France and Qatar end suburbs dispute with new fund

France and Qatar launch a mixed Franco-Qatari fund to invest €300 million in small and medium-sized French companies, in a bid to quash concerns raised by a previous Qatari plan to invest specifically in depressed French suburbs.

DOHA // France and Qatar launched a mixed Franco-Qatari fund yesterday to invest €300 million in small and medium-sized French companies, in a bid to quash concerns raised by a previous Qatari plan to invest specifically in depressed French suburbs.

Business ties between cash-strapped France and Qatar have deepened in the past five years as the euro zone's second biggest economy behind Germany has overcome instincts for economic patriotism to welcome inward investment in areas ranging from sports to real estate and infrastructure.

But a plan for Qatar to pump €50m (Dh241m) into businesses in the suburbs had proved divisive, when they were first floated, with critics concerned that Qatar might exercise too much influence and prompting former president Nicolas Sarkozy to put them on hold until after the May 2012 election.

The new Socialist government, facing rising unemployment and stalled economic growth, then came up with a compromise for a mixed Qatari-French fund aimed at small and medium-sized businesses and a memorandum of understanding was signed in November.

"We do not refuse Qatari investments in France but we say there are conditions to meet, areas to focus on and rules to explain," Mr Hollande said during a visit to Qatar.

The new fund would not target specific geographical areas in France nor specific company profiles but will also be available for companies in "our suburbs", Mr Hollande said.

The fund will be operational from July, said Jean-Pierre Jouyet, the head of French state-owned bank Caisse de Depots, which is co-shareholder of the fund with Qatar's sovereign fund Qatar Holding.