Francois Hollande shows true colours with threat to nationalise ArcelorMittal The sans-culottes appear to have captured the government in Paris. I have no hesitation in saying here, Venez à Londres, mes amis. Don't wait to be persecuted... and put in the tumbrils by the regime. Come to London," he said. Yet behind the jousting is a neuralgic issue for France, one that goes beyond a commercial dispute over a rustbowl plant in an industry battling Chinese over-production and Europe's double-dip recession. Steel has a special hold on Europe's political mind. The mills on the grim Lorraine plateau have been the hub of France's steel industry for 200 years, the strategic prize of both the Franco-Prussian War in 1870 and the First World War. French foreign minister Robert Schuman came from Lorraine - even serving in the Kaiser's army - which is why he worked to ensure that neither country had control again with the creation of the European Coal and Steel Community in 1954, the forerunner of the EU. The explicit purpose was to put a higher umpire in charge of the resources of conflict and industrial rivalry. The self-made Lakshmi Mittal - born in a Rajput village without electricity, and now at home in a £70m Kensington house - walked into a political minefield when he gobbled up the Franco-European steel champion Arcelor in 2006. He has never been accepted by Gallic elites. The French secret services tried to scupper the takeover, deeming the move a strategic threat. La Direction de la Surveillance du Territoire (DSE) - which has a mandate to combat "espionage by alien powers" - tapped his phones, according to Le Monde. President Jacques Chirac threatened to invoke the "national security" clause under EU competition law to block the bid, though he later backed down as non-French shareholders peeled away and India's appetite for French weapons cooled. The disdain was palpable for this Indian interloper with the effrontery to snatch Europe's steel industry from beneath the noses of the great powers. Paris said he had failed to respect "business etiquette," while Arcelor chief Guy Dolle said the merger was unthinkable since Arcelor distilled perfume while Mr Mittal turned out cheap eau de Cologne. It is a contentious point whether Mr Mittal has stuck to the promises made in 2006, and whether he has proved himself a reliable custodian of French communities. A joint letter by more than 40 French members of parliament on Tuesday accused him of serial violations, including the closure of operations and failure to invest enough in the Florange site near Metz to maintain a competitive edge. They say he has made veiled threats in recent days to shut "other ArcelorMittal activities in France" if he does not get his way in Lorraine. It is time to put the interests of "France, its workers, and its industrial fabric" above the word of a capitalist boss, they wrote. The reproach exasperates defenders of Mr Mittal, who say his restructuring plans are broadly in line with what Arcelor was going to do anyway. The Florange furnaces were due to close in 2009 because the region has run out of iron ore and coke, and can no longer sustain two blast furnaces at viable cost. He kept them going a year longer. Mr Mittal has invested in his Dunquerque plant, closer to his iron ore supplies from Brazil, and still employs 20,000 workers in France. Nobody can work miracles in a global downturn, with hot-rolled steel prices down from $1,200 (£750) to around $600 a tonne since the boom. Mr Mittal wishes to shut the Florange furnaces but also to continue to produce rolled steel there for Volkswagen, BMW, Toyota and other car plants nearby. That would preserve three quarters of the 2,500 jobs. This is not good for enough for Mr Montebourg, who is fast acquiring a reputation as the chief scourge of capitalists in the anti-business cabinet of President François Hollande after a showdown with the Peugeot family. Mr Montebourg claims that the whole Florange operation can still be saved - though he has yet to identify a white knight by name - and has now taken the fateful step of threatening forced seizure by the state, claiming that this can be done under the 1958 constitution of the Fifth Republic. Lawyers will fatten on this for a long time unless Mr Mittal and President Hollande find common ground. They were due to meet on Tuesday night at the Elysee. Mr Hollande said nationalisation would be "part of the discussion." The episode has once again exposed the anti-market reflexes of a government that seems out of step with Europe and the world, and still unable to face up to the causes of France's slow national decline. The International Monetary Fund warned earlier this month that rising taxes are undermining the country as a place " to work and invest," and said France risks being left behind as Italy and Spain grasp the nettle of reform. The French state's share of GDP has risen to 56pc, creeping higher than Sweden and Denmark, without their labour flexibility. French industry has been losing 60,000 jobs a year for the past decade. The current account has swung from a surplus of 2.5pc of GDP to a deficit of 2.4pc since the launch of the euro. The country has lost 20pc labour cost competitiveness against Germany. It has a 50pc "tax wedge" - the tax share of labour costs - among the highest in the world. What France needs as unemployment rises by over 40,000 a month to modern era highs and the economy slides deeper into perma-slump is a radical assault on the state. Instead, Mr Hollande talks of nationalisation. Is London big enough to take the refugees?