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2017-08-01 14:43:03
Macron Vowed to be Business Friendly. Now He Faces a Protectionist Uproar

PARIS — Two weeks after taking office, President Emmanuel Macron, donning a white hard hat, stood before hundreds of employees at the nation’s largest shipyard, promising to protect a French jewel from falling into foreign hands.

As one of his first major acts, Mr. Macron vowed to review an imminent takeover of the shipyard, STX France, by an Italian competitor. “We’re an industrial power,” he told cheering workers, who had just completed building the world’s biggest luxury cruise liner, the Meraviglia. “We must guarantee the preservation of jobs.”

The government is now trying to defuse an uproar in Rome, days after blocking the deal and nationalizing STX.

Mr. Macron campaigned to make France more business friendly by luring foreign investment and easing regulatory complexities. But blocking the deal for STX, along with a series of other maneuvers in recent weeks, is prompting concerns that Mr. Macron may follow the tried and true French tradition of dirigisme — an interventionist approach that his predecessors have employed time and again to promote French interests.

France is finding itself in the middle of debate over protectionism, as a backlash against globalization deepens around the world. President Trump is championing a more nationalistic stance in the United States, while Europe is generally calling for freer trade to stoke growth.

Bruno Le Maire, France’s prime minister, on Tuesday traveled to Rome to meet with Italy’s economy and industry ministers, who criticized what they called an “incomprehensible” decision over STX, and accused France of lapsing into economic nationalism. Mr. Le Maire said the seizure of STX was temporary and designed only to buy time to renegotiate an accord more favorable to the French government, which owns a third of the company.

“Even if it is temporary, it’s part of the French way of doing things,” said Famke Krumbmüller, the head of research at OpenCitiz, a political risk consultant firm in Paris. “Macron says he’s going to do things differently, but he also has to work with existing institutions and the culture, and that won’t just go away in a few months.”

Successive presidents have declared France “open for business,” only to get intimately involved in corporate takeovers, especially when a foreign company is making a play.

President François Hollande’s government tried to thwart a bid by General Electric to buy the power business of Alstom, a top maker of high-speed trains. Under Jacques Chirac, the government sought to prevent the Indian steel giant Mittal from buying Arcelor, a competitor with French operations. Both deals went through in the end.

Despite declaring he would make France’s economy more liberal, Mr. Macron has shown a willingness to involve the state in industrial policy.

As economy minister, he increased the government’s stake in the French automaker Renault over the objection of Carlos Ghosn, the chief executive. Mr. Macron also oversaw measures granting double voting rights to long-term shareholders, increasing state sway in French companies where it holds shares.

More recently as president, Mr. Macron has exerted that power in the name of saving jobs. When GM & S, a struggling French auto parts supplier, veered toward bankruptcy this summer, his government demanded that the partly state-backed carmakers, Renault and Peugeot, order tens of thousands of euros worth of new parts from the plant.

The 277 workers had booby-trapped the factory and threatened to blow it up unless a buyer was found. Mr. Macron sought to entice a savior by pressuring Renault and Peugeot to also invest millions more in modernizing the plant, on a remote and polluted parcel of land in central France.

A French buyer finally sealed a deal this week. Fewer than half the jobs will be kept.

While Mr. Macron’s early actions set a distinct pattern, it is not clear how much further he will go. He is still hoping to lay the groundwork for growth, in part by lightening the French state’s hand in companies, which could make such economic intervention less possible.

“It looks bad for France’s image right now,” said Patrick Artus, the chief economist at the French bank Natixis. “But I don’t think his mission is to increase the activism of the state.”

Mr. Macron has pledged to revamp France’s costly pension system, to invest in education and to build up France’s technology and renewable energy sectors. To pay for it, he has hinted at privatizing billions of euros worth of the French government’s holdings in a swath of French firms.

“In five years, the French state’s presence will be much lower than today,” Mr. Artus said. Meanwhile, he added, Mr. Macron’s interventions are “all political marketing.”

Mr. Macron’s poll ratings have slumped recently from near record highs as he prepares to push through steep budget cuts and painful changes to French worker protections and labor laws. French unions have called for street protests in September.

But the decision to temporarily nationalize the STX shipyard, in Saint-Nazaire, has proved popular with the French public, which generally wants the French state to preserve national interests.

“Macron is picking his fights right now in French public opinion, and dropping the tool of nationalization is not one of them, given what he has to do in terms of cutting budgets and implementing labor market reforms,” Ms. Krumbmüller said. “Not nationalizing STX would have been too expensive for him in terms of popularity.”

In the case of STX, Mr. Macron’s government said its concerns went beyond jobs. Under the contract signed by former President François Hollande, the Italian state-backed shipbuilder Fincantieri was to take a two-thirds stake in the French shipyard held by a now-bankrupt South Korean owner.

Fincantieri had pledged to keep thousands of jobs and orders for the next five years at Saint Nazaire. The hulking operation makes many of the world’s mega-cruiseships and has the capacity to build aircraft carriers and other naval vessels.

The French government said the deal could jeopardize the Saint-Nazaire operations in part because Fincantieri holds stakes in Chinese shipyards, raising concerns about a transfer of technology to China. The deal would also effectively give the Italian state, which owns Fincantieri through a finance company, sway at a strategic French site.

Last week, as the contract was about to take effect, the Macron administration tried to renegotiate a 50-50 split. When Fincantieri balked, the French government seized control by exercising its right to buy out existing shareholders.

On Tuesday, Mr. Le Maire sought to smooth tensions with Rome, where officials questioned why it was acceptable for a South Korean shipbuilder to hold a majority stake, but not an Italian one. Italians are also incensed that French companies have spent billions on takeovers of its own major businesses in sectors like dairy and luxury, without the Italian state putting up a fuss.

Mr. Le Maire, in his talks with Italian officials, offered to work with Italy to create a “European naval shipbuilder champion,” in which the two countries would collaborate on building civilian and naval vessels.

Should the Italians reject a deal, he told a French newspaper, “we will stick with the current situation and look for other potential buyers.”