JPRS ID: 10030 WEST EUROPE REPORT

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• Content Type: REPORTS

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JPRS L/ 10030
5 Oc~ober 1981
Wes~ Euro ~ Re ort
p p
(FOUO 50/81)
.
~
_ Fg~$ FOF~EIGN BROADCAST INFORIlIIATION SERVICE
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JPRS L/10030
~ October 1981
WEST EUROPE REPORT
(FOUO 50/81)
CONTENTS
THEATER FORCES
- FRANCE
Nuclear Deterrent, European Defense Policy: Results, Limits
(Albert Palle; CONII~NTAIRE, S~mer 81) 1
ECONOMIC
~ INTERNATIONA.L AFFAIRS
. French Use Violence To Stop Spanish Agricultural Imports
(Mig�uel Ramos; CANIBIO 16, 2~+ Ju1 81) 10
Norway Replacing Denmark as Nordic 'Locomotive~
_ (Carl-O]_of Johard; VECKANS AFFARER, 20 Aug 81) 16
DENMARK
Foreign Debt Soon To Reach 100 Billi.on Kroner
(Ca.milla Bratt; VECfCANS AFFARER, 20 Aug 81) 22
- a - [III - WE - 150 FOUO]
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THEATER FORCES FRANCE
NUCLEAR DETERRENT, EUROPEAN DEFENSE POLICY: RESULTS, LIMITS
Paris COP~RrIENTAIRE in French Summer 81 pp 197-203
[Article by Albert Palle: "Machi~velli and Deterrence"]
[Text] A few weeks ago, while watching, like everyone else, a television special on
France's nuclear defense, I tried to imagine Machiavelli sitting in front of my TV
set. What would the commissioner of the Nine of the Militia have thought upon viewing
those ttirage aircraft, those Pluton missiles, those S-3 and M-4 missiles? Would he
have inferred that this Republic of the "franciosi"--as he sometimes somewhat annoyingly
referred to the subjects of tl~e most Christian king--was "virtuosamente" and wisely
taking the military measures necessary to cope with its enemies?
' Name the Enemy and Allies
The force portrayed for him was immense, a force capable of destroying several dozen
cities, each with a population of 1 million. The Republic possessing this force must
. surely be one of the c~~orld's leading powers. 'iet who would dare confront such a
force? Milan? Venice? King Charles? The secretary [of the council of the Republic
of Florence] was indeed surprised to note that the enemy was not even named. He heard
reference made to omnidirectional defense, but also--because it is one plausible
scenario among others, so it was said--of an enemy "from the East." Which enemy?
When Rome feared for its existence, between the two Punic Wars, it di.d n.ot mobilize
its legions against an enemy "f~om the South," but against Carthage.
What does this television language mean? It is directed to the people and not to the
chancelleries. If the nation of the "franciosi" has enemies, why not name them?
- Could. it be that the Republic ~s afraid to do so? But if the enemy is abstract,
what reality does the defense have? Our Machiavelli wondered whether this timidity
did not betray a certain lack of "virtu," despite the military resources the Republic
_ appeared to have.
An irritated TV viewer whispered in his ear: "Don't rack your brains about it, it's
only an election campaign program." But this remark did not stop the Florentine.
The fact that it was campaign rhetoric mattered little. He :;*as intereste3 solely in
the reality it revealed. But other viewers soon informed him and suggested, without
clearl}+ explaining themselves, that this enemy who is not named and who is perhaps
not one, is much larger ar~d more powerful than the Republic. But they immediately
reassured him that the victorious strategy had been deduced precisely from this
_ ~nequality and was a strategy designed to guarantee the Republic`s survival.
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Now this was a situation our friend felt he recognized: a very larbe and very
powerful nation confronting another weaker nation. In his view, the first tends to
subdue the second. Experience proves that to preserve its freedom, the latter can
rarely rely solely on its own forces but must also be defended by its allies.
'~tie Florentine noted, however, that nothing had thus far beea said to him abo~it the
Republic's allies. Could the Republic possibly be alone under the s~ui in opposing
the giant lying in wait for it? That would indeed be alarming. But once again they
reassured him. There is no need to talk abot~ allies. We have something better.
We have our own forces!
"riiracles" of Deterrence
The commiss~oner of the Nine of the Militia was thus initiated into the subtleties of
the doctrine of deterrence by which the Republic of the "franciosi" is able to prove
- that, in its case, the weaker nation can nold the stronger nation in check. This
� u�i;smed enemy who could come from the East will not come, however, because he does not
wish to expose'himself to massive retaliation. If he were to advance toward out
territory, if he were to threaten our vital interests, we in turn would threaten to
destroy several. dozen of his cities. He will not take that risk.
- Our friend continued his questions. What are those vital interests? What action by
this enemy, who is perhaps not an enemy, would be considered an attack on those ~
interests? He was not told. If this nonenemy were to violate, for example, as he
has previously done in other places, the borders of a neighboring country but then stop
at the Republic's borders, would that be an attack on the latter's vital interests
or not? These definitely constitute prospective misunderstandings that might we11
encourage the said nonenemy to take a chance someday.
~dould the threat brandished by the Rept:blic be enough to stop the enemy? The autlior
of "Discourses on the First Ten Books of Livy" tried to imagine how Carthage would
_ have reacted had a small nation in northern Italy, or even Rome, threatened it with
Jupiter's thunderbolts if Hannibal did not immediately halt his elephants as they
were about to s~art crossing the Alps. Carthage would not have believed in the threat.
The thunderbolts of the Republic of the "franciosi" are no doubt much more dangerous,
much more real than Jupiter's. The enemy who is nat one has no doubts on that score.
Yet does he believe in the threat? The fact is that he has thurderbolts twenty times
more powerful, as the Florentine had already learned from other sources. And what if
that enemy were not to play the deterrent game and, deeming the situation ripe, were
at last to launch an attack witl~ his airborne divisians, his thousands of tanks;
his hundreds of thousands of infantrymen? In fact, occupation and control of the
Republic and a few other neighboring countries might well be for the nonenemy such
an important objective that he would be willing to take equally important risks to
achieve it.
;mat should be done then if the nonenemy having become the enemy turns a deaf ear to
the threats oF inassive retaliation? Our Florentine using tiis reason buttressed by
- experience concluded that the only remaining thing to do i.; to try and stop the
invading forces in the field. The Republic must give battle to the enemy. Impossible,
replied the TV set, be~ause, after all, we are winning. In fact, we are going to
draw nearer to the enemy and launch a certain number of so-called tactical atomic
weapons against him, not to stop him in his tracks but to make him finally understand
the situation. He will readily see that our threats are serious. Our atomic
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projectiles will have already done him a great deal of harm. The damage is nothing
compared with the strategic bombardment we are going to unleash against him a~ any
moment if he persists in his aggression. Q.E.D.
T'he secretary of the seigniory was perplexed. This battle which the Republic refuses
to fight while at the same time firing at the enemy 3 certain number of projectiles
that will cause enormous damage, is it really explicit? Will the enemy understand
that the Republic is not giving him ~attle but is thereby giving him merely a sort of
telephone call? It's quite doubtful. .
Deterrence or Refusing to Give Battle

y Refusal to give battle is a tactic that our friend from Florence has studied. When
Hannibal was ravag,ing Italy, Fabius followed him while stubbornly avoiding an actual
battle, a strategy which enabled Rome to rebuild its forces and eventually destroy
Carthage. But as Livy's commentator recalled, the battle which Fabius sought to
avoid was merely the one Hannibal wanted to force him into under conditions favorable
to Hannibal. The Roman would have fought on his own grounds, a risk the Carthaginian
was too good a general to take. On his own grounds Fabius was, in fact, as strong
as Hannibal was in his positions. It was this strength that allowed Fabius to refuse
to give battle. The situation was altogether different for Philip of Macedonia.
