
government and to Ciampi yesterday, Merloni asked for an exemption from the 30 per-
cent advance deposit on imports of induatrial raw materials, tools, and goods im--
ported "on a temporary basis," meaning producta which are aub~ected to processing
and then re-expor~ed. The president of the industrial coumiunity ~ustified his
plea for an exemption on the basie of the extremely untoward impact the measure
might have on production and hence on employment levels.
Asid~ from a poasible minor ad~ustment (such as was made in 1976, for that matter),
it remains clear that the international money rates (only yesterday the Swiss Na-
tional Bank announced that it had no intention of applying the brakes to rising
domestic intereat rates) make it incumbent on Baakitalia to keep a tight rein on
the money supply. To this end the central bank has been r3isii~g rates on short-
term loans over the past few weeks (for example, raising the return on 3-month
treasury bills to around 18.75 percent), and has been ~opping up liquidity with
the various competitive auctions. This radical and systematic action, along with
the upcoming deadline for making tax payments, reduced immediately available money
supplies in the system to healthy levels (or maybe even a little below them).
It is clear, then, ttiat yesterday~s move, by further contracting liquidity, may
have some exceedingly untoward consequences. Perhaps, though, the fluidity of the
situation did not leave the monetary suthoritiea much room to maneuver. Bankitalia
found itself faced, in fact, with~a sturdy rise in interest rateB abroad, quite
sufficient to aiphon off the large mase of capital that tends to stay conaiatently
more liquid (medium-term paper no longer tempts anybody); the 3-year iesue of nego-
tiable treasury nates--1,500 b1111oa lire worth--was subecribed by only 451 billion
yesterday, notwithetanding the fact that the actual yield is 21.5 percent and that
the pegged rate will shelter it from future increasea.
Who Has Won Exemption
The following items a?-e exempt from payment of Che 30-percent non-interest-bearing
3-month deposit on imports: all payments on importa not in excess of 100,000
lire; allocatione to persona going abroad within the 5-million ceiling per person
in addition to the tourist allowance; payment of pensions, savings, and salaries;
transfers of currency for study, medical care, subsistence and business; purchase
of artificial kidneys; imports of crude oil and grain; payments for ships stores,
supplies, and bunkerage; ship rentals for transport of inerchandise; transfers via
postal money order or international money order within allowed limits; payment on
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E~rincipal and interest of loane obtained abroad; compensation and derivinA from
social security insurance and food subeidies as prescribed by ].aw; payments into
special authorized accounte consisting of funds originating abroad for charges
allowed by specific authorization; extension, through credit transfers to accounts
abroad, of. credit on the basis of PL 227 of 24 May 1977; welfare payments to emi-
grants and ICLE loans; payment for imports of foreign daily n~wspapers and period-
icals; credits to foreign accounts of maritime and air common carriers for pro-
ceeds from the sale of passenger tickets; indenmities from insurance companies for
civil liabilities incurred by residents toward non-residents; payments of repara-
~ tions or damages under court rulinga; investments of Italian capital abroad when
sub~ect to the deposit required under ministerial decree of 8 August 1978 and
12 March 1981; payments made from assets in an "authorized account"; issuance of
loans granted by Italian medium-term lending inetitutions purs~~ant to implementa-
tion of intergovernmental agreemente or for financing Italian exports; extension
to sources of credit granted by banks acting ae agents for for.eign counterparts
and which are part of the regular activities of eaid banks in dealing with foreign
countries in other currencies and in Italian lire; transfers made through the
Italian exchange off ice; retirement of loana in required currencies in effect as
of 27 May 1981, for advance payment on imports.
New Measurea Diacusaed
Milan CORRIERE DELLA SERA in Italian 29 May S1 p 13
[Article by Paolo Glisenti: "Limping Devaluation Means Nothing But Trouble"]
[Text] It is now 24 hours since the announcement of the measure tha.t restores
the advance deposit on imports, and already concern over the strongly recessive
and inflationary c~ntent of the measure is taking on the sound of a general cry of
alarm. At the same time, doubt is growing as.to the actual ne~d for moving so
drastically down a road which had already proved to be paved with a number of
hazards. Firet of a11, there is no evidence whatsoever to show that pressure on
the lira had lately reached an ab~tormal pitch, much less to in3icate that corporate
accumulation of r~serves had gone beyond a natural and healthy tendency. In thie
sense, apparently, it would appear that the government has moved solely as a pre-
caution. But at what price?
By comparison with the similar measures taken in 1974 and again in 1976, the one
that went into e�fect yesterday is unquestionably more restrictive. On those
occasions, not all imports of raw materials were sub~ect to the deposit (this time
only grain and crude oil are left off the "blacklist") and in any case they imme- .
diately decided--under presaure from the EEC which held the measure inimical to
the spirit and the letter of the free trade agreements--to cut from 50 percent to
20 percent the duty on an even more select list of capital and consumer goods.
This time, though, the net fell even around vacation spending and spending on
sundry other services, and hence around the "invisible" items in the cash portion
of the balance of payments.
It becomes clear at this point that the intention was to go far beyond an attempt
to "cool down" imports of goods not necessary to the productive system, and that
the aim was instead radically to lower the temperature of the r~ational economy as
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a whole, thua accentuating the trend that has been apparent since the firat of the
year. That is evidenced, for example, by the surprising decision to make 50 per-
cent of the financing arhich importers will seek tq pay the ad^vance deposit sub~ect
- to the ceiling on bank loans: by our reckoning, this will trigger a strong con-
traction in the growth of domestic credit, down from the predicted 12 percent or
so to around 8 or 9 percent at year's end from last year's level, and will give
new impetus to the rise in interest rates, which are even now at prohibitive
levels. But if we calculate the shrinkage in credit for the next 4 months alone,
we can predict that the margin of expaneion wi11 be more than half abaorbed by
financing to pay the advance deposit.
Let's see what that will do. The squeeze over the next 4 months will affect a flow
of imports worth some $18 to $20 million and hence will freeze something like 6,000
billion lire in the Bank of Italy; with those 3,000 billion piling up beneath the
bank credit ceiling, fi.nancing for induatry and business will be wiped out at a
single stroke. There will be still another pernicious effect nf this siphoning
off of liquidity, though: since a lot of people will try to get around the obsta-
cle and since the supply of credit wi11 shrink in the face of growing demand, it
is a foregone concluaion that people wi11 start dipping into savings, thus height-
ening the already alarming downward trend in depoaits that many savings banks are
already experiencing.
The inflationary risk promises to be no less serious. Yesterday's action may be
viewed at first blush as a"limping devaluation," since it puts a brake on imports
without helping exports. We believe we can say, however, that it will not produce
even this halfway ob3ective. Experience clearly shows, in fact, that, in terms
of volume, exports will be affected only minimally, particular?y when they are
backed by a solid "backlog" of private consumer demand, by n~onetary measures.
