The day after François Hollande's election on May 6th, 2012, a young man aged 34 started work at the Élysée Palace. He would be much more than the new president's economic advisor. He wanted to be at the heart of presidential power, and that was what he achieved with the coveted title of 'deputy general secretary' – deputy chief of staff - at the French presidency.
His name was Emmanuel Macron, and he has now just been appointed economy minister in Hollande's second reshuffle in the dying days of August. Before working for Hollande, Macron had been one of the top-rated managing partners at investment bank Rothschild & Cie. But unlike Socialist Party heavyweight Henri Emmanuelli, who worked at the sister French Rothschild bank, Cie Financière Edmond de Rothschild, before becoming a full-time politician, Macron is no ordinary banker. The business of banking has changed a great deal in the 35 years since Emmanuelli left it.
Macron is an investment banker, advising big international corporations, helping them with major mergers and takeovers involving billions of dollars in shares and debt. He works with them on overcoming legal obstacles and finding 'fiscal optimisation' or 'synergies' – in short, the whole industrial and financial Monopoly game that makes the banking world go round.
After Hollande's election Macron moved into the office that had been occupied by François Pérol, a friend of former president Nicolas Sarkozy who had also been deputy general secretary of the Élysée before leaving to take the reins at Banque Populaires-Caisses d’Epargne (BPCE) under controversial circumstances. Before his stint at the Élysée, Pérol had also rapidly amassed a small fortune at Rothschild (1).
People, political parties and power may come and go, but Rothschild & Cie remains. It is a node of power at the heart of government, it is at the epicentre of influence, business and the rough and tumble of finance and politics. The story of how that came to be is a quintessentially French tale, of Parisian capitalism over the past 30 years caught up in and transformed to its roots by globalisation. At the same time, this capitalism has retrenched into an oligarchic elite whose members easily pass from privileged positions in the public sector to highly-paid posts in the private sector. It suffers from inherent conflicts of interest, the implication of private interests in public scandals, and a particularly French old-boy system among top-ranked graduates from France’s most elite schools.
David de Rothschild, the determined architect of the now ostentatious influence of the bank that bears his name, is not normally voluble. He is seldom seen in public and his public comments are both very rare and good examples of stonewalling. However, in this book he speaks at length and surprisingly freely, tracing in detail how he rebuilt the bank after its nationalisation in 1982 (2) with the help of his half-brother Édouard de Rothschild and cousin Éric de Rothschild, making it into one of the main repositories of power in France. That is what Banque Rothschild always was – after all, no less a person than Charles De Gaulle's successor as president, Georges Pompidou, had spent most of his career there.
“It is the bank's tradition to be at the service of the Republic,” David de Rothschild told Martine Orange. She describes this interlocking of the bank with the state through dozens of interviews carried out within the bank, with heavyweights from major French companies and with people inside several political circles. One of those she met at Rothschild was Macron.
For this investigation takes us not only into the inner workings of French capitalism, but also into the very heart of French politics, to where decisions are made, as well as introducing us to some of the main players in these fields. Of these, one in particular figure emerges in the history of the bank – former premier Édouard Balladur. As Pompidou's advisor in 1973-1974 he played a key role in the bank's renaissance together with Ambroise Roux, the godfather of French capitalism in the 1980s.
Balladur never lost touch with Rothschild and placed people close to him within its walls: first Nicolas Bazire, who had been Balladur's chief of staff when he was prime minister in 1995 and went on to become the number two at Bernard Arnault's luxury goods empire LVMH; and then one Nicolas Sarkozy. But the bank's links with politics do not end there. Little by little it forged close relationships with all the important people.
And Macron, who had already played a major role in the Attali Commission (3), a commission Sarkozy charged with examining ways to revitalise the economy, quickly joined with Hollande. In April 2011, when opinion polls were showing Dominique Strauss-Kahn would be the winner of the Socialist presidential primary, the bank had already chosen its candidate – François Hollande. This is the subject of the extracts from Chapter 27 of Martine Orange's book, which we publish on the following pages.
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1. Macron told L’Exprèss that his 2011 salary at Rothschild was 2 million euros. His monthly pay as Hollande's advisor was 14,910 euros, and as minister it will be 9,940 euros.
2. Most French banks were nationalised in 1982 by President François Mitterrand, France's first socialist president, but they were mostly re-privatised from 1986.
3. An economist and former advisor to Mitterrand, Jacques Attali was commissioned by Nicolas Sarkozy in 2008 to come up with proposals for reinvigorating the French economy, which were later shelved. For more details see here.
