Monsieur Macron has won the recent elections in France as, I would say, the more “market-friendly” option available, vis-à-vis the rampant economic nationalism of Madame Le Pen. Certainly, he won the election as the most “europhile” option available. And yet, economic nationalism is a well established feature of French politics and perhaps a more or less safe way to build further electoral consensus.
After a spectacular, and quite unexpected, victory in the legislative contest in addition to his election as President of the French Republic, Monsieur Macron’s popularity went down by 10 points recently. I won’t dare to say that this explains his recent moves concerning the shipyard of Saint-Nazaire, which he is threatening to nationalise, but he certainly doesn’t believe that flexing his nationalist muscles will hurt his popularity.
Saint-Nazaire has a long history as a shipyard. It is owned by a joint venture of the of the South Korean group STX, which has filed for bankruptcy, and the French government (which owns a 30% stake). With STX’s bankruptcy, Fincantieri – which is in turn controlled by the Italian government bank – signed a deal to acquire the Saint-Nazaire shipyard.
The European single market is founded upon the the free movement of goods, capital, services, and labour (the so-called four freedoms) and therefore this should hardly be a problem.
But now Monsieur Macron is stopping the deal. Instead of allowing Italians to becoming majority shareholders, he chose to nationalise the shipyard. Such a move is prompted by the realisation that, of course, shipbuilding is “strategic” and by the need for avoiding the new shareholder firing people in order to increase efficiency. One wonders why such “strategic objection” didn’t apply to South Koreans but is used against fellow EU members.
What is a “strategic” business or a “strategic” industry? Many definitions can be advanced but, basically, “strategic” refers to those businesses that a government wishes to control, for whatever reason.
Per se, the deal is not particularly remarkable. The Italian company committed 79 million euros for 66% of STX France’s shares. Shipbuilding doesn’t seem to be a particularly profitable business sector these days, nor the most technology-intensive.
Yet this move will help to increase Macron’s popularity in Brittany, where St. Nazaire is located, by showing that the state is coming to “protect” their jobs. It may prove that Macron doesn’t lack resolve, to all those who were looking for a new tough guy in town. It would certainly be a disappointment for those who pictured in Macron a new champion of an integrated Europe: this is a blow to the single market. If the French cannot “trust” the Italians as shareholders of one of their “strategic” companies, and not just some Italian guy but the Italian government, how can they speak of a more integrated Europe with a straight face?
“Economic nationalism” never seems to go away, especially in France. But the Italian reaction has been perfectly symmetrical. While Italian public opinion is constantly upset when foreign investors buy stakes in major Italian corporations (“they’re buying our family jewels!”), now we’re all upset that “our” team is being stopped from acquiring a French company. Only a few years ago, our government stopped AirFrance which wanted to buy then government-owned Alitalia, preferring to sell it to a heterogenous group of Italian businessmen (not a very good choice, with the benefit of hindsight).
The tribal distinction of “us” and “them” has little relevance in a market economy. We should actually be welcoming foreign capital that comes to our shores, we shouldn’t consider it a form of “invasion”. Likewise, if there is such thing as a “national interest” I suppose it coincides with the interests of Italian consumers. In what sense is it related to an Italian company employing capital in French shipyards? I can see that a more open economy produces a better allocation of resources, but that is hardly a matter of a single business acquisition in France – particularly when the buyer is another government-controlled company.
Behind all of this lies an old idea. Sad as it is, we shall admit that the idea that exports (including exporting our own companies) are good and imports are bad is still “an article of faith”, as a brilliant French economist pointed out a few years ago.
One of course wonders how prejudices so profoundly rooted are affected by EU membership. Very little, it seems. Alas, sometimes euro-philia and euro-phobia differ not so much in their reliance on the us vs them story, but only on their assessment of who is the “we”. It seems that the emphasis was put on the “common” more than on the “market”. It is hard to forecast that the common market will ever be completed, or taken truly seriously by Europeans and member-states alike, if we don’t find some leader capable of explaining the virtues of trade, exchange, economic cooperation.
Alberto Mingardi is Director General of Istituto Bruno Leoni and Adjunct Scholar at the Cato Institute.