Therefore, while there are few advantages to be expected on the balance of pay-
ments front, the drag effect on retail pricea may well turn out to be consider-
able. Before this produces a further ahift away from imported products to Italian
ones a lot of time wi11 pass, and in the meantime the damage already done will be
permanent.
Here again, let'e sltop and do a little figuring. The additional costs placed on
imports ie aupposed to be 2 percent. In practice, for every dollar paid to a
foreign supplier we shall have to shell out 21.60 lire more, and there is no doubt
that the incxease in the cost of doing buainese will wind up tacked onto retail
prices, even though to a lesser degree thanks to competition wr.ich is now quite
lively, given the general softening of prices in many sectors. The net effect
will be that things are going to get worse instead of better.
We need only think back to what happened in 1976 to get a good idea of the outlook
a~*ead. That time the restrictions imposed on imports by the advance deposit re-
quirement did cool the climate for a couple of months in thoae pessimistic days
on the exchange market and thus strengthen the position of the lira. But almost
immediately the first inklings of trouble began to surface. Remember what Paolo
Baf.fi eaid in his "closing remarka" to the Bank of Italy assembly several months
later: "The absence of coordinated recovery measures triggered a new crisis which
necessitated currency and monetaxy restrictions far more aevere simply to protect
the lira" (for one thing, the intereet rate shot up 3 points).
21~
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It is worth bearing in mi.nd that thia time the deposit is only 3~ percent (.as
against SO percent in 1976) since, as we have said, the conte~t in wIzich we are
operating is far more one of rece~sion and inflation. Politically, then, it
_ would c~em that we fiave sinned by a lack of opportunism: tfie government crisis is
not, at least for the time being, perceived as cause for seri~us alarm even in
Italy--much less abroad; the laborious negotiations over "cooling down" the index-
ing machinery certainly had no ca11 to go through still another severe test of
the real intention to aim at getting production costs and inflation down on the
part of whoever is pushing the buttons in the economic_planniag room.
Among the many ob~ectives they want to pursue more or less openly with this mea-
sure probably the least noble of all is the one they will achieve: that of raising
ti~e umpteenth protectionist barrier to protect a lot of companies in trouble. If
the EEC doea not call us back into line this Cime, it will mean that the rest of
Europe, like us, has lost all sense of duty toward what is le.ft of frse trade.
COPYRICHT: 1981 Editoriale del "Corriere della Sera~' s.a.s.
6182
CSO: 3104/284
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POLITICAL FR~'N~:E
SECOND RAUND ABSTENTIONS AFFECT LEGISLATIVE ELECTIONS
Paris VALEURS ACTUELLES in French 27 Jun 81 pp 17-19
~Article: '~Logical Analysis of a Chamber That Cannot Be Found~'
~ex~ ~e voters did not switch sides. They simply withdrew--
giving Mr Francois Mitterrand the undiscoverable Chamber which he
had not expected to get.~
"This is not a tidal wave; the sea has simply withdrawn." This observation by Mr.
Pierre Chaxpy, in "La Lettre de la Nation," is quite correct. Just look at the .
charts. The left did not gain a single vote between last May and June. On the con-
trary, it lost, quite a lot, almost 1.7 million votes between 10 May and 14 June.
The picture is even more astonishing if you look at the figure of 14,222,000 on 19
March 1978; it lost something like 200,000 votes, dropping down to 14,015,000 on 14
June 1981.
And the right, so to speak, has dried up.
You were able to read that already in our last issue. Instead of the 14,650,000
voters who cast their ballots for Giacard on 10 May, there were no more than
10,850,000 voters who cast the san~e votes on 14 June. They did not turn to the
left. No:. They did not vote at all.
All observers, both on the right and on the left, and even at the very swnmit of the
government, are equally atunned by thia behavior.
One might eak aneself whether this did not involve a myriad of individual switches
by voter~ who, furious over the failure of their candidate on 10 May, decided to
stay home on 14 June, without ~ver imagining that 3.8 million other citizens would
do the same thing at the same time. If that had been the case, they would have come
out on 21 June. But they did not.
On the following pagea you will aee the reaults of the aecond rounda of the voting
both in absolute figurea and in percentages of registered voters.
VALEURS ACTUELLES hsd entitled its 6 June iesue, under the por trait of Mr. Pierre
Mauroy, "There W111 Be No Ma~ority." We could not have been more completely re-
futed by the facts than we were.
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. And still:, Still, we do not regret this for the simple reason that the inexplicable
is unpredictable.
Look at the first round on 12 March 1978 (legislative elections): the total number
of votes on the left was 14,222,000, in other words, 4.5 percent of the registered
voters.
On the other side, the total votes for the right came to 13,725,000 or 38.8 percent ~
o'' the registered voters. ~
Looking at these initial figures, one might have thought that the right was going to
lose the election. Nothing of the sort happened, as you know. During the second
rcund (and you might look at the table for the second round of elections), right-wing
voters as a matter of fact dropped their abstention. On 19 March 1978, they numbered
500,000 more than the voters on the left. In percentages of registered voters, the
right climbed up to 41.7 percent, winning almost 3 points (2.9 percent) over the 38.8
percent of the preceding round, whereas the lef t dropped down to 40.5.
With ttie help of this drop, the Asaembly which has ~ust gone out of businesy thus had
a majority of 287 deputies (RPR [Rally for the Republic], UDF [French Democrattc
Union), CNI, and miscellaneous) as against the 204 left-wing deputies.
tde e:cperienced the amplifying effect of our way of voting, with a single slate on
each side for both rounds. This is the desired effect since the basic principle
of t.he Fifth Republic was to enable the president to have a solid ma~ority in the
Assembly.
If by chance we had adopted proportional representation, this effect would no longer
rnaterialize. The power of dissolution, with which the president of the Republic is
armed, would no longer have any intimidating effect. An Assembly elected by pro-
portional representation would constantly be reelected almost in the same propor-
tions and would thus have no reason to fear the presidential threat. The amplify-
ing effect of the margins would no longer materialize.
During the first round of electione in 1978, with 38.8 percent of the regi~tered
votere~ the right was 1.7 paints behind the left which had 40.5 percent.
During the second round, thanka to the abstentioniets who emerged from their status
of abstention, it went up to 41.7 percent while the left remained stationary.
Last May, during the first round of the presidential elections, the right, with
39.2, was definitely ahead of the left with 37.4. Just look at the tab les for the
first rounds.
But the ecologists had 3.1 percent and we know that they were distributed roughly to
the extent two-thirds on the left and one-third on the right.
This is why the election of Mr Mitterrand during the second round was entirely
probable.
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To tell the truth, the preaidential election did iavolve a pereonal factor. General
De Gaulle had said: "Giscard's problem is the people." Miea Antoine Pinay recently
told "QUOTIDIEN DE PARIS" (20-21 June): "Giscard is not as close to the people as
Chirac."
But the Giscard factor no longer meant anything in the legislative elections. The
voters knew or should have known that the Assembly has the last word, not only with
respect to the Senate but even with respect to the president of the Republic.