How Rothschild tipped Hollande to be candidate
Thirty years later
April 2011. David de Rothschild always follows French politics with close attention and interest. He wonders aloud: “And who do you see as the socialist candidate at the presidential election?” The question is surprising. Dominique Strauss-Kahn had been clearly ahead in all the opinion polls for weeks. It was not a question of whether he would stand, but when. Everyone is saying that the socialist primaries would be a formality for him.
And yet David de Rothschild does not believe this. DSK has something about him, a reticence to throw himself into the struggle for power, that bothers him. “François Hollande, don't you think?” he continues. Within the bank Emmanuel Macron, the organisation’s youngest managing partner, has already joined the future socialist candidate's team and works hard for him, providing him with background notes on a wide range of subjects.
No one doubted that this brilliant, atypical investment banker would be drawn to power. When he arrived at the bank in 2008, aged 31, he had already had three lives. He had been an ardent student of philosophy, assistant to eminent French philosopher Paul Ricoeur, and had begun a thesis before realising that all that was not for him. “Paul Ricoeur wrote his major works after the age of 60. I did not have that patience,” Macron said. So he enrolled in the schools that train France's top civil servants, Sciences-Po and ENA, following the usual route to end up at the prestigious and powerful audit watchdog the Inspection Générale des Finances .
His studies barely over, a third avenue beckoned: politics. He signed up for a taste of local politics with the Socialist Party in Pas-de-Calais, northern France. But there was no chemistry between the young civil servant and the old guard in the depressed former mining town of Liévin. So back he went to the Inspection des Finances full-time. He refused a transfer to one of Sarkozy's ministerial offices and remained based at Bercy, the popular name for the finance ministry, until Attali noticed him and requested he become the rapporteur for his commission on economic growth. The commission's work ended up in the same way as its predecessors' had – consigned to history as soon as it hit its first obstacle, in this case the reform of the Paris taxi monopoly.
Meanwhile, on the advice of Serge Weinberg, one of France's most influential managers, and of Attali, Macron had gone to work at Rothschild. “I was lucky,” he said. “I had a career path that wasn't very clear. Only at Rothschild could they understand it.”
While he was getting to know investment banking and international business, he was also studying Hollande's economic programme. Because for him, this life of mercurial money could only last a certain time. In mid-April 2012, while advising Swiss food group Nestlé in its 11.9-billion-dollar bid battle for U.S. drug group Pfizer's infant nutrition business against Danone, he was still talking to the future president's inner circle every day. He provided notes and thoughts on the crisis, macroeconomics, the banks and other subjects, right up to the day he was called to the Élysée.
“It is the tradition of the bank to be available for the Republic,” says David de Rothschild succinctly. At the end of the day, to him this is simply a return to what happened in the past, before the war, when the passage of certain top people between governments and the bank had become usual practice. He knows that the upper echelons of the civil service now see his bank as a necessary part of their career path. At the same time, it is the price of influence.
Then, on the other side of the political spectrum, there is Rothschild managing partner Grégoire Chertok and Jean-François Copé (1), former acting leader of Sarkozy's party, the centre-right UMP. Chertok and Copé have been friends for over 20 years, and together with Charles Beigbeder, former boss of Poweo, they form a trio in which family ties, business and politics intermingle without boundaries.
Copé introduced Chertok to Fondapol, a think-tank run by political scientist Dominique Reynié. Even though Beigbeder was inclined towards the employers' movement and has chaired Croissance Plus, an association of bosses of small and medium-sized French firms, he joined them. This think-tank, which aims to participate in political innovation, was where economist Jacques Delpla began to develop his theory of zero government debt.
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1. Copé stepped down as interim leader of the UMP last May amid revelations of irregular funding linked to the use of PR firm Bygmalion, run by friends of Copé's, during Sarkozy's 2012 election campaign. See here for more details.
The new James de Rothchild...
But in the end all that did not seem enough for Chertok. He had run 130 transactions since the beginning of his career at Rothschild, which made him one of the most experienced bankers of his generation. Yet he, too, began to find the job wearing, his interest evaporating, with a desire to exist in a different way, elsewhere. So he chose to get more involved in politics. Is this really compatible? Is not the mixing of politics and investment banking an explosive combination?
“I could have done the same as other bankers and decided to only be interested only in money, cars, holidays and other trivialities. No one would have found anything to criticise in that,” he said. “But I want to do something in the general interest. My father was a Jew from Byelorussia who came to France in 1939 and immediately joined the Resistance. So I know what my family owes this country, what it has received from it. My commitment stems from this history.”
