France may raise Renault stake to 20%

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France may raise its stake in Renault SA, the country's second-biggest carmaker, to have a greater say in the company's decision-making, Industry Minister Christian Estrosi said, in the midst of a dispute over jobs.

French President Nicolas Sarkozy has summoned Renault Chairman and Chief Executive Carlos Ghosn to a meeting on Saturday over concerns that a new version of its popular Clio model may be produced in Turkey, taking jobs away from France.

There is a 50/50 chance that the state will raise its stake to as much as 20 percent from just over 15 percent, Estrosi told Reuters in an interview on Thursday, a day after he met with Renault Chief Operating Officer Patrick Pelata over the jobs issue.

"We are considering this. What is certain is that we are looking for a way for them (Renault) to understand that the state with a stake of 15 percent is a state that has influence," he said. France is Renault's biggest shareholder.

"We can do this by staying at 15%. Maybe going to 17, 18 or 20 is a psychological way to make them understand that we don't intend to just let the industrial auto strategy of France run its course without reacting."

With 15.01 percent, the French state is the top shareholder in Renault ahead of Japan's Nissan Motor Co Ltd, which has a 15% stake.

Renault has yet to decide where it will produce the fourth generation of its Clio model, but media reports that it could opt for Turkey have prompted government calls for the vehicle to be made largely within France.

"What we are asking of Renault is not to close a production chain in Turkey, It is to ensure that the Clio 4 that is destined to be sold in France is produced in the country," said Estrosi, who is also mayor of the Mediterranean coastal city of Nice.

He added, however, that it would be acceptable to make the vehicle in Turkey for that market.

EU seeks explaination

Taking task with recent French calls to largely produce the Clio 4 in France, the European Commission called for explanations from the government.

European Competition Commissioner Neelie Kroes said in a statement that the commission would seek assurances that a French pledge last year to grant public funds to auto makers would not affect the ability of companies to develop their activities freely.

Estrosi said that a decision on raising the stake "will be the fruit of the discussion between the president of the republic and the president of Renault."

Government moves would depend on the extent to which Renault took France's desires into account, given the size of its current stake, he said.

"Does the president of Renault consider that from now on we are a stakeholder with 15 percent, which merits respect and does not have to be subjected to decisions without us being associated with them, or not?"

Renault declined to comment on the interview with the minister.

However, Renault director Jerome Stoll said earlier in the day that a compromise was possible in the dispute after the company reported a 3.1 percent drop in 2009 worldwide vehicle sales.

Renault was once completely state-owned and was privatized from 1996. Renault has a 44.5 percent stake in Japanese carmaker Nissan, and the two companies have a decade-old industrial alliance, making them one of the world's biggest car groups.

Estrosi said that the government's attitude towards Renault reflects a push by the authorities to strike a balance between interventionist policies to protect jobs and allowing companies to act freely.

The minister also said he wants to protect French car parts suppliers by ensuring that French automakers source more parts domestically.