That is the phenomenon that becomes inexplicable.
Let us go back to the table for the first round. Here we find that the right, which
had 39.2 percent of the votes on 26 April, only had 29.9 percent on 14 June; so it
is indeed true, as Pierre Charpy said, that "the aea has withdrawn." During the
second round, ita percent~ge of registered votera went up but only very little from
29.9 to 31.3 only.
B~tween 26 April and 14 June, the total number of left-wing votes only gained 1.2
point, going up from 37..4 to 38.6. Bo be sure, that was due to the raid on the
ecologists (the 3.1 percent ehowing up in the column for 26 April).
During the second round of legislative elections, on 21 June, the percentage of the
lef t roae to 41.2 percent. In other worde, 2.6 pointe more than during the first
round.
Here is what that means: the stay-at-homes decided to come out again between 14
and 21 June and gave the right 1.3 point ~nd the left 2.6 points.
Those who did not vote on 21 June knew what they were doing. They had voted for
the right in May; a month later they agreed to give Mr. Francois Mitterrand full
power for the 5-year term of the legislature.
This is explained by what is called "the presidential effect." In other words,
the French have so euccessfully adopted the Conetitution that they are determined
in all coses to give the president tne ma~urity oi his choicc.
The Fifth Republic would thus become a real elective monarchy. Deep down in its
psychology, the French people apparently remained royaliats: the president must be
invested with uncontested power.
In the history of political science, this ia the firat time that a phenomenon of
thia nature and thie amplitude has materialized: the votera did not awitch sides;
no, they simply withdrew.
Let us get back to the tables for the second round. On 19 March 1978, the left
had 40.5 percent of the registered voters. This time, on 21 June, it had 41.2
percent. It only had 0.7 percent more. This is quite in keeping with the
precedents: these tiny snifts are the kind which political life has accustomed
us to in the past.
7?~e stupefaction is on the right: 41.7 percent on 19 March 1978, 40.2 percent
still on 10 May, but this time only 31.3 percent.
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rux urr~~ ~n~ ua~. ~~~t,Y
What precisely did those 9 or 10 percent of the voters try to say after they had
been mobilized in May but demobilized in June.
To probe their minds ~nd hearts, we need a technique that does not exist since
opinion surveys mean something only in conjunction with basic questions: will you
vote for X or for Y? T'hat is simple and clear and calls for an unequivocal re-
sponse. But a complex response to a question such as "why did you do this or that?"
cannot be coded on a computer.
It is true then that the spirit of geometry must yield to the spirit of finesse.
But the spirit of f inesse is incapable of rigorous demonstrations. It says: "I
seT~se this." The result alone can make the division between correct intuitions
and wild flights of imagination. A prediction based on the spirit of finesse
thus is not good for anything.
Mr. Francois Mitterrand certainly has displayed an exceptional ability in terms of
electoral intuiCion. In 1980, the opinion surveys had him beaten by 60 against 40.
'They placed Rocard far ahead of him. He remains imperturbable. But can even he
say tnat he expected to win the massive parlimentary ma~ority he got?
The people presented him with the same surprise as they did Louis XVIII by giving
him ci "undiscoverable Chamber." Indeed they did.
1 La v~rite des scrutins
I (~n pouresntsges des Inacrits)
�
40,6 40.8 40.1 41.2
` a~,~ 3a,e
~s.e 3~,a
- ~ ~ ~
3~ a 30,6 29.9 31.3
27,6
a
20,3
~ ~ 4 t 7,8
I 16,6
' ~ M
~2 p
_ iY � W W ~
3.1 W
i 1,7 0.7
12 ~n~r� t87t 1~ mar� 1978 28 wril 1981 10 maJ 1881 14 juln 1881 21 Juin 19H1
5 6 llll~~ nuli sont Inclus parmi I~~ ~b�tenllo~~istoo). 9 10
I~E~y: 1--The truth of the voting (in percentages of registered voters); 2--Absten-
tionists; 3--right; 4--ecologists; 5---12 March 1978; 6--19 March 1978; 7--26 April
79R1.; 8--10 M~y 1981; 9--14 .7une 1981; 10--21 June 1981; 11--The blanksare included
among the abstentionists.
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3 Premier tour
Et1 YOIX 4 mars 14 25 avril 15 14 juin 16
1978 19g1 1981
divers gauche ( i) 1 297 251 989 410 517 684
- PC (Marchais) 5 870 402 4456 922 4 065 540
P&MRG
(Mittsrrsnd-Cr6pesu) 7 055 083 8148 807 9 432 382
total gauche6 14222 736 13 595139 14015 586
UOF (Gisca~d) 6128 849 8 222 432 4 827 437
RPR (Chirac) 6 462 462 5 225 848 5 231269
divers droita (2) 7 1 134 096 868 444 795 210 '
total droits 8 13 725 407 14 316 724 10 853 916 '
~cologistes 9 621 100 1 126 254 271 688
inscrits I 0 35 204 152 36 398 859 36 257 433
abstentions 6 a62 173 6 882 777 10 748 633
nuls 11 581 736 477 965 367 610
E11 �Xo 12 mars 26 avrii 14 juin
des inscrits 12 1978 1981 1981
divers gauche 11) 3,6 2,9 1,4
PC 16,8 12.2 11,2
PS-MRG
(Mitterrand-Cr~peau) 20,1 22,3 26
totsl gauche 40.5 37,4 38,6
_ UDF 17,4 22,5 13,3
RPR (Chirac) 18,3 14,3 14,4
divers droite (21 3,1 2,4 2,2
total droits 38,8 39.2 29.9
~cologistes 1,7 3,1 0,7
abstsntiona et nuls 13 19 20,3 30,8
(f1 le 16 avri! : Laguiller et Bouchardeau
(21 le 26 avril : Debrd et Geraud
Key: (1) On 26 April, Laguiller and Bouchardeau; (2) On 26 April, Debre and
Garaud; 3--First round; 4--Votes; S--Miscellaneous left; 6--Total left; 7--Miscel-
laneous right; 8--Total right; 9--Ecologists; 10--Registered voters; 11--Blank;
12--In percentages of registered voters; 13--Abstentions and blank ballots; 14--12
March 1978; 15--26 April 1981; 16--14 June 1981; PC--Co~unist Party; PS--Socialist
Party; MRG--Revolutionary Left Wing Movement.
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Second tour 1
E11 VOIX 19 mars 1978 ~ 10 mai 1981 8 21 juin 1981 � 9 En % des inscrits 10
gauche 12 553 262 15 714 598 10 602 502 19 mars 10 mai 21 juin
droite 12 922 54n 14 647 787. 8 057 526 1978 1981 1981
inscnts 30 956 076 36 392 678 25 757 374 gauche 40,5 43,2 41,2
abstentior.s 4749366 5142925 6579668 droite 41,7 40,2 31,3
nuls 730 908 887 368 512 678 abstent~ s
� compte non tenu des 84590 ~lecieurs de Polyn~sie et de Wallis et Futuna. et nuls~1~ ~~~8 ~6,6 27,5
Key: 1--Second round; 2--Votes; 3--Left; 4--Right; S--Registered voters; 6--Blank;
7--19 March 1978; 8--10 May 1981; 9--21 June 1921*; 10--In percentages of registered
voters; 11--Abstentions and blank ballots; *--Not counting the 84,590 voters in
Polynesia and Wallis and Futuna.
