Emmanuel Macron wasted no time in forgetting his Economic promises

France's new president, Emmanuel Macron, vowed to attract more foreign investment and to push for greater European integration. His government's decision to block an Italian takeover of France's STX shipyard has broken both promises in one fell swoop.

Finance Minister Bruno Le Maire said on Thursday France would temporarily nationalize the yard -- blocking a deal that would have seen Italy's Fincantieri SpA take over 48 percent of STX, with an Italian banking foundation buying a further 6 percent. Le Maire said he was defending "France's strategic interests in shipbuilding."

This rationale is hard to credit. The shipyard's previous owner was Korea's STX Offshore & Shipbuilding Co. Ltd., so the facility was already in foreign hands. Francois Hollande, Macron's predecessor, had already cleared the new deal in April, having secured a string of concessions. These included a veto for the French government to protect intellectual property and military resources.

The decision has more to do with surrendering to pressure from labor unions, which had called for the state to intervene. The government may also be aiming to put pressure on the Italian government, which has a controlling stake in Fincantieri: Le Maire had asked for Italy and France to be equal partners in STX, but Rome said no.

In either case, the move makes a mockery of Macron's insistence that his goal is to modernize the country and open it for business. Two months into his term, he's already pandering to the protectionist sentiment that has made foreign companies reluctant to invest in France.

The same goes for his commitment to Europe. Just as the European Union is discussing plans to intensify defense cooperation, France shows it has no trust in a key ally. And the announcement could strengthen
economic nationalism in Italy. In recent years, French groups such as Lactalis SA and LVMH have taken over Italian companies in a string of high-profile deals. Italians might ask why they aren't allowed to do the same in France.

Macron's election was hailed as a victory for openness and economic liberalism. It's to be hoped that this early misstep is an aberration, not a sign of things to come.

Bloomberg Editorial

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