27 September

The Italian Prime Minister Paolo Gentiloni will visit Lyon today. At this meeting between the EU27’s second and third biggest economies, the governments will attempt to put an end to months of diplomatic turmoil, resulting in part from the nationalisation of the Saint-Nazaire shipyards, and seek to reach a new agreement.

The bone of contention

The roots of the dispute trace back to the acquisition in 2006 of the Chantiers de lAtlantique by the Korean company Stx. Their recent bankruptcy forced a quest for new buyers. Fincantieri’s proposal was deemed the most convincing, and on 6 April the Italian company (which is under State control) reached an agreement with the French government, then headed by Manuel Valls: Fincantieri would acquire a 48.7% share. Given the 6% allocated to Fondazione Cr Trieste, there would be a resulting overall Italian majority.

Following the election of Emmanuel Macron, however, there was a rapid u-turn. On a visit to Saint-Nazaire, the new French President announced his intention to review the share distribution, formulating a proposal for an equal 50-50 split, with governance powers slightly in favour of Rome. When the Italian government rejected that proposal, their French counterpart proceeded to nationalise the shipyards.

The domestic French rationale behind this move is not difficult to understand. Facing sinking popularity rates and with a new employment law on the horizon, Macron seized the opportunity to establish himself as the defender of French workers’ interests in the eyes of a public who are concerned about defending employment and protecting French expertise. It’s worth noticing here that the issue is particularly delicate given the strong symbolism of the Saint-Nazaire yards for France. They are the sole facility that can produce ships over 200k tonnes; for commercial but also crucially for military purposes.

The two parties, it has been reported, seem now to have concluded an agreement thanks to a new opening from Macron on the issue. The French government is said to have designed a solution whereby Fincantieri would officially become owner of a 50% share but with a further 1% conceded by the French government to the Italian company on a 12-year loan. This would broadly meet the demands of the Italian government, who would not accept anything less than a 51% share. The partnership will furthermore likely be enlarged to the military field, with the aim of launching a project for the construction of a “Sea Airbus” under Italo-French lead.

Macron’s concessions could be read as an attempt to encourage Italy to back his European reform project, not least in the face of German nervousness about his plans for Eurozone bonds, and Sunday’s German electoral results. While Macron’s concession may offer a way through, the summer’s tensions will leave repercussions, particularly when it comes to Macron’s popularity among the Italian electorate.

Europeanism à la carte

Although Macron’s election was widely hailed as a victory for the EU, his presidency has quickly caused resentment. In Italy in particular the honeymoon with the new French President did not last long, as could be easily predicted following Macron’s aggressive attitude on various instances towards his southern neighbour.

The dispute over the Chantiers de l’Atlantique takes place within a wider scenario of Franco-Italian tensions over other, arguably more crucial problems, most notably Libya. Macron’s unilateral moves on the Libyan issue have not been well received in the peninsula. Italy has