1978
nwrM,.e.w ta
~ 117
iii~ris~
Pc a ~
pg + MRG
285 p. .
O~J Mt ~
UD
PC 44
ON. D?. S
Non-inscrits--nonregistered; La nouvelle Assemblee--the new Assembly; Div.G.--
Miscellaneous left; Div. Dr. Miscellaneous right.
With its radical allies on the left, the PS tops the absolute majority by 39 seats;
by itself alone it has 270 elected representatives. Among the latter, there are
132 teachers, almost half of the number of deputies, and only two workers. It is
short two seats in this table for the New Assembly, the seats for Western Polynesia,
where the second round raill be held on 5 July and those of Wallis and Futuna on 28
June. According to the results of the first round, both of these should go to the
right.
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Y
Seats in the Capital
Here we have 15 deputies for RPR and three for the UDF as against 13 for the PS; in
spite of a loss of eight seats, the right has retained a ma~ority in Paris.
The socialists, who had no seats in 1973 and who had been able to win two seats in
1978, were able to win 11 seats and 12 points in 3 years with 30.6 percent of the
votes. Among the newly elected deputies we have the first secretary of the PS, Mr.
Lionel Jospin; two leaders of CERES [Center for Socialist Studies, Research, and
Education], Messrs Georges Sarre and Michel Charzat, and a left-wing Gaullist,
Mr Pierre Dabezies.
~
~,n:~~ ~ 'i
,e .
. ~
~ ~ 4
_ ~O a.~ ~
~ I
i
~s ~
Y
~ 1873 ~
Z7 +Z!
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ZO
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16 :~a~~,,:, .
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1878
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- & i
ZO ~ ~ `"t
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71 i
~
- e
_ ~ Q i~ -
a~ ~
w~'p~ 1981 j
Q APa `
Qs . ;
~
32
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The Communists had been dominating the Parisian left since the Liberation; they
dropped from 17.8 percent in 1973 to 15.6 percent in 1978 and 9.3 percent on 14
June. Declining from seven seats in 1973 to three seats three qears ago, they
disappeared from the capital starting with the first round of elections; in the
31 districts, PC caadidates were everywhere defeated by PS candidates. Among
the defeated ones, they are two members of the Political Bureau, Mr Paul Laurent
and Mrs Gisele Moreau, and both of th~m are outgoing deputies.
Prior to 1978, the Giscardians had two RI (Independent Republicans) deputies and
three centrists. Shifts within the ma3ority and gains in the eastern part of
Pa�ris had enables them to win two seats three years ago in favor of the radicals.
Only the three centrists were able to withstand the Socialist wave; they are
Rober Chinaud and Jacques Dominati (PR [Republican Party]) who were eliminated
just like Mr Didier Bariani, chairman of the Radical Party, and Mr Jean-Pierre
Pierre-Bloch, a member of that party.
The RPR (whiah had two members closely connected with CNIP [National Center of
Independents and Peasants]) rema~ned the biggest block in the capital with almost
half of the deputies in spite of the loss of four seats. That included of Mr
Jacques Feron, CDTIP, Mr Joel Le Tac, who had been called upon to vote for Mr
Mitterrand on 10 May, and Mr Alain Devaquet, the former secretary-general of the
RPR movement.
COPYRTGHT: 1981 "VALEURS ACTUELLES"
5058
CSO: 3100/816
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GENERAL FRANCE
NEW SDECE DIRECTOR PIERRE MARION~S PAST OUTLINED
Paris L'EXPRESS in French 26 Jun 81 p 74
[Article by Jacques Renard: "The Man Who Played Comedy"]
[Text] Pierre Marion, the new boss of the SDECE [Foreign
Intelligence and Counterintelligence Service], loves
amateur theater. And, undoubtedly, for a long time, the
intelligence services.
He has at least two contradictory passions: those connected with secrecy and those
connected with the amateur stage. Just a few weeks before being appointed, on 17
June, to the position of director-general of the SDECE, Pierre Marion was Mr Rafle,
the usurer in the play "Turcaret or the Financier," a comedy by Lesage.
Certainly a discree~ role, in the fifth act, playing before a public which, to be
truthful, is rather confidential, that is, members of the French colony in Washing-
ton, in a lecture hall at the World Bank, attending the annual show of the French
Theater Club. Audiences were able to see him in the spring of 1976--a year and a
half after hia arrival in the United States, this time in the x~al-life role of
delegate-general for the Americas of SNIAS ~atio~al Industry l~e~rospace Compa;ny~--in
the last act of "Tartufe" as a~it player: "We live under an enarr~y prince(of fraud)."
The apeech undoubtedly had some gapa in it, in contrBSt to the new and flamboyant
uniform, created by the adoring eyes and hands of his wife, Dominique Marion, the
troupe's wardrobe lady. But with hia somewhat brutal air of authority, his noble
bearing, hia fine appearance, sometimea reminiscent of Jack Palance--these earned
him an honorable exit.
Next year, in "Le Dindon," the del~cate interpretation of Narcissus, that English-
man whom Feydeau had born in Maraeille--like Pierre Marion himself, 60 years ago--
offered him oniy a choice between declaiming like Raimu with the accent of Laurence
Olivier or the other way around.
We quickly ekip over "Lea Femmes savantea" and move on to the real big coup which
left the friende of Pierre Marion breathless. "Do you really believe that he has
b~~en a membex of the French Intelligence Service for a long timei" some of thean
asked. "I do not believe he is a socialist," said others with the same degree of
astonishment. He has a long record. An engineer, a graduate of the Ecole poly-
technique, Pierre Marion ~oined Air France in 1942 where he began a slow climb which
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he reports with equal patience in "Who's Who" (1981-1982 edition). He suddenly left
Orly in 1963 to take over for a period of 5 years as general representative of the
company in East Asia and the Pacific. The initiated hinted tha.t "his address in
Tokyo was very honorable in terms of correspondence."