He tried in vain to avoid giving battle, but the Romans, after having ravaged his
country, cornered 'nim into fighting and defeated him. Is this refusal-to-give-battle
policy adopted by the Republic of tlie "franciosi," the Fabius version or the Philip of
Macedonia version?
- Recalling the savage conduct of the Romans, how could Machiavelli possibly help from
wondering whether this refusal to give battle would not, on the contrary, incite the
_ Republic's powerful enemy to rapidly press his advantages, despite the risk of massive
atomic retaliation to which he can respond with counterblows 20 times more powerful?
This risk would certainly stop us. But they, the enemy, are probably not us.
The Persians burned Athens and the Gauls burned Rome, but neither the Athenians nor
the Romans stopped fighting. The destruction of Moscow, Leningrad, and other cities
- would not stop tb.e enemy who is victorious on the battlefield.
The Republic's enemy will not let himself become hemmed in by the policy of deterrence,
~ no more than Fabius let himself be drawn into the battle desired by Hannibal or
Hannibal in the one wanted by Fabius. The enemy will be deaf to the strange messages
transmitted to him via Pluton missiles. When the battle gets underway, it will be
the battle he war.ted, on the ground he chose, and at the right moment with the right
weapons. If he has not already fired first, which is most probable, he will counter
the Pluton and S-3 missiles with a volley of SS-20 missiles capable of pinpointedly
destroying all weapons and equipment likely to hinder the advance of his forces.
He, unlike the Republic, is not on the defensive. His military doctrine, drawn from
his political doctrine, provides for and prepares for the tactical nuclear blitzkrieg
clearing the way for his tanks. The enemy's plans even call for him to be able to
fig~t this battle without having to mobilize his reserves. Regardless of the
magnitude of the damage inflicted on his rear areas, he will have gained the victory
if he rapidly occupies all the territory of the Republic and its neighboring republics,
- a victory he cannot be denied because the Republic has decided that it cannot and
will not give battle to him. If he has a bit of "virtu"--and he has proved he was
not lacking in such--he could Even accept the destruction of Moscow, his capital city,
without even destroying Paris in retaliation. What good would that do, inasmuch as
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it is assumed his tanks are bearing aown on the Elysee Palace, a handsome building
which it is more convenient to occupy in gaod condition than in ruins. Machiavelli
ventured to suggest that it was to be feared, ho~vever, that Parisians, concentrated
into suitable "Gulags," would have to rebuild the barbarians' capital with their
bare hands.
This made ~ur Florentine friend quite apprehensive. In his view, this deterrent
terror without battle is like a fortified place without any manpower therein.
He remembered having read in Livy that "nec murus, nec vallum, armati armatis
obstant," which could be translated somewhat freely as "tanks are not stopped by
submarines," a version suggested by the excellent authors of "Echec a la guerre-la
bombe a neutrons" [Checkmating War-the Neutron Bomb] (by Samuel T. Cohen and Marc
_ Geneste, published by Copernic), a book that the �amous author [Machiavelli] of
"The Art of War" would have appreciated. In fact, tanks are not stopped by strategic
missiles launched from submarines or from silos on the Albion Plateau, nor by
deterrent fortifications, but by man-operated weapons capable of blasting them in
their tracks.
i
Arm Men to ~~op Tanks
Is it not actually possible for the Republic to provide itself the means of fighting
this battle, failing which the enemy will not be stopped and will win? The TV screen,
extremely defeatist on this particular point, had already implied that the Republic
could not. The TV had casually indicated, however, that there might conceivably t>e
- another strategy, one implemen~ed in coordination with some vague unspecified allies.
Television is by nature brief and reticent; more often than not, it refrains from
- disturbing the viewing voter's digestion or sleepiness. To learn a little more about
this strategy, the Florentine secretary let himself be taken into a chamber where he
felt people must certainly be better informed, namely the Pdational Defense Committee`s
conference room. As he entered, the armed forces chief of staff, the delegate general
for armament, and the administrator of the Atomic Energy Commission were conducting
a briefing. He reasonably felt that, unlike their televised remarks, these men would
not, in such a meeting, draw a flattering and reassuring picture. After all, these
were experts briefing political authorities.
' Our Florentine who is able to take a hint immediately caught some signals in their
explanations, signals that made him listen carefully. For example, the chief of staff
said: "You need not puzzle your brains about this." Mach:avelli immediately
interpreted this as meaning: "Do stop being idiots." General Vanbremeersch was, in
effect, pointing out to the committee's parliamentary members that military doctrine
, must take technology into consideration, that General de Gaulle, the father of
deterrence by massive retaliation, had no doubts about tiiis, because it was he who
had ordered research, development and production of tactical nuclear weapons, in
other words, weapons meant to be used on the battlefield.
Mr Martre, the delegate general for armament, seemed to be entirely of the same
opinion. "The important thing is to have the suitable weapon meeting the requirement,
and have it at the right moment." And what if that right moment happens to be the
one when eiiemy tanks are sweeping forward? And what if the suitable weapon meeting
_he requirement were preczsely that neutron bomb which the delegate general for
armament considers "~he most reliable weapon compared with others of equivalent
effectiveness?'
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Mr Pecqueur, the admini_strator. of the Atomic Energy Commission, was more explicit.
"The neutron bomb," he explained, "is essentially a defensive weap~n...When fired at
2-kilometer intervals, it provides total protection."
The Florentine who had made inquiries already knew that this weapon's neutrons
penetrate the thickest armor, like daylight through glass, that it destroys every
living person or thing at ground level without causing any blast or fire damage.
- He knew that two of thesa weapons detonated 1,500 meters apart would be enough to
stop any armored formation over a 3-kilometer front, and that to obtain similar
results with conventional artillery shells would require simultaneous fire from the
tank and field artillery guns of 30 to 150 armored divisions. Lastly, he knew that
a person can shield himself from the weapon's neutrons by taking cover under 1.5
meters of earth, a solutiori highly suitable to tne defender who can bury himself but
not to the attacker who has to advance at ground level.
Continuing to argue for the Republic of the "franciosi," our Florenta.ne regained his
peace of mind. According to the experts themselves, the Republic could very well
have these extraordinary weapons in 2 or 3 years, weapons capable of stopping the
enemy in his tracks no matter how gigantic the invasion forces may be. Once again,
David can plan to fight Goliath, not by demolishing the giant's lair, but by opposing
him with a sling. Once again, the Republic can abide by the princinle "armati armatis
obstant." The Republic is not lost, provided it loses no time in producing these new
weapons in large numbers and is not content to store them in arsenals but the
apportunity to do so effectively whenever and wherever needed. This would certainly
be a considerable change in strategy. But it would permit the Republic to do better
than Fabiusr namely to stop Hannibal in the ~oothills of the Alps before he is able
to ravage Italy.
Accepting the Forward Battle
The Florentine contemplated writing an additional chapter to his treatise on "The
Art of War." By accepting to fight the forward battle, the Republic immediately
deprives the enemy of the doctrinal superiority underlying his strength. 1'he enemy
- believes that war always has a political meaning. The Republic and its allies believe
that monstrous atomic weapons make war impossible and even unthinkable. In an eifort
to prove this fact to the enemy, they have accumulated these weapons of terror.