So Chertok took the leap. He began discretely as a deputy mayor in the 16th arrondissement or district of Paris – nothing very remarkable. During the regional elections in 2010 he was a candidate for the then right-wing majority with the Parti Radical Valoisien, a centre-right party affiliated to the UMP until 2012, “because it was closest to my opinions”. He was in 12th position on the list, but some UMP members tried to push him down to the bottom of it. Copé alerted Sarkozy, who demanded that Chertok be placed high enough to be elected to a seat. He was duly voted in and sits on the culture committee for the Île-de-France regional council – the authority that covers the greater Paris area.
Chertok has been taking part in the Right's debates on the post-Sarkozy period with Copé, and some say he has ambitions for the future: to be general secretary at the Élysée like Macron, or budget minister. “That would require enjoying being in the media, out in the limelight, and accepting the attacks. I do not have that sort of temperament,” retorts Chertok. But a lot can change between now and the future...
David de Rothschild, meanwhile, takes a benign view of these diverse interests. “I have always found it quite normal that partners would have other centres of interest besides the bank. You need to be in contact with other realities, to be in touch with other environments and circles,” he says. Given his own strong interest in public service and politics, he does not see what arguments he could wield to condemn the personal commitments of others, as long as they do no harm to the bank's reputation.
And that is what it all comes down to: the bank. His obsession, everything that justifies all his hard work over 30 years. This past June [Editor’s note: June 2012] he had the feeling of having achieved what he set out to do. Everything is in order. The family is reunited, the group has become international, the organisation has been simplified, family control is guaranteed, and the delicate relationship between the partners and the bank has been clarified. His own succession and that of his cousin Éric are gradually being put in place to ensure a smooth transition, as is the bank's usual custom. David de Rothschild is starting to talk about a peaceful pre-retirement. But in truth, no one believes it.
For some time now, a number of leading figures have been making their way along the discreet passage that leads right up to the bank's roof. During the bank's change of headquarters David de Rothschild discovered this small brick gardener's house which has a magnificent view over the River Seine and Paris. He had it done up for himself, in a sober style. It is here, in complete discretion, that he receives the bosses of the top companies listed on France's stock exchange index the CAC 40, international figures, political leaders, economists and friends. It is here that he carries out the bilateral conversations that he so adores, and of which nothing, ever, leaks out.
The all-powerful bosses of large groups appreciate these moments of frankness and of trust, where there is no vying for supremacy or a need to impress, and where a simple “You think so?” and the raising of an eyebrow is enough to show disapproval. It makes a change for them. At a time when the great godfathers of French capitalism Claude Bébéar and Michel Pébereau are fading from the scene, the up and coming business generation has no desire for such figures for the future.
The time of head-on combat with the state has gone, those days when the world of business thought it had a duty to launch endless attacks on the state to force it to release its grip on power. Having often spent their entire careers in business, this new generation of bosses doesn't have an obsession with the state, like the previous generation who often came from among the ranks of top civil servants. For them, heading as they do groups that are now international in outlook, France is no longer their only priority, even if since the financial crisis they have understood that statelessness has its limits.
Nonetheless, there remain conflicts of interest, the marking out of territories, fights, and both major and minor secrets of French capitalism. In David de Rothschild they find an attentive listener and sometimes an arbitrator. The world of business has already called on him once, to resolve the delicate question of the succession at the giant group Louis-Dreyfus, which threatened to turn into a brawl between Margarita Louis-Dreyfus, widow of the late Robert Louis-Dreyfus, and its chief executive officer Jacques Veyrat, seen as the designated successor. After six months of discreet negotiations the affair was sorted out quietly without a fuss. The business world appreciated that.
A little taken aback by this unusual affair, David de Rothschild has sworn that he would never be caught doing it again. But should one believe him? The business world has already virtually enthroned him. Its members trust him more and more with their secrets, and often consult him for his advice. And he himself enjoys more than ever a situation which puts him at the centre of a thousand political, economic and business confidences and gives him a central position of influence. He dreamt of being the new James de Rothschild – referring to the original founder of the dynasty in France. He is.
Rothschild, une banque au pouvour ('Rothschild, a bank in power')
By Martine Orange. Published September 2012 by Albin Michel. 368 pages, 20 euros.
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- The French version of this article can be found here.
English version by Sue Landau
Editing by Michael Streeter