He came back as deputy general manager in charge of business, the next to the last
step in a career whose ultimate destination could only be the position of general
manager. And then came one of those unexpected developments. ~t was in the summer
of 1970. Jean-Jacques Servan-Schreiber, a brand-new deputy fr.on Lorraine, went to
Aquitaine where Premier Jacques Chaban-Delmas was a candidate for the seat left
vacant by the death of his UDR [Union of Democrats for the Republic], Jacques Cha-
brat. Jean-Jacques Servan-Schreiber flung at the head of government the challenge
of a single opposition candidate--from the convention delegates to the democrats--
in othe~ words, another highly revealing story. The operation failed and the Radical
Party's secretary-general himself tried in vain to become a candidate; but before
he failed, he released the names of aeven "high-grade" men one of whom was to be
his champion againat Chaban. Pierre Marion was among them.
fhe deputy general manager o� Air France had to defend himaelf, in talking to his
president and general manager, Georges Galichon, and tranaportation minister Raymond
Mondon, againat charges of having made some promises which caused conaiderable
trouble. This was followed by a period of decline which the future boss of the
French spies did not pull~~out of until he left Air France through a safety exit. In
1972, he joined SNIAS and took up his post in Washington.2 years later, with the
secret consolation of having some powerful friends, especially Gaston Defferre,
among the socialists--which was not true of his own boss, Gen Jacques Mitterrand.
The last act was played on 5 June at the Le Bourget air show which President Mit-
terrand opened on the way. Charles HPrnu, the new defense minister, in looking f or
somebody to run the "pool," stumbled across his old friend Pierre Marion: "You are
the man I need."
Just Z days prior to the official announcement by the cabinet, General Mitterrand
ra.:,~Gd: "They are now going to accuse me of having aome influeuce on this appoint-
ment. Th~t is wrong, I was againat it."
COPYRTGHT: 1981, S.A. Groupe Expresa
SOSH
CSO: 3100/811
s5
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GIIVERAI~ FRANCE
ARIANESPACE SEEKS 30 PLRCENT OF WORLD SATELLITE LAUNCH MARKET
Paris AIR & COSMOS in French 13 Jtm 81 pp 89-91, 93
[Article by Pierre Langareux: "Arianespace Wan~e to Capture 30 Percent of the
~ World Wide Market for Satellite Launchinge"; paseage� enclcsed in elant lines printed
in baldface]
[Text] /The ambition of Arianeepace~ the fir~t comm~rcial epace traneport company,
responsible for the commercial, operational Ariane rocket launchings, is to capture
from 20 to 30 percent of the worldwide market for satellite lauachings, estimated at
- abou~ 2Qdrdnri$g;:-t.h~ next 10 years./ The preaideat and general manager of Arianespace,
/Frederic d'Allest,/ atated at the Le Bourget Salon that the company is now planning
to launch from /50 to 60 satellites/ with Ariane rockets, starting in 1983.
The present schedule already contemplates launching 30 French, Euxopean, and foreign
satellites b etween now and the ead of 1985 with Ariane rockets. Half of these launch-
ings, or 15, are already on firm~order to the ESA [European Space Agency] or to
Arianespace. The launch schedule for 1982 and 1983 is already completely filled, with
firm launchings and all the launching slots up to 1985 taken, ~aith a few rare ex-
ceptions.
The commer3cal future of the Europeaa launcher indeed appeara much more favorable than
wae the case only a few years ago; cartainly on condition that customers' hopes are
not dieappninted 3n the launchsr's naxt qualificaCion firing.planned for 19 June at
Kourow .
~aenty-four Rockets in Production
Four f].ight test firings (Lpl-L04) of the new launcher have been planned; two of them
muat b e succesaful to qualify the rocket. The first two firings have have already
been accompliahed, the firat (LOl) succeasfully on 23 Decembex 1979. But the second
(L02) on 23 May 1980 was unsucceseful because of faxlure of one of the first stage
motore, resulting in the loss of the two satellites carried on 'board (at no charge).
The other two flight test firings are planned between now and the end of the year,
also with satellitea carried at no charge, but at the customers' risk. The next firing,
on 19 June (L03) will, for the first time, carry two, geostationary satellites.
The last firing (L04), with only a single geostationary satellite, is planned for
October 1981.
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A firet lot of aix standard Ariane launchers, called the "promotional aeries" (L55-
L5 10), wae ordered by the ESA for launching four European satellites and three of
the international Intelsat organization, launchings obtained in competition with
the American "Shuttle.'.' This promotional seriea will be used in the first operational
launchings by the Ariane rocket. /The first operational firin~g (L5) is planned for
February 1982./ The last launching, (L10) in this promotiona3. series, controlled by
the ESA, will take place in February 1983 but that firing will indeed be carried by
Arianespace on behalf of the ESA.
Beyond this a11 launchings.will b e effected by Arianespace, the company which in
addition produces and ma.rkets Ariane launchers. On 15 May 1981 an agreement was
signed by the ESA and Arianespace, giving the French company complete responsibility
for operations--with the exception of new developments, which remain the responsibility
of the ESA. Arianespace will thus tak.e charge of the Ariane launchers after the
initiql promotional series, that is, as of the eeventh opera.tional launcher (after
the four tese rockets), which means starting with the llth launcher (L 11), firing
nf which is planned in May 1983. ~
Incidentally, Arianespace has already placed the order with tha industry (Aerospatiale
[National Aerospace Manufacturing Company], SEP [European Propellant Company], Matra,
etc.) for a second lot of four standard launchers (L.11- L 14) to be used in the
operational launchings planned in 1983. The comnany has alsa started accumulating
supplies over the long term for a third standard seri~s of five rockets (L 15-L 19).
_ But the Arianespace president-general manager stated that /next autumn the first 19
_ launchers will be on firm order and etocking aupplies' will start for a fourth series
of five rockets (L 20-L 24)./ Before the end of.th ~~year I981 there will therefore
be 24 Ariane rockets in production.
Ttie first 11 ,Ariane launchers (LO1-L11) will be to the preaent specifications, that
is, of the basic Ariane 1 version. But after that all launchers will be of the im-
proved Ariane 2 or Ariane 3 versions. The second standard lot ('L 11-L 14) will there-
for.e irclude one Ariane 1, one Arinae 2, and two Ariane 3 roc~ets, while the third
l~t (L 15-L 14) will consist of three Ariane 2 and two Ariane 3 rockets--on con-
dition that the payloads do not chaage. /The first firing of an Ariane 3 rocket
(L 12) is planned for July 1983./ The Ariane 4 veraion, sti11 snore powerful than the
preceding, wi11 be introduced in the fourth production lot (L 20-L 24), presumably
for the L 24 firing planned for /September 1985/ as a flight teRt ~f the new launcher
which will be put into service in the beginning of 1986.
The Ariane rockets are now being produced at the rate of one every 2 and 1/2 months,
taking into account the manufacturing cycle of the complete l~uncher which extends
over about 3 yeals. But, /this autumn the production rate will be increased to one
rocket every 2 montha,/ or six rocketa per year.(instead of the two annually as at the
be~inning), which will easily permit the /operational launchin,g rate now set at five
f:Lringr~ per year �or the 1982-1983 period/ with the aingle launching pad now existing.
Orders Totalling 1.4 Billion France
Ariane hae already secured firm orders and 14 options for Ariane rocket launchings in
the 1983-1985 period. The orders on the books thus amount to 1.4 billion francs.