But the enemy has not changed his views. With these same weapons, he has achieved
a counterterror capability. Between these two terrors which, in his opinion,
counterbalance one another, he continues to prepare for a war having a political
meaning, that is to say aimed at occupation and control of territory. Under these
conditions, how can anyone who refuses to wage war possibly resist someone wilo believes
it is always possibly useful? "A war cannot be refused," recalled the Florentine,
"but only deferred to the other party's advantage." By ac~epting the forward battle,
the Republic would first of all be renouncing this defeatist doctrine. It would be
rejecting a certain intellectual disarmament which places it in a position of
inferiority irrespective of the magnitude of its weaponry.
- Without doubt it would at the same time reduce the risks of a holocaust. The armed
forces chief of staff may perhaps have sug;ested such a possibility, even ttiough
seeming to say the opposite, when declaring: "Any nuclear attack on our territory
will lead to a total response." On reflection, these words mean: strategic nuclear
fire is specifically a response to a definite strategic nuclear attack and not, for
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example, to a tank attack, it being possible to stop the latter by other means.
In that case, would the enemy unleash stra~egic terror knowing that it would eventually
fall back on his head. Why? One of the "enemy�s" men, Marshal Grechko, has said:
"These doomsday weapons are not weapons of ~aa~. The man who would be crazy enough
to be the first one to push the button is not yet born" (quoted by Piarc Geneste in
"Echec a la guerre"). ~f faced with an ad.versary capable of winning this forward
_ battle, it is virtually certain that the Republic's enemy will take care not to join
that battle.
As he was about to conclud,e his additiona~ ~hapter, the Florentine received new
information that pleased him very much. He learned that technology had recently
conceived a new extraordina~y weapon, th.~ ~amma bomb,* which combined with the neutron
b~mb would give the Republic absolute assurance of being able to bar .the enemy from
its territory. This would not be the fi~st time in history that the weaker nation
endowed with "virtu" victori~us~.y defends itself against a stronger nation. But would
it not be tize first time t~iat the weaker nation's weapons give it absolute defensive
superiority?
The Florentine's age-old experienc~ prompted him, nevertheless, to temper his pleasure.
He knew that Fortime trifles with aur assurances, that men very often have neither
- enough "virtu" nor enough sense to ~eize the opportunities it occasionally offers them.
~ Hence he was hardly surprised whe,n he was informed somewhat later that the same
National Defense C~mmittee before which a considerable number of experts had testified,
- had adopted none of their recomme~dations. But SS of its 60 members voted to reaffirm
the principles of deterrence by massive retaliation and rejected any idea of tlie
forward battle. What about the capabilities which modern atomic weapons offer the
defense? Not interested. Wh~t ab~ut the neutron bomb capable of stopping an army
of tanks? It is contrary to rh~ principle of deterrence. The threat of huge
- old-fashioned "popguns" is bet~ter. The experts seem to have talked to a committee
of deaf persons. As the defense minister himself had previously said, "Our doctrine
does not change."
Revise the Doctrine of Det~rrence
The doctrine which does not change has become a dogma, deterrence an archaism:
antiquated deterren~e. Once again, the Florentine felt pessimistic about the
Republic's future. Hp noted that in the name of faithfulness to a genius, obscurantism
was prevailing. There is nothing new about this. A great man of the Republic,
General de Gaulle, -a reformer and strategist, had devised the best defense possible
at a certain period. A genius capable of changing with the times and keeping abreast
of technological advances, he would undoubtedly have adapted his strategy to them.
He did not nave time to do so. His successors have immobilized his thinking into
a mythology,
Should comm~n sense lose hope? The Florentine is not a man to yield to Fortune
. altho~ig'n he does acknowledge her power. An examination of the facts showed him that
the dogma may not b~ as indestructible as it appears. Admittedly it is untouchable
for all the Republie's political ;~arties save one and especially sacrosanct for one
*"Terreur sans massacre: la bombe gamma" [Terror Without Slaughter: the Gamma
Bomb] by S.T. Cohen and Marc Genest in POLITIQUE INTERNATIONALE.
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of them, the RPR, which claims to be the heir of the father of deter.xence. Even
within the party that no longer unreservedly accepts him, the UDF, there ~s still
great respect for the mythology. Z~at is why almost all UDP' members of the National
Defense Committee voted with their RPR colleagues for the dogma's retention. It is
encouraging to note, however, that in the UDF's "A Defense Doctrine for France," ttiat
party acknowledges "that only numerous tactical nuclear weapons, such as the neutron
weapon, can counterbalance the adversary's enormous supeYiority in conventional
weapons." While continuing to base defense policy on deterrence by massive retaliation,
the UDF considers it necessary to prepare a tactical nuclear defense for the battlefield.
The President of the Republic has personally declared that "we must not finesse"
and that.nuclear defense consists of a"cluster of ineans," a conception which is
already quite removed from old-fashioned deterrence.
Revision of American Strategy
1fi ese minor quakes would probably not be enough to crack ultraconseYVatism's crust if
they were not reinforced by a probable revision of the strategy of the Republic's
principal ally. Our Florentine friend finally discovered, desoite the TV screen's
silence on the subject, that this ally really existed, was fortunately very powerful,
and in the past had already twice saved the Republic from disaster. Under these
circumstances, Machiavelli felt he.could not assess the Republic's defense capability
without havi.ng some idea of that principal ally's own defense capability. At this
juncture, he began to inquire about the strange comical behavior of the princes of the
~ "franciosi," letting it be known "urbi et orbi" that they could defend themselves by
themselves alone. It was obvious, in fact, that if the Republic's deterrent th.reats
did retain some weight, it was because the adversary had to keep the main part of his
strategic nuclear forces in reserve to neutralize those of the Republic's great ally.
This accounts for the enemy's rush to accumulate new projectiles capable of
neutralizing the "franciosi's" nuclear forces and possible those of small neighboring
republics, while still retaining the capability of devastating the territory of their
great ally.
- What then are the forces of this ally called the United States? Does it have the will
to protect the Republic? An important question on which the Florentine pondered at
length. We shall simply mention his amazement upon learning that the great ally had
one day become more afraid of his own weapons than of his enemy and had disarmed
while the latter continued to build up his forces. An odd situation. At that time,
the United States had formidable forces stationed on the territory of its allies in
Europe, pentomic divisions equipped with ato~ic delivery systems which gave it and its
allies a tactical superiority of 20 to 1. Any enemy attack would have been immediately
crushed in its tracks by a shower ~f tactical projectiles. In addition, the ally's
Strategic Air Commar.d was capable, if necessary, of devastating the enemy's
territory. The enemy, liowever, soon acquired the capability of striking U.S. territory.
How could such a nuclear exchange be avoided? The great ally thoi_igh that by
disarming his atomic units in Europe, the risk of such an exchange would be reduced.
_ He reasoned that if he tried to stop anemy tanks with atomic shells, the war would
inevitably escalate into a holocaust. If tanks did atta~k, they would have to be
countered with other tanks, with so-called conventional weapon~. If these tactics
did not work, then and only then could atomic weapons probably be used.
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The rlo~entine strategist was told this was ca~le-d the "flexible response" doctrine,
a corollary of the escalation doctrine. H~ gras~ed at once that this strategy
definitely answered the enemy's purpose. 't't~e United States withdrew its most
~ advantageous weapons, such as the Davy Cro~c..k~ett, an atomic recoilless rifle, to its
uwn territory. It buried the others in silas where they still remain, targets
pinpointed by the enemy and easy to destray. They will be launched only if something
goes wrong. Will they sti11 be usable? Will there be time to use them? Only the
president of the United States may order employment of tactical nuclear weapons.
