PARIS (Reuters) - Eleventh-hour talks to resolve a power struggle over French government influence at Renault RENA.PA are making headway, sources said, ahead of a Friday deadline set by the carmaker and Japanese alliance partner Nissan 7201.T.

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“We’ve made some progress but we’re not there yet,” said a source close to the carmaking alliance. French officials also indicated that agreement had been reached in principle in some areas of the dispute, with details yet to be worked out.

Tension has been building since April, when Economy Minister Emmanuel Macron temporarily raised the government’s Renault stake to secure a permanent increase in its voting rights - and enough clout to veto strategic decisions or tie-ups that might one day endanger domestic interests including jobs.

The move raised hackles at Nissan, 43.4 percent-owned by Renault, pitting Macron against alliance Chief Executive Carlos Ghosn, who has headed both carmakers for the last decade.

Since its 1999 rescue by Renault, Nissan has outgrown its French parent and now leads the way in engineering and other key areas, within an alliance now ranked as the world’s fourth-largest carmaker by combined sales.

Renault-Nissan declined to comment on the ongoing talks.

Unless a deal is reached before Renault’s board meets on Friday, Nissan has threatened to exit a 2002 alliance agreement currently barring it from raising its non-voting 15 percent stake in its French parent. Lifting the holding to 25 percent would cancel Renault’s voting rights in Nissan under Japanese law, effectively ending French control of the alliance.

“It’s a serious threat,” said a source with knowledge of the government’s position. “This is a risk the finance ministry does not want to take, so Ghosn’s in a position of strength.”

Macron deployed 1.2 billion euros ($1.3 billion) of public money to raise France’s stake in Renault to 19.7 percent and block Ghosn’s proposal to opt-out of a new law giving long-term shareholders double voting rights.

Even after the holding is pared back to 15 percent, France will command 28 percent of votes when the Florange law takes effect at the end of March, enough to veto strategic decisions.

In a compromise offer last month, first reported by Reuters, Macron agreed to forego some of the government’s extra voting rights on non-strategic shareholder resolutions.

As part of a compromise deal, French officials have now also agreed to support binding commitments that neither France nor Renault will intervene in Nissan management or governance, according to sources on both sides of the negotiations.

But France is resisting additional Nissan demands, they said, including an end to Renault’s existing right to nominate its top three executives. Macron has also so far rejected a proposed safeguard mechanism allowing the Japanese carmaker to raise its Renault stake if the terms of the pact are breached.

Some investors are hoping that Ghosn, 61, can use the crisis to carry out structural alliance changes or even a full merger. That could unlock some of the value of Renault’s large stake in Nissan, worth around $20 billion at the Japanese company’s current market capitalization.

“There has arguably never been a better time for Renault-Nissan to push through material changes to its structure,” Exane BNP Paribas analyst Dominic O’Brien said in a note this week.

“It would be a very disappointing outcome if Ghosn is unable to use the current state of affairs to deliver this change.”