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The /seven firm orders/ were placed by tha ESA for launching tha European ECS 2 and
Ma.recs C satellites and the Intelsat 5/F8 satellite, by France for launching the
French Telecom 1 B, Spot, and TDF 1, and the Swedish Viking satellites, and by
Germany for launching the German TV-SAT satellite.
The /14 options/ have been taken by the ESA (3), Switzerland (1), Colombia (2),
Australia (2), the Arab League (2), the Luxembourg company, CLT (1), and the'.�ollowing
American firms: RCA (1), Western Union (1), and Satellite TV Corporation, subsidiary
of Comsat [Communications Sate111te Corporation] (1).
In addition, /Arianespace at present is negotiating with eigY:t other potential cus-
tomers/ intereated in the Ariane launcher. They are: Intelsat for its future
Intelsat 5, the Swedish Space Corporation for the TELE-X, TelPsat (of Canada) for the
Anik, and the American General Telephone and Electronica Corporation, Southern Pacific
Company, and Hughes Cou~unicatione, Inc. for their domestic eatellites, as well as
NATO and Che Britieh Aerospace Dynamice group for launching milltary telecomonunications
satellitee~ becauee Arianespace can also launch milltary eatellitee--within the ecope
of international agreements and t~eatiea governing the peaceful uses of apace, which
exclude only "offensive" eate111tes.
Other launchings are also planned, but the dates for them have not yet been fixed.
They involve the Eutelsat ECS 3 and ECS 4 and EAS Hipparcos satellites, as well as the
future OPMET geostationary operational meteorological satellites of the future Eumetsat
organization.
The new Araine 2 and Ariane 3 rockets, whose construction has been decided upon and
is underway will, in the middle of 1983, make posaible considerable increase~.in geo-
stat3onary launching capacity (2,065 and 2,470 Kg in transfer orbit) compared with
that of the present launcher (1,750~g).
The New Launchers
But it is the future /~lriane 4 launcher, whose construction shcu?d be authorized
in the end of 1981 or beginning of 1982,/ that wi11 truly be ~he Arianeapace work-
horae with which to face its foreign competitors~ the Shuttle i.n pert3cular. The
Arinne 4 rocket in f~ct will double the capacity !or launching into geoetationary
trans�er orbit (3,540 Kg) and increase, by more thetn 50 percent, the low orbit per-
formance (7,500 Kg) compared with the Ariane 1, while reducing the cost per kilogram
transported by about 40 percent. Incidentally, there will be th;cee veraions of this
new rocket, depanding upon requirementa: /Ariane 40,/ without additional boosters;
/Ariane 42,/ with two boosters' and 1~iane 44,/ with four booaters (each with from
7 to 8.5 tona of aolid fuel). ,
Arianespace has also planned on better adapting the new launchers to the payloads
by preparing to fabricate new nosea and double launch systems (SYLDA).
_ The nose, 3.2 meter6 in diameter and 8.65 meters long, of the Ariane 2 and Ariane 3
will make it possible to launch a large satellite of the PAM-A (Atlas-Centaur) class.
or two medium satellites of the PAM-D (Delta 3920) class by means of the new SYLDA
44G0 double launch system, a lengthened version of the SYLDA 3900 of the Ariane 1
launcher. Arianespace has also planned to improve Che occupancy of the launchers with
sma11 satellites carried as "secondary passengers" by util3zing the Boeing Aerospace
Viking platform.
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For the Ariane 4 no fewer than /five new noses/ will be available. These modular
noses of composite material (Kevlar), 4 meters in diameter, will thus enable the
payload volume to be increased considerably.
~ For the launchings Arianespace will offer three noses of di�ferent sizes and volumes:
8.6 meters (54 cubic meters), 9.6 meters (65 cub ic meters), and 11.8 meters (88 cubic
meters). For double launches the first two noses can be used upon the SPELDA carrier
system for double launching which will replace the SYLDA. They provide the following
combinations: nose of 8.6 meters (50 cubic meters), or nose of 9.6 meters (60 cubic
meters) upon a steell of 3.5 meters (26 cubic me ters). The panoply of noses wi11 thus
r~ake it possible to launch either a large satellite of the Intelsat 6 class (3,540.Kg)
or two medium satellites of the Australisat class (1,600 Kg each), or even a large
s~tellite of the Intelsat 5 class and a small telecommunicatior.s satellite (3,900 Kg
toCal) .
Prices for launchings are difficul.t to establish because at present no market price
exiats, d'Allest etated. A firing of the Del~a 3920 for the end of 1983 wi11 cost
about $35 million. But the price of the At1as-Centour has changed greatly and that
of the Shuttle is a temporary promotional one (for the 1982-1985 period) which will
later be revised upw~ard--by at leagt 50 to 60 percent.
The Arianespace president-general manager never theless says that /Che Ariane rocket
is competitive with the Delta rocket;/ it costs from $5 million to $6 million less
than the American launcher. As for the price of an Ariane 2 rocket, it will be about
200 ~3.11ion francs (1980 prices).
But, nevertheless, the competitive position of the European launcher vis-a-vis the
Shuttle must be improved by better production organization and creation of more
economical versions(Ariane 4). Arianespace is also planning to renegotiate estab-
lished prices for future launchings, beginning in 1986, with Eciropean governments.
The ELA 2 Under Construction
A~econd launcaing area (ELA 2) is also going to be constructad at Kourow to ir~prove
launching capacity up to 10 firinge per year.
1 /I'reliminary aut~?nrization for the ELA 2 wae given laet week and work ia going to
begin next .Tuly./ 'I'he new launching facility ehould in fact be /ready in October
~ 1984/ for acceptance and validation operatioae which will be effected with a"launch-
ready fueled mock-up," that is, with an actual rocket which will remain upon the
l~unching pad for the entire duration of the operations. But rhat rocket will be
launched later with a payload on board. /The f irat firing of an Ariane rocket from
the ~LA 2 is planned for April 1985./
The cost of constructing the ELA 2 is now estima ted at /about 650 million francs/
(109 million accounting units). The construction of this new launching facility is
in facC broken down into five principal tasks directly controlled by the CNES [National
Space Studies CenCer].
T'he infrastructure contract (ci.vil engineering, s teelwork, air conditioning, and energy
supply), for the sum of about 280 million francs, was awarded last week to the
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coneortuim headed by Dumez, of France, and including Clemessy, of France, MAN, of
Germany, and Brunn-Sorenaen, of Denmark.
The contract for equipment (hydraulic, low current, and administrative) is sti11 in
- competition and will be awarded at the end of June.
The contract for control systems is divided between ETCA, of Belgium, for the
electrical and Rovsing, of Denmark, for the hydraulic.