It takes 20 hours for the request to r~each him and his authorization to be
retransmitted to the battlefield. During this time, how far will the tanks have
advanced? Will there still be a t~r~~t far atomic weapons, friendly and enemy troops
being intermingled in battle? The e~e~~'s enormous superiority in conventional forces
would be decisive under these circua~stances. Defeat on the battlefield would be
- inevitable.
The Republic of the "franEios~," head2d at the time by General de Gaulle, quickly
realized that this strategy was absurd and did not protect Europe. It ~aas under
these conditions that he arme~i the R~public with an independent "strike force" designed
to deter this aggressor fr~m the East by threats of massive retaliatory sLrikes, a
strategy adapted to the technulagical resources of the period but which is no longer
suitable today, no more than is tt~e flexible response strategy. Both of these
strategies leave Europ@ at the mercy of the enemy.
Fortunately, the great ally"s strategy is very probably going to be changed, and this
will definitely have some effect on the Republic's strategy. There are many signs
suggestive of such a change. For instance, the new American president's advisers,
men like Richard Al1en, Dick Van Cleave, and Senator Tower, make no secret of the
fact that the strategy ~ahich has been in effect for 20 years, a strategy tied to
detente, has to be revised. This is a lengthy and exacting task that President
Reagan will address himself to.
Our Florentine wondered whether the enemy will leave the "franciosi" and their al~ies
enough ti_~ne to put on this new armor. Historical precedents are not, in his view,
very enc~~uraging. In the 14th and 15th centuries, it took the kingdom's magnificent
knights astride the~ir chargers 100 years to realize that they were powerless against
the English archers. It took the massacres of Crecy, Poitiers, and Azincourt plus
other appaulling misfortunes to make tnem renounce the dogma of the knights
invincibi.lity when opposing loutish commoners. In 1870, Napoleonic principles
transformed into dogma made us deaf and blind to the Prussian army's progress.
In 191'+, the dogma of the all-out offensive made us scoff at German machine guns, at
a cost of 300,000 dead and retreat until the "Miracle of the Marne." There was no
miracle in 1940, however. This time, the dogcna of the defense made us disregard the
warnings of a Colonel de Gaulle about the possibility of a war of movement. The
results are well-known.
Some well-meaning persons claim, however, that the hypothesis of a frontal attack
from the East is the least probable of all hypotheses. The Florentine secretary
reminds us that it is unwise to rely on the improbability of hypotheses. To be left
at the enemy's mercy, which is the case today, is not prudent. This is a position
which leads nations and individuals to ever~ act of cowardice and simultaneously
to misfortune.
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Let us hope that the dogmatism and archaism which in the end have always spelled
disaster when in power, will give way to plain common sense before it is too late.
COPYRIGHT: 1981 S.A. Commentaire
' 8041
CSO: 3100/955
U
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ECONOMIC INTERNATIONAL AFFAIRS
FRENCH USE VIOLENCE TO STOP SPANISH AGRICULTURAL IMPORTS
Madrid CAMBIO 16 in Spanish 24 Jul 81 pp 19-22
[Article by special correspondent Miguel Ramos: "The Fruit of Discord."~
[Text] When, at the end of the first half of August, the news reached the vast and
empty freight platforms of the Saint Charles of Perpignan Market that Spanish
trucks loaded with pe~rs and melons were blocked, destroyed and set on fire by
co~andos of unionized French farmers from the Var and Vaucluse districts, Yaul
Ma.rquillanes and Yves Mir looked at each other with disbelief, surprise and con-
fusion.
Paul Marquillanes is the president of the French National Union of Fruit and
Vegetable Importers, and Yves Mir is the director of the Saint Charles Inter-
national Market.
Two things attracted their attention in these actions against Spanish fruit:
f irst, they occurred at the most slack time of the importing season and when they
were least ~ustified; second, the actions coincided with violence by the wine
growers, on the eve of the harvest, against imports of Italian wine earmarked
_ for cutting and blending.
The coincidence of the actions of the Var and Vaucluse farmers (and not the farm-
ers of the Languedoc and Roussillon regions, like last year) with the action of the
- wine growers in Aude and Herault seemed to Marquillanes and Mir to be too coinci-
dental not to have been planned. Subsequent events showed they were right and
filled them with anxiety.
In fact, the new French socialist government behaved in an absolutely unusual way,
which the importers of wine as well as of fruit and vegetables, do not hesitate
to describe as "demagogic," "electionist" and "anticommunitarian.''
Prime Minister Pierre Mauroy and Minister of Agriculture Mrs Cresson call.ed to-
gether the leaders of the wine growers and farmers unions and formed with them so-
called "crisis cells," from which the businessmen were campletely excluded, and
from which resulted, in the case of wine, protectionist provisions in the form of
new taxes and customs duties for imports and, in the case of fruit and vegetables,
a delay of 3 weeks on imports of lemon pears and melons, which Ma.drid accepted,
and which was presented to France as a tremendous victory by Mrs Cresson.
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For the Spanish growers this delay, cheerfully accepted by Madrid; meant neither
more nor less than the ruin of the whole export season for the product at issue and
_ for subsequent ones.
The whole crux of the problem is in fact this: Spain grows more and better fruit
and vegetables and cheaper ones than the French grow and, above all, Spain produces.
them /always 2 ~aeeks earlier/ [boldface].
Three-quarters of the tremendous quantity of Spanish fruit and vegetable exports
pass through the Saint Charles International Market, where customs is located and
also trade toward all of Europe.
Now, in August, the huge ships are empty. This is the most slack time. "The big
season," says Mir, "is fram the end of September until June." In fact, it is only
- a matter of lemons and oranges. They show us graphs and statistics. In 1972
206,000 tons came from Spain of_ market garden produce including citrus fruits,
' vegetables and fresh fruit. in 1981 the figure will be about 600,000 rons.
"The market operates only in the Spain-France Sense," Mir clarifies, specifying
that the sector he represents, which is the importers, is determinedly a supporter
of Spain's entry tnto the Common Market. This will make trade operate both ways,"
says Mir, a sturdy and dynamic man in his forties, with a huge motorcycle waiting
for him at the door. Meanwhile~Marquillanes already proposed to the Giscard
_ administrati~n and has again proposed to the Mitterrand administration the es-
, tablishment of a tripartite commission, made up of representatives of the Paris and
Madrid governments, the French and Spanish unions and the business people, which
commission would set up a calendar of imports and exports for fruit and vegetables.
This year there wa.s already an experiment that worked perfectly. For climatological
reasons, this year in France there was a shortage of 2,000 tons of artichokes. An
agreement was reached between Paris and Madrid and those artichokes were brought
from Spain. Afterwards, when the artichoke supply 3n Spain was exhausted, Madrid
in turn bought 2,000 tons from the French farmers.
. For the businessmen, ~he climatological factor that causes fruit and vegetables
to appear from 2 weeks to 1 month earlier in Spain than in France,.far from being
a reason for discord, could be an element in increasing trade.
The French fartners do not understand it this way. "Qn Monday, 17 May, they meet
- again in Perpignan with the Spaniards. I have spoken with the French leaders to
- allow us to attend the meeting. They refuse. We know that in Paris they have
reached secret agreements with the government about which we do not have the
slightest informat.ion. Believe me, the situation is very disturbing."
Words, Words, Words
Yves Mir, before each statement, specifies: I say this as an importer, I say this
as c~irector of the market. Now Mi.r wants to speak only as a French citizen.
