Remember the scene in "Dumbo" when the crows find the baby elephant stuck high in a tree and snidely chortle at the idea he flew there? I've seen a horse fly, and I've seen a house fly, but I will have done seen everything when I see an elephant fly, one of them jibes.

That's me right now. What is left to see after watching the French Socialist government and its highly protectionist arms industry cheerfully open up to greater roles for private enterprise and for trans-Atlantic cooperation in the manufacturing and selling of advanced weapons systems?

Defense industries form the last frontier of the national security state that emerged from the ashes of World War II and thrived during the Cold War. But that frontier is under determined assault by the creative destruction of global capitalism. What is left for governments to control once they accept that rockets and missiles have to follow market logic pretty much as pork bellies and microchips do?

In more fragile times, nearly everything touched security: Governments kept ownership of or control over banking, transportation, communication, housing and other areas that have been progressively turned over to entrepreneurs and corporations through privatization as state inefficiency has been too costly and cumbersome.

The sinking of the national security state into ever deeper obsolescence is particularly apparent today in France, which has practiced the twin arts of state control and protectionism for industry with skill for centuries.

Prime Minister Lionel Jospin is intellectually for more state involvement, not less: He is a convinced Socialist and a man of the left. But he is also a realist who has come to understand the power of the huge markets that global consolidation brings and cutthroat competition requires.

His task, he told me in a recent conversation, is to make sure that France "is not passive in dealing with globalization" and adapts to needed change without great drama or stress.

"Globalization is a fact. It is not an aim in itself," he continued. "I want globalization, but globalization that has a place for Airbus airliners too. I don't want globalization with Boeing alone."

To achieve this--and to reduce the crushing unemployment burden France carries even as its rates of economic growth increase--Jospin has been willing to rein in the state control of the economy that has flourished through a half-century of Gaullist, Socialist and center-right rule.

"The French state can act in the economy. Drawing up a budget is a way of acting, of choosing," Jospin said, switching easily from French to English as the mood struck him. "But the French state cannot replace the other actors. Where they may need our resources or advice, we can influence them perhaps, but they have to play their role."

These comments came back to me as France announced a few days ago that Jospin had authorized the accelerated privatization of the Aerospatiale Matra company, a principal manufacturer of the Airbus and once a crown jewel of French state ownership.

To clear the way for Aerospatiale to merge with DaimlerChrysler Aerospace of Germany, Jospin is cutting state ownership of Aerospatiale to 15 percent. Daimler boss Juergen Schrempp also reportedly received two concessions: He got assurances that the French state would keep out of management decisions of the merged company, and attractive buyout terms if that promise is not kept.

A festive Oct. 14 unveiling of the merger in Strasbourg, France, attended by Jospin and German Chancellor Gerhard Schroeder, set the stage for another surprise move: Boeing announced in London it would participate with Aerospatiale Matra and British Aerospace in developing an air-to-air missile for the proposed Eurofighter jet. This new group will compete with Raytheon, which was receiving significant sales help from the Clinton administration in Europe, in the hunt for missile contracts from Britain, France and other nations that will total in the billions.

Who is us, and who is them, in these combinations? Schrempp is not only boss of Mercedes through his leadership of Daimler but also of Chrysler, one of America's Big Three. Can Bill Clinton continue to pressure Tony Blair to buy Raytheon when Boeing joins the hunt on the side of the French, who suddenly welcome foreign partners? Did that elephant fly?

The most intense and best-planned campaign the Pentagon waged this year was not in Kosovo. It was in twisting the arms of European arms manufacturers to pursue trans-Atlantic mergers with U.S. firms instead of following a Fortress Europe approach. The once distant vision of U.S.-European defense consolidation is moving closer to reality as the nation-state loosens its grip on the means of war.