The call for bids on the release system will be made in July and the general con-
tractor will be na~d in the autumn. ~
As for the cryogenic feeder arms, construction has been assigned to SILAT, of France,
as was the case fdr the first lauaching pad. ~
Ariane Launching Prospects for 1985-1990
Launcher 1985-1986 1986-1987 1987-1988 19~~3-1989 I989-1990
Ariane 2 or 3 4 3 3 2 2
Ariane 40 - 1 2 3 2
Ariane 42 (1) 1 1 1 2
Ariane 44 - 2 1 1 1
Spare 1 1 1 1 1
Total 5 8 8 8 8
Performance of Ariane Launchers
Payload Weights in Kg
Helio-
Orbit Geostationary Geostatieaary~`~~~~~.� Low synchronous
Launcher tran~fer 1 satellitie 2 satellites 200 Ktn 800 Km
Ariane 1 1,750 1,025 915 4,850 2,400
- Ariane 2 2,065 1,200 1,100 5,000 3,000
Ariane 3 2,470 1,450 1,365 5,800 3,450
Ariane 4 3,540 2,170 1,930 7,500
Ariane 5 5.700 3,440 2,960 10,000
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I~I)It c)1~1~1c'IAI, il!it~: t)NI.Y
CALENDRIER D~S LANCEIN~ENTS a ARIANE ~ jUSQU'EN 1985
1,u~sea ~ 2wois nrt t} cw?nc~c un~e I5o_ ( 6 MIS810N ~ cne~~7
BQRi! DE DEVELOPrlYENT (LANCEM[NT8 .:'E88A1)
107! Dic. LOi CA71 ESk Capwl~ T~ehnoloQ. Suco~~
1f10 Mal LQ2 CAT2 + FlnwhNl + All~mpn~ Scl~ndflqw EolMo
OSCAA 9 All~ena~ R~dlo~rot~ur
1N1 Ju1n l0~ CAT3 + METE08AT 2 E3A M~Noroloplaw 1 dT0
+ APPLE Ind~ T~l~oommunlatlom (iT0 ~
Octobn l04 CAT4 } btARECS A E3A T+licom. marltlmM ZQTO
SEAIE DE PNOMO (t 1
tY12 Fivrlx I~ MARECS B ESA il~can. marlurt~s (3T0
+_~RIO 2(+ SYLDA) ESA DH. damMi nNNo
Avr11-m~i LO In~ri~?T V FO au Int~l~at TiNoommunkatlau OTO
EC91 ESA Til~aommunle~tlon~ aTQ
1n~Wli~t L7 E%08AT E9A Mbonoml~ EItlpTqw
~ ouC~INTEtBAT V Po EngeNut il+
~a
Icitlon~ OTO
Nov.~d~o. La INTEI.SAT V F7 In�b~t T~I~oonwnunlaatlo~a aT0
i[R O~
1Mi ~wrla L10 IN?AdA V PC Intsl~at T~I4aommuniatlon~ CiTO
M~I lit ~I~ [8A T~I~oommunla~Qon~ p~0
Juill~t L17 T 1 A~� fra~w T~Ibonwnunlatloe~ GTO
MAN C ( F8A fN~oom. m~tlm~~
Oatob~e L1~ T 1! � fr~na~ T~I~aomnwmatlon~ QTO
+ M (R) UOA T~lioommunlatlon~ TO
Go~n~bn Lt4 T 1(1~ � ARA~AT T~t~oaTnw~Manon~ ~10
+ Afl U8A TN~oonwnunlat~on~ OTO
tIM R~vria lt6 L1bn 7
Awlt Lt0 SP~
(17 Fnna~ T~I~dkeotion 13 Ello~y~b.
iHa( BuW~ EwdN a~nmaa ~ EIIIp tlqw
I Juln L17 BATCOL 1(~~ � Coloenbl~ ~I+aonwnunlatlaM aT0
+ AAAS8A7 ~ (R) ARAdB/~T T~I~oommunlattonr ~TO
AoOt Lte N SAT All~a~apn~ N dlnot~ OTO
Oatobn L10 8ATCOL 4(fq' Cotom6l~ 7il~oommunlo~ttan~ aT0
+ TE48AT 1(Fn 8ulw TV dlraa CiTO
D~a~nbn l2p TDF 1(~ fnno~ N dlnoa OTO
1914 Fivrl~r U2 AUSTAAl.I8AT 1(R~ � AuW~ll~ T~I~oommunlatlon~ OTO
+ Ubn
Avr~t ls2 L 8AT E8A N dlnoh GTO
M~1(~ l2J ~t ClT (LwcJ N dlr~at~ GTO
luNi~t ~ + I T 2(F~ AustrWl~ T~1loommunlo~t~on~ C1fl
010 � EBA 1 V. CaMt~ HMI~y Int~rpl~n.
+ S'TC (!1) U8A N dlnot~ 4T0
NN~roln C26 u~IAN: 4 ESA _ Vol d'Nwl ],6 _
01c~n+br~ C?7 Ubn - -
Schedule of Ariane Launchinga Through 1985
1. Year 11. Maritime telecommunications
2. Month 12. M~teorological data broadcasting
3. Launch No. 13. RemoCe seneing
4. Payload 14. Plaema etudies
5. Origin 15. Radio obeervation of Iialley's comet
6. Purpose 16. Test flight
- 7. Orbit 17. Heliosynchronous
8. Promotional Series
9. Arianespace Promotional Series
10. Meteorology
*utilizing SYLDA-Ariane double launch sysetm
(1) GTO ~ geostationary transfer orbit
- (F) on firm order
(R) under option
COPYRIGHT: A.& C. 1981
11,706
CSO: 3100/786
L;1
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;
GENERAL ~ FRANGE
SNPE BL'ILDING DIMETHYLHYDRAZINE PLANT AT TOULOUSE
Paris AIR d COSMOS in French 13 Jua 81 pp 94-95
[Article by Pierre Langereux: "SNPE Conetructe Firet French iJIyIDH Plant at Toulouse"]
[TextJ The National Powder and Exploeives Company (SNPE) has been chosen by the
National Center for Space Studies (CNES) and Ariaaeapace to build the first French
plant for production of UDI~i (unsy~etrical dimethylhydrazine}. a hydrazine dexivative
used as a fuel in the liquid propellant enginea of the first and second stages of the
European "Ariane" lauach vehi~le. This plant, which will be built in the Empalot area
of suburban Toulouse, will have a production capacity of 750 tons of UDI~IIi per year
and will become operational during the first half,of 1983. Thus CNES and Arianespace
will no longer be dependent on foreign sources of supply for this storable fuel for
the Ariane launch vehicle. Up to now UDI~IIi had to be purchased from the Un3.ted States
or the Soviet Un3on, the only countries in the world producing (and,~selling) UDI~i.
Of the various liquid propellants for the European launch vehicle, UDI~IIi has the only
- one dependent on foreign auppliers. The other propellants for the rocket--nitrogen
peroxide and liquid hydrogen and oxygen--are already produced in Franch. Nitrogen
pEroxide (NZ04) ia produced by the French Nitrogen Company at tlie Pierrefitte plant
(Hautes-Pyreneae), while liquid hydrogen and o~rgen are producod by Air Liquide.