"The situation in France is not at all clear. There has been a change of govern--
ment, and the economic crisis has worsened. Constnnption has fallen substantially,
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and the effects are being felt in products such as fruit. But, moreover, pay ~
attention to one detail and that, eh?, I repeat, I say from a very personal point
of view...where have the Spanish trucks been held up and destroyed, evidently with
the blessings of the French police? Take a look at the map: between Avignon and
- Marseille. This is the fief of Gaston Defferre,to whom you people, probably with
all the reason in the world, did something n.asty, which Mr Defferre did not like
at all. His trip to Madrid was postponed. He was not well received. Because I
still say to you, otherwise, to attack Spanish fruit imports at the most slack
timP of the season does not ma.ke much sense."
The socialists also made a clean sweep in Perpignan and throughout Roussillon, or
French Catalonia. It was, for them, a"divine surprise." In that region Giscard
was in control, closely followed by a Communist Party~ (PCF) that was well estab-
lished and growing steadily.
In June of last year, this special correspondent spoke with the local political
and union powers. It was at the time of the big truck crisis.
Durin.g that period a strange common front appeared among Giscardians and communists
alongside the "young farmers" of the region, led by an aggressive peasant named
Pla., who went so far as to physically threaten this reporter. "Be careful what
y~u write in your country, because I have a long arm and relatives in Barcelona who
could do you a lot of harm." These threats were uttered before witnesses.
Last year, on the contrary, the socialists condemne~ the actions of the young
farmers and accused Pla of being an "agent of Giscardism and an irresponsible
- demagogue." They called for the rapid entry of Spain into the EEC.
Victory in the elections went to a woman, Renee Soum, attractive at 42 and a pro-
fessor, from the Mitterrand faction. "But she is not here. She has taken a we11
deserved vacation, the poor thing," we are told by her political ac~viser, a lawyer,

~ Mr Landrieu.
Ae remembers perfectly our visit last year. But we have to refresh his memory
about his party's policy statements, made 2 months ago, when the socialists were
not yet in power. Landrieu explains: "Basically we ha~r:: not changed. Certainly
we are for SpainTs entry into the EEC...although right now the subject is ill-
timed. And, moreover, would it change anything on the Spanisb fruifi and vegetahle
problem? Look at the wine issue. Italy belvngs to the EEC and you have already
seen what is happening."
The young farmers voted for Giscard. "Has anything changed in this aspect,
Mr Landrieu?," we asked, ever so well interested.
"Oh, they continue to be quite moderate, but, in fact, there have been changes
in the local, peasant voters.They are losing their ~ear; they are gaining
confidence. They are starting to understand that certain state interventionism
- may be better than being at the mercy of the banks
Regarding the results of the Paris negotiations, Landrieu resorts to the official
explanation. It was a great victory for Pierre Mauroy and Claudette Cresson.
They succeeded in calming the fury of the wine growers and the farmers.
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"We have a file on this subject. Look."
Landrieu displays some letters of accusation signed by the Young Farmers Union,
according to which certain importers said that shipment~s of Spanish lemon pears
were going to Switzerland, but later they put them in boxes on which they wrote
"fruit of France" and these shipments were sold in the big warehouses right in the
Perpignan region.
We were familiar with the story. One of these large warehouses was completely
razed by the young farmers. At the Saint Charles Market this version is denied
most vigorously. At the headquarters of the socialist representative, they are
crnnpletely unaware of the denial.
If Spain ~oins the EEC, all the agriculture in the South of France is condemned
to disappear, and this reality is admitted by everyone in France. A year ago the
local socialist party spoke of "reconversion" and "industrialization."
Once in power, these convictions seem to have been forgotten.
The concessions made by the new government to the wine growers will be extended
to the farmers and fruit growers. State subsidies will be increased, as will
protectionism. As for the destruction of Spanish trucks and shipments, this is
not a major importance "since they are conscientiously compensated."
By blocking millions of liters of Italian wine at their borders, the French
Government has violated the most sacred principle of free circulation of goads in
the EEC counrries, thus creating one of the greatest crises that this communitarian
organization has experienced until now.
Leaving aside Defferre's possible vindictive whims, the action this August against
the Spanish fruit imports is the creation of a"test," probably coordinated between
the French Government and the farmers unions, intended to soon facilitate the pub-
lication of superprotectionist measures that would practically close the European
market to Spanish fruit.
CAMBIO 16's special correspondent obtained secret disclosures in the Perpignan
region according to which the real battle a~ainst our fruits and farm products
- will take place this fa11 when the Saint Charles Market reaches the zenith of its
operations.
There are leaks that say the most violent actions against our exports will no
: longer take place on the southern roads, but at Rungis itself, the Parisian central
wholesale tnarket .
The anticipated price increases, the bad social and economic situation, thp
announced devaluation of the franc and the general dissatisfaction would thus make
"understandable" in the public eye "the rage" of the Gallic farmers and would
convert into a new "great success" for the Mitterrand administration new and harsh
- protectionist measures that are essentially anti-Spanish.
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At the same time, such measures will allow the socialization of the systems of
distribution and marketing, that is, of this business, considered by the present
regime not only as opposed to the principles of socialism, but made up of inen
amang whom Mitterrand's voters are not plentiful.
Meanwhile, on 1 August in Figueras and on the 17th in Perpignan, i.nterunion
Spanish-French farmers meetings were held, which gave our countrymen the impres-
sion of being above all a"smoke screen" and a platform of personal publicity for
the French leader, Mr Pla.
On the Spanish side they are singing another tune. The leaders of the Unio de
Pagesos (Farmers Union) and members of the coordinating group of the farmers
unions, which joins 25 guilds and can be described as genuinely representative
of the Spanish farmers, state that "the French do not want a calendar. What they
want is to gain time and to cause at the suitable moment a major crisis that
- will allow their government to block imports, as they have done with Italian
wine."
Thus state Federico Munoz and Francesc Puig, in a hall of the Ampurdon Hotel, on
- the eve of their meeting with Pla, Abadie and the.other Frenchmen.
"We are going to the meeting knowing how things stand and only eager to exhaust al1
possibilities for dialogue and to show it is we who are the democrats and not them.
There is one truth r~vealed here by these events, and it is this: We Spaniards
pick the fruit and vege'~ables in better condition and at lower prices than the
French and 15 to 20 days ahead, And in this market tfie one who starts out first
is the one who sells everything. This is our advantage. Their advantage is a
government that supports them and is ready to do everything so that the south ~f
France will be the orchard of Europe, even if this means wrecking Spanish agricul-
ture," state the Spanish unionists.
Today their patience has worn out. Perfectly aware of what is happening on the
other side of the border, through tl~eir own sources (much more aware, at any rate,
than the Madrid government), the Spanish unionists are now finding it difficult
to restrain their troops, who are ready for the most brutal retaliation against
French property in Spain, "if this continues."
The call for a boycott of French products "has been above all to satisfy them a
little bit, because they already wanted to move toward actions of greater scope."
And Federico Munoz says, "The French do not know us. If it is a matter of violence,
they do not know what we are capable of. If they want to make this a question of
guts, they do not know who they are up against.'''
CAMBIO 16 can assert that there a].ready exists within Spanish farm unionism a
secret committee that has been entrusted with the study and organization of
reprisals against French trucks and merchandise in transit through Spain.
"If our government were to close the borders to French imports for only 15 days,
Paris would realize that it has everything to lose," believe our farmers, envious
of their French counterparts.
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"Just think, they make the least little row and MitterYand calls them, he invites

a them to eat at the El~~see and he gives them what they are asking for. Here, the
moment has not arrive.i when Mr Lamo de Espinosa consults with a representative
of the Spanish fa~ unions.
