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Bosses say 'back off'
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January 26, 2001: 2:33 p.m. ET
European business leaders call for state to take lesser role in economy
By Rod Cant CNN.com Europe business writer
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DAVOS, Switzerland (CNNfn) - European business leaders said Friday the region's competitiveness is hindered by too much government interference in the corporate world.
Representatives from academia and business told delegates at the World Economic Forum that Europe had made substantial gains in removing structural obstacles to growth, but plenty more needs to be done.
"The state is not a good shareholder," Daniel Bouton, Societe Generale's chairman and chief executive, told delegates, urging a speedier withdrawal of government's from the business arena.
Bouton pointed to the state-supported regional banks in Germany and government-owned banks in France as examples of how state involvement can distort the market.
For years SocGen executives have been critical of the French state's huge bailout of the ailing bank Credit Lyonnais, arguing the bank should have been allowed to founder.
Bouton's fellow panel member Ron Sommer, Deutsche Telekom's chief executive, agreed.
"France and Germany privatised too late," but Sommer said that once the process started it was carried out in rapid order. Deutsche Telekom itself remains 45 percent-owned by the German state.
Playing down fears the European model would forever lag what's happening in the United States, Harvard Business School professor Michael Porter said it was only a decade previously that American experts were looking fearfully at the Japanese economy, "but the US has been consistently more competitive in the last decade," driven by productivity gains and new technology.
Porter warned however, that governments still play too heavy a role in Europe, with "too many parts of Europe where firms don't face full competition," because of the state's vested interests.
The business leaders identified the European auto industry as one area which has made huge competitive gains. Ferdinand Piech, VW's chief executive, told the meeting state subsidies to the industry had fallen, while working practices had become more flexible, helping the sector's progress. He claimed eventual tax harmonization across Europe would be a further boost.
While all the business leaders admitted that state interference had held Europe back in competition with the United States, they were cautiously positive on future developments.
SocGen's Bouton said:
"The reality of the euro (in 2002) will be the catalyst for increased competitiveness," while Sommer was even more bullish:
"Europe can take over from the United States as the locomotive of economic growth," he concluded. 
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