The United SCates wAe one of the largest producere of UDA4I up to the beginning of the
1970's, when the Baltiawre plant ceased operations af ter a atudy revealed that one of
the synthesis intermediates in the manufacturing process, dimethylnitrosamine
(CHg)2N20), was strongly carcinogenic.
Prevented from procuring UDrIIi from the United States in auffici2nt quantities at a
aufficiently competitive price to fuel the new European launch veh3cle, CNES then,
in 1974, concluded a contract with the Soviet Unfon to supply IJLI~i. This made 3t
poasible to acquire the some 100 tons of UDI~i neceasary to proceed with development
of the Ariane rocket.
Recently CNES has also purchased 200 tons o� UDI~IIi in the United States, where for a
number of y~are it hae been praduced by a new, noncarcinogenic process by Olin
Ma~:hieaon Corporation, primarily to aupply the needs.of the U.S. Air Force.
Tnese supply a~reements will provide aufficient stocka to complete the development
o:E the launch vehicle. However, the aolution had to be consider~d only temporary.
It was not reasonable to have to depend exclueively on foreign supplies for the oper-
ational flightr~. �
112
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FOR 01~1~1('IA1. U~b: ONLY
Therefore, in 1975 CNES asked the physical inorgAnic chemistry laboratory at the
Univeraity of Lyon, affiliated with CNRS [National Center for Scientific Research]
and direcCed by Professor Cohen Adad, to work out a new procesa for producing UDMH.
The only process known .at that time, the dimethylnitrosamine process which had been
perfected at the Sorgues plant in the mid-60's, had to be ruled out by the Solid Fuels
Service because of the health risks.
The Lyon team, with advice from SNPE engineers, turned its attention to the Raschig
process, which had already proven satisfactory for the manufacture of hydrazine
hydrate. A very thorough, extensive, meticulous study was conducted to determine the
influence of the various controllable industrial process parameters on the kinetics
of the reactions involved, measure all the thermodynamic quautities needed for the
engineering calculations, and clarify the nature of the by-products which inevitably
arise.
To check the conclusiona of that atudy i.n tests on a reduced sca'le, a pilot unit was
built under a contract commissioned by CNES and DRME [Research and Test Methods
DirectorateJ. This pilot unit was operated from October 1979 ta the beginning of 1980
at the SEP [European Propellant Co.] plant in Vernon, to work out an economically
feasible procese.
On the baeie of the technical daCa gathered in those trials, CNES began requesting
industrial offers for construction of a French UDMH production plant.
SEP took part in the consultations about the proposed plant, in cooperation with the
chemistry division of the French Coal Board (CDF Chimie), but it was SNPE which was
chosen by CNES and Arianespace at the end of 1980. SNPE added some improvements to
the process in order to produce UDMH industrially in accordance with the planned
quality and cost objectives.
The plans for the UDMH plant worked out by SNPE-CE, an engineering affiliate of SNPE,
are now cumplete. The construction work will begin aC the end of 1981 on a site at
the Toulouse Powder Works. The plant, which ie to employ only 25 pereons, is to be-
come operational during the first half of 1983.
The contract concluded with CNES provides that SNPE will assume the plant construction
coats (around Fr 40 mi111on), while CNES agrees to purchase UDMH from SNPE in the
amount of. 300 to 750 tone/year at a set price (around 50 Fr/kg).
- 1'he contruct will remain in force for a period of l yeara from ;~tart-up of the plant
(f:trst half of 1983) and is renewable for at least 3 yeara beyond that.
The UDMH production capacity planned for the Empalot plant cou7_d perhaps perm~t some
at the UDMH to be furnished to other clients, but the plant wiZl not be able to pro-
duce much more than 750 tone/year.
'I'his capacity will be sufficient to handle the needs of the present Ariane rocket,
which will. require about 62 tons of UDMH (50 tons for the f3.rst stage and 12 tons for
the second stage) or maybe a little more counting filling losses and fuel for bench
tests of the engines. ~
But the Empalot plant wi11 not produce enough to supply the new version of the launch
vehicle, which is expected to be ready by the end of 1985, only 3 years a�ter start-up
- 43 ~
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l nFf'I('IAi. USI? t)NI.Y
oi thG p]ant. The Ariane 4 rocket is to be equipped with a new first stage carrying
`l40 tons of propellant, 84 tons of which will be UDMH; this, added to the second
stage (12 tons of UDMH), will mean a consumption of around 96 tons of UDMH per shot.
To sarisfy the needs anticipated with the new Ariane 4 rocket on a schedule of 8 to
10 shots per year, as CNES envieions in the second round of ~hota (ELA 2) now on
the drawing board, the plant would have to produce around 1,000 tone/year.
CNES and Arianespace, accordingly, expect to continue procuring UDMH abroad--in the
United States, the Soviet Union, and Even ~hina!
_ French Process for Industrial Production of UDMH
The process for production of unsymmetrical dimethylhydrazine (UDMH) worked out by
the University of Lyon basically uses the Raechig process but breaks it down into
two successive op2rations to improve production yields. The new French process is
therefore carried out in four steps.
First step: Just as in the Raschig procees, chloramine (NH2C1) is formed by reacting
sod:Lum hypochlorite (Ca0C1) with ammonia (NH3) at low temperature (8�C), in the pre-
sence of ammonium chloride (NH4C1) which ensures a weakly basic medium.
5E~cond step: The mixture thus obtained, containing chloramine (NH2C1), is then com-
bined w:ith sodium hydroxide (NaOH), to increase the pH (from 9-10 to 13-14), and with
dimethylamine (CH3)(ZNH) [sic; (CH3)2NH) ie correct~. The operation is thus conducted
in a basic medium in a quasi-adiabatic manner in a pressurized reactor (8 bar) at
elevated temperature (80�C), so as to favor the synthesis reaction and minimize the
parasitic side reactiona. The reaction thus yielda a very dilute aqueous "synthesis
broth" containing sodium chloride and 3 percent UDMH (CHg)2N-H) [sic; ((CH3)2i~tNH2) is
correct].
Thi.rd step: Excess ammonia and dimethylamine remaining after the synthesis are elim-
inated and collected for eventual recycling.
Fourth step: The synthesis broth is distilled to eliminate the watex and obtain
UDMH, better than 98 percent pure.
In pract~Lce, SNPE has had to overcome two difficulties to be a~.Ie to perfect the pro-
cess at the industrial level with a favorable overall yi~ld (around 80 percent). One
of these difficulties was occaeioned by the high dilution of thE synthesis broth,
which meant substantial energy conaumption in che final distallation operations (steps
3 and 4). The other difficulty was in chooaing a syntheais reactor which would best
minimi~e the effecta of the paraeitic reection between the alt~eady-formed ITDI~i and
the unreacted chloramine,
Tl~is process is now completely perfected.
(:OPYRICHT: A. & C. 1981
9828
CSO: 3100/787 END
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