"We understand the Spanish Government's problems. But if they continue to do
nothing, we will go ahead to take action, and, believe me, we ~re going to choke
the French. Right now we have public opinion on our side. We know this because
we are the people, and we know what is being said and what people are saying to
, us. It is about time to lower your trousers. Let us see when you give them what
they deserve," [as published] asserts Puig.
This special correspondent for CAI~IO 16 sensed this state of mind even among
members of the Nabional Police and th~ Civil Guard detailed at the border.
From the important Spanish agriculture sector one imagines quite pessimistically
the future of relations with France.
They ix~tend to get our exports out by ship, from Santander or Bilbao, and distri-
bute them to Europe from Belgium or Holland, avoiding this "valley of death" which
is transit through a France that is permissive toward highway piracy and a police
force that this August has collaborated directly with the offenders, whose
names routinely appear in the press and whose faces crop up making statements on
television screens.
According to the Spanish unionists, the ease with which Madrid accepted delaying
for 3 weeks the exporting of lemon pears has ruined the whole apple sea.son, which
started on the 8th.
"Not only has the pear stock not been sold off, but the exporters and carriers do
not want to assume the risk of crossing France loaded witli Spanish apples. No,
things cannot continue this way.11
No. It cannot go on like this. It is up to the government now.
COPYRIGHT: 1979, Informacion y Revistas, S. A.
9545 .
CSO: 3110/145
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_ ECONOMIC INTERNATIONAL AFFAIRS
NORWAY REPLACING DENMARK AS NORDIC 'LOCOMOTIVE'
- Stockholm VECKANS AFFARER in Swedish 20 Aug 81 pp 34-35
[Article by Carl-Olof Johard]
[Text] The large firms are strengthening their hold on the economy
in Scandinavia. That is shown by VECKANS AFFARER's annual compila-
tion concerning Scandinavia's 500 largest firms. Norway has taken
the lead as Scandinavia's "locomotive," while Denmark, which used
- to be number one, has suffered a setback. The most profitable
industxy--petroleum--is found in Finland. In Norway, on the other
hand, the oil companies are struggling with domestic price regula-
tions that inhibit profits. The most profitable firm in Scandinavia
is, as usual, Alko [Finnish State Liquor Monopoly], followed by a
brace of multinationals with IBM in the lead. The Swedish firms
have the greatest solvency, but they also head the list of the
- biggest losers.
- The large firms are continuing to strengthen their hold on Scandinavia's economy.
The total turnover of 1,044.2 billion S~aedish kronor for the 500 largest firms cor-
responds to 82 percent of Scandinavia's combined GNP--an increase of 2~percent since
1979 and of 7 percent since 1978. The same firms now employ a good one-fourth of
Scandinavia's total manpower.
At the same time, Norwegian oil has started to exert a real influence on the balance
of power in the Scandinavian economy. Despite an incipient recession during the sec-
ond ha.lf of 1980, no striking decline was noted in profits by the large firms, since
the high oil revenues kept industry as a whole afloat. Despite the hard-pressed
situation, the 500 firms increased their combined profits by 5 percent to a total of
30.1 billion kronor.
The return on total assets also continued to rise all along the line, with the result
that the average for Scandinavia comes to 8.1 percent, compared to 7.7 percent the
year before. But to some extent, that is due to the long-term interest rate, which
stands at around 15 percent.
Noxway in particular experienced a historic upswing during 1980, thanks primarily to
the explosive improvement in profits by Statoil and Norwegian Hydro. Statoil turned
1979's loss of 100 million kronor into a profit of 200 million kronor--an improvement
amounting to 300 million kronor~-and Norwegian Hydro's profits improved by 1 billion.
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Return on Total Assets
,
1_-. rr~,~_
~''t a
Rt� 113
_ `~;d~s. ~ , ~ , Key :
~t" 9 6
�aas~~~~~;~' , 1. Percent
~'C~'.'. L�:'.
;';,~f:,,c:� g~g a~5 ._82 2. Norway
` ~ 3. Sweden
2 3 6 5 4. Denmark
~ , ~ ~.d' 5 . Iceland
ti r~' . . ~ ~ .
ri.. � ~i ?
..,~~i~~.. ,
. ,i:~*~'''~~~``+;'S:`'"
o^,..',~,.~3-~.. ~..J.
. ~:1~ .F~:Yi..
Nozway, which used to show the lowest return on total assets, has now moved to the
- head of the pack with an average of 9.6 percent, while the most reliable "locomotive"
- of the past decades--the Danish economy---has for the first time reported the lowest
return on total assets in Scandinavia at 8.2 percent.
_ Verner Puggaard, economist at the Federation of Danish Industries, explains: "Indus-
try in Denmark suffered a sharp setback on the domestic market during 1980. Because
of a sharp increase in oil prices and higher corporation and consumer taxes, the
country's investments and its purchasing power dropped drastically during the year.
Domestic sales dropped by between 25 and 30 percent."
The return on total assets for Swedish firms wound up 0.1 percent below the weighted
average of 8.6 percent, while for Finnish firms it equaled the average precisely.
Like Norway, however, the Swedish firms showed the highest relative improvement in
profits. Since 1977, the Swedish firms have steadily increased their return by 5 per-
- centage points, with an increase of 1 percent since 1979.
If we look at the rate of return on stockholders' equity after taxes, the picture is
further strengthened. Here the Norwegian fi~s show a return of 11 percent, compared
to 8.9 percent for the Danes, 8.4 percent for the Swedes, and only 7 percent for the
Finns. The reversal in Denmark's and Finland's figures is explained to a large ex-
tent by the differences in the percentage of corporation tax in those two countries.
The highest return in Scandinavia--30.4 percent--is displayed by Finland's petroleum
industry, while the petroleum industry in the land of oil~-Norway--shows a return of
only 8.2 percent on stockholders' equity.
Paavo Gronlund, economist at the Federation of Finnish Industries, says: "The high
profitability of the Finnish oil industry is due almost exclusively to the total
domination of the field by Neste, the Finnish oil company, and its high profits."
- Jan Didriksen, administration manager of tY,e Federation of Norwegian Industries, says:
"The low return shown by the Nonaegian oil industry is caused by the tremendously
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Return on Stockholder's Profits.
- Equity. Norway has Profits for Swedilsh firms
passed Denmark as exceeded the total profits
Scandinavia's for all the others.
"locomotive."
~ ~
: ~ fl,2
~y~, sa-ex7 5~st~ r,z .,r~`~'~Y x,E:.T
^ ~Ww~~c~~'`I. K~.:: 1,~i�-~...~ ~~y.~~'f~..r ~ 3f
' ~~~Q .a'r.i F C i~1 k"aT L ...1' ~
; ~ ~ 3~, ,~,~,,,,y ~Y,
~ ;4~ , .~s '.!i
`sF~ tx ~.J ~~t er r ~r y,{ ~
819 . .'ti ~~c.~wn t~y.a...~f?~*~,,_R
~ y. 8~ 4 r~~ r-~y>~ ~ f. y
~ 4 n ~ s,, ~ `
'1 O .'l't~: ~~r~'~4.'~~Si-',t~ , 8
r ~~,1 R,~._.~. ,
6,
i. R~�~_psyk~K 4 2~.' R. .
. '�ti ~S~~~y y.2�
. ~ pi~/ ~ ~~~fp y'~
6r: ?R- ~ *
_ i:'1`
~1~-L ~
. ~.~,.ti..,~,
~ .
