Franse staatssteun aan industriegigant Alstom doet wenkbrauwen in Berlijn fronsen (en)

The French government's expected bail-out of troubled industrial giant Alstom is beginning to cause ripples in the normally calm waters of Franco-German relations.

Paris is expected soon to announce that it will take a 31.5 percent share in Alstom in a rescue deal that is set to be cleared by the European Commission by the end of the week, following tough negotiations between French finance minister Nicolas Sarkozy and competition commissioner Mario Monti.

Mr Monti said on Monday (17 May) that a tentative agreeement had been reached that would not contravene the EU's state aid laws.

If the deal is indeed permitted, the French government would become the largest shareholder in the company.

Trouble across the Rhine

But the moves are being viewed with dismay in some quarters in Germany, especially by Siemens - Germany's own industrial giant - which was hoping to acquire assets in Alstom.

And French determination to keep Alstom in the hands of the government threatens to undermine a Franco-German plan to create "European industrial champions", fleshed out at a recent meeting between French President Jacques Chirac and German Chancellor Gerhard Schröder.

It is thought that Siemens intended to join forces with Alstom to create exactly such a European industrial giant but has been rebuffed by Paris.

Summer showdown

The next showdown is expected to come on 1 June when Messers Schröder and Chirac will meet in Berlin - flanked by their finance ministers - to discuss this industrial policy and the future of their respective industrial giants.

It was thought that the heads of Siemens and Alstom would attend the meeting but Alstom told reporters yesterday that they had heard nothing about it.