~ '
~
a
{ y ni 'i`' ~ f c ; q Y~~(~~,
r,~ : t~"' ~ ' . ~
~ ~ t:N~ yy' ~ Z -
. ~ ~ 5r' ~Y ` nt_f ~4' . ~ ' . .
t
t.~an x n�2'F. . r~s~:t '.~.r'~r?.~..:' 5$ t' 7 T ~c7~R,T~"yifi
~w ~i
1 1 1 ~
~ Y'f~ 3,7
�,"%~=i.~~': 32,5 3 5
r ~
Solvency. Only the Swedzsh Net Margin. Norwegian firms also
- firms showed increased had the highest net margin.
solvency in 1980.
Proce nt-pe rce nt
Mdr kronor-billions of kronor
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- low domestic oil prices. For quite a long time, the Norwegian oil companies and re-
fineries have been engaged in talks with the government concerning oil ~rice regula- ~
tion."
Swedes Increase Solvency
During 1980, solvency declined to an overall average of 22.4 percent for the 500
- big firms. Here again, the largest loss was recorded by the Danish firms--5.2 per-
cent. But the Nozwegian and Finnish firms also showed slight decreases to 18.3 and
19 percent respectively. The Swedish firms were therefore the only ones in Scandi-
navia to increase their solvency--by 1 percentage point to an average of 24.3 percent.
The Swedish firms increased their investments during 1980 from 24 billion to 29.5
billion kronor. This means that the large Swedish firms accounted for nearly 52 per-
cent of the investments made by all the large Scandinavian firms combined.
Sven Wallgren, managing director of Esselte and deputy chairman of the Federation of
Swedish Industries, says: "But investments are still too low in Sweden. They ought
to be much higher to prevent our position in the domestic market from deteriorating
further."
Low Investments in Norway
Finland almost doubled its investments--from 6.3 to 11.7 billion--while the large
Norwegian firms displayed a dramatic reluctance to invest. Although the country has
more firms on the list of 500 than it had in previous years, investments nevertheless
dropped from 17.7 billion in 1979 to 8.6 billion in 1980. The explanation is to be
found in reduced efforts in the North Sea. Denmark remains at the bottom of the in-
vestment list with 7 billion kronor.
_ Jan Didriksen of the Federation of Norwegian Industries explains: "The low investments,
which were due to the extremely low return on stockholders' equity that used to exist
in Norway, have also provoked a lively debate in the Norwegian mass media. In the
~ long term, however, the unwillingness to invest does not apply to the oil industry,
where a major investment program has been adopted for the next few years."
The Swedish firms are certainly still by far the most internationally oriented, but
they have lost ground abroad and now account for only 66 percent of sales abroad by
the 500 firms (exports plus sales by subsidiaries), compared to 73 percent in 1979.
The Danes and Norwegians increased their sales abroad by 3 percent each--to 13 and 10
percent respectively--while the Finnish firms increased theirs from 10 to 11 percent.
_ Since Swedish industry still accounts for nearly 55 percent of total exports by the
500 firms, the Swedish decline has therefore occurred primarily in overseas produc-
tion. Overseas production by the large Swedish firms is still very considerable,
however.
Partly because of exchange movements in relation to the Swedish krona (totaling nearly
8 percent during 1980), Denmark is for the first time the most poorly represented
country on the list of 500 with the exception of Iceland. Since 1979, Denmark has
lost 11 firms from the list, while Finland has added 9 new ones.
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Finland Stronger in Second Place
Sweden has 188 firms among Scandinavia's largest. They account for 596.~ billion
kronor in turnover, or a good 57 percent of total turnover by the 500 firm5. With
its 116 firms and 191.1 billion in turnover, Finlaiid has further strengthened i~s
second-place position, ahead of Norway with 96 firms (115.8 billion in turnover).
Although Derunark has fewer firms represented on the list of 500 than Norway does,
the~~ account for a larger turnover (135.1 billion Swedish kronor). Iceland has seven
firms on the list, with a total turnover of 5.3 billion kronor.
Sweden's Const~mers' Cooperative Union (KF) and Volvo are continuing to fight for the
title of "Scandinavia's largest firm." It is interesting to note that the next group,
consisting of the Swedish firms of the Axel Johnson Group, Electrolux, Beijer Invest-
ment, and the IGA [expansion unknown], has moved into the earlier gap and that there
are now (before tk~e merger of Volvo and Beijer) only relatively marginal differences
in the turnover figures for those firms an the one hand and KF-Volvo on the other.
It seems tha~ n~xt year, the KF will find it very hard to keep Electrolux and the
Axel Johnson Group out of the struggle for second place after the giant Volvo-Beijer.
Of the 10 largest Scandinavian firms, 7 are Swedish, 2 are Finnish--the Kesko food
chain and the Neste oil firm--and 1 is Danish (the East Asiatic Company). A brandnew
member of the 10 is Sweden's giant retailer, J. S. Saba (formerly NK [Nordic Company]-
Ahlens). Presumably the A. P. Moller Group would also hr~ve had a place in that cele-
brated company, but as usual, it does not publish any sales figures.
Neste Has Highest Profits
The Swedes and Norwegians had a good year otherwise as far as earnings and return are
concerned. The Finnish oil corporation, Neste, continues to show Scandinavia's best
before-tax earnings (1,547.7 billion kronor), followed by Norwegian Hyd�ro with 1,330
billion, L. M. Ericsson with 1,008.8 billion, and Electrolux with 1,003 billion. The
position of the Swedes is significant. The engineering industry accounted for nearly
half of the combined profits for the Swedish firms. The leading position held by the
oil companies is due in large part to high profits on inventories.
When it comes to Scandinavia's 25 most profitable firms, the top spot on the winner's
stand again goes--not unexpectedly--to the Finnish State Liquor Monopoly (Alko), which
had a profit of 35.8 percent. The runner-up in that race was IBM, which took second
and third place--IBM Denmark with a profit of 30.8 percent and IBM Sweden with a prof-
it of 27 percent. The foreign multinational giants took 5 of the 10 top spots.
Biggest Losers in Sweden
The list of the biqgest losers is also dominated by Sweden. No less than 12 Swedish
- firms are on that list, among them 9 that are wholly or partially state-owned. In
all, the nine state-owned Swedish corporations lost a little over 3 billion kronor
(net of all government subsidies). That is nearly one-fifth of the combined results
for all of the 188 large Swedish f irms. The state-owned quartet of Swedish Shipyards,
the SSAB [Swedish Steel CorporationJ, Swedish Petroleum, and the Swedish State Hold-
ing Company are also outstanding at the top of the list of losers. Z`he first non-
Swedish firm on the list of losers is the state-owned Norwegian Steelworks, with a
loss of 164.4 billion kronor.
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To sum up, it can be said that from a Scandinavian perspective, and despite heavy
losses by the state-owned firms, Swedish industry did reasonably well in getting
through the first stages of the recession at the end of 1980, while Danish and Nor-
wegian industry, on the other hand, lost ground. Thanks to its expansion in petro-
leum and an extremely profitable retail and wholesale trade, the Norwegian economy
was able to shore up its otherwise poor results.
Sven Wallgren of Esselte says: "For the Scandinavian domestic markets, 1981 is going
to be an even tougher year. The NoYwegian oil industry's influence is continuing to
- grow, while the odds for the rest of Norwegian industry look even worse for the fu-
ture. The Swedish firms, whose interest in Norway is growing steadily, are going to
be sitting in the front row, and they will find a good market in that neighboring
country. Norway is now Sweden's second largest export market."
COPYRIGHT: Ahlens & Akerlunds tryckerier, Stockholm 1981
11798
CSO: 3109/242
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ECONOMIC DENMARK
FOREIGN DEBT SOON TO REACH 100 BILLION KRONER
Stockholm VECKANS AFFARER in Swedish 20 Aug 81 p 123
[Article by Camilla Bratt]
[Text] A very large deficit on current account (about 15 billion Danish kroner this
year), a foreign debt that is now approaching 100 billion Danish kroner, and about
300,000 unemployed or on early retirement.
Those are a few of the problems that the Danish Government has to wrestle with.
Since the end of 1979, Anker Jorgensen's Social Democratic minority government has,
with the support of three small nonsocialist parties, pushed through one package of
economic restraints after the other in an effort to overcome the deficit on current
account that has now lasted for 20 years.
A tighter monetary policy, devaluation, tax increases, cutbacks in the publi.c sector,
and all-out efforts to hold down wage increases (partly by excluding energy prices
from the index on which wages are based) have so far constituted the government's
formula for solving the economic crisis.
Those starvation cures have had their effect. Private consumption fell by 4 percent
last year and is expected to drop another 1 percent this year. And the current ac-
count deficit shrank from 15.5 billion Danish kroner in 1979 to 13.8 billion in 1980.
But to achieve the stated goal--to improve the country's competitive position by 2 or
3 percent annually until the economy is reasonably in balance--the government is being
forced to continue its policy of economic restraint, and at the same time it must try
to speed up production, investments, and employment.
The latest agreement between the government and the three small parties includes, in
~ addition to measures aimed at getting production moving, a plan for reducing energy
- consumption through advantageous financing and thus contributing to energy-saving
measures. Reducing the oil bill is one part of the attempt to shrink the deficit on
current account.
- 2'he ability of Danish firms to compete has improved in recent years, and as economic
activity in their big export markets gradually picks up, they will probably win back
a part of the market shares they have lost.
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According to the OECD, exports of industrial goods will rise at an annual rate of
7 or 8 percent toward the end of this year and during 1982.
- Most forecasts also indicate that industrial production will pick up next year.
= The OECD estimates that the GNP wi].1 rise by 3 percent in 1982 and that industrial
production and investment will increase by 4.5 and 4 percent respectively. But it
should be remembered that those growth rates are based on a very 1ow starting point.
Economic policy: In recent years the government has pursued a tough policy of re-
straints aimed at checking inflation and strengthening the competitiveness of the
firms in the export markets. At the same time, new measures are being implemented
to get production moving and create new job openings.
The firms wi11 be given certain tax reductions and more advantageous investment con-
ditions.
The government plans to tighten its policy further by increasing certain indirect
taxes--on cigarettes and beer, among other things, and possibly on automobiles.
_ Inflation: One of the few bright spots in the Danish economy in recent years is the
fact that the rate of inflation has been checked.
Prices rose relatively slowly at the end of last year, but inflation picked up again
at the start of this year.
The reason is that import prices have risen rapidly because of the rise in the dollar
rate of exchange and that wages, despite the moderate 2-year agreement that went into
effect at the start of thzs year, are expected to rise by nearly l0 percent due to
wage drift and cost-of-living adjustments.
Despite that, inflation is expected to slow somewhat--from 11 percent last year to
10.5 percent this year and 8.5 percent next year.
Private consumption: Last year, the volume of private consumption fell by 4 percent.
The reason was sharply higher energy prices and the devaluation at the end of 1979.
Certain indirect taxes were also increased.
Private consumption is continuing its decline this year. Real incomes will probably
drop by nearly 2 percent, but since the savings ratio will presumably decline some-
what, the drop in private consumption will be limited to about 1 percent.
Labor Market: The number of unemployed is expected to average 250,000 this year--a
full 40-percent increase over 1980. This means that 7 percent of the total labor
force is unemployed.
Although industrial production is expected to rise by 4 percent next year, unemploy-
ment will scarcely be reduced, since about 35,000 new workers are expected to enter
the labor market.
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,
L ~y
BNP, 1 ~ y } ~ Y ~ ~
~
g. 'K ,z ~ J~-'~'~~Y~z
S:i ~J
4~`~jyt
3 r t++ -~ir {r, , ,
,4t~~y,"'5~~~ q V r ~~.'~xs'~
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~ "^"1
n~. ~ ~ ~
i~'~"� Annual change in volume (percent) .
2 Key:
f, a
s+;44~; 1. GNP
,,xqy h
,197$�i`~1J~'9~~w' ~xG
Arlig volymftSr~ndring.
Procent.
f` a"'~ y: e~ k ~~y � a~ y
- ~ y 1~ti ~ e.~. i Y 1. f Y.
' i, y ~ 1~ ~~Rkd.~ y!~ ~ ~
1 ~ S ~ .c y~
~~~'.x"`~,n ~flT~~'f f,~~~.'
- vw'z~, h+.'Q � 3 k
~ Industrial sales volume (1975 = 100).
. ~ , ,~r~,~ r~.~
' . ~ 1 v .
~IZO fY! ~ T Y x I~
`~y~~,~x-~~~ Unemployment (percent) , seasonally ad-
;
y k t~ A 1 ~ vY i.
~t1o ~ `'~cS~. " justed.
Industrr ? = A~"`~~"~
y :
- N ~.?~~a~~ Ke
100 ' ' 1. Industry
' 1978 ` 1979 �'188Q;, f,'1;~~~&~;;,
Industrins ftfrs~ljningsvolym 2 . Unemployment
1975 = 100
ArbetslSshet. Procent.
5~songrensat
v ~
- Inflatoo , ' ~~~'Y~ "~~Y~ ~
u
5 r ; "k""M~ ~ ~~s.r
`YY:^f{f4~ Y+.'(FY,i
. ~t T ~~'.L~~.. {Va
~ � M~
~ ~"""~~+v~�
_ E t~': ~S~'Y
. t
j,t Consumer prices : annual change (columns)
5 'y n~"I E ~,y and 6-month increases at an annual rate
` ~~3~ ~ ~ (curve) . (Percent. )
p a~~`
1978 1979 ~ s ~
- Konsumentpriser. Arlig ftlr~ndring
(staplar) samt t3kning sex mgnader
i ~rstakt (kurvor). Procent
Bytesbalans~~'x~~q-~�.'~�~
r ~ ~..:1%. i�Ji}:~'X.'. . . 1w 'j\
v.n~ r~t:
. / 4~':~; SRS
d~ ~
~ _ ' ~ ~~z.
f Balance on current account (billions of
~ , C Danish kroner).
r'o ~ ~
~ ~;~4~~ t ~
> ~ ~ KeY :
~~,,'K.'j ~g~~~ > ~
- � ~ 1. Ctirrent account
_ 197$.. 19~1~;~ :~'t :i
Bytesbalansens saldo.
Miljarder danska kronor
2~+
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Foreign Trade; Although the demand from Denmark's largest export markets--Sweden and
the FRG--is expected to rise next year and the export industry has strengti?ened its
competitive position in recent years, the deficit on current account is continuing
to rise.
Interest charges on the fast-growing foreign debt--they are expected to total about
15 billion Danish kroner this year~~are one reason why the deficit is continuing to
grow.
Industrial investment: Industrial investment dropped by 8 percent last year and is
expected to decline by an additional 10 percent this year.
The low propensity to invest is one result of the high interest situation and of weak
demand in the domestic market.
There is a high level of idle capacity today, and even if production picks up next
year, industrial investments will certainly not gather speed until the end of 1982.
COPYRIGHT: Ahlens & Akerlunds tryckerier, Stockholm 1981
11798
CSO: 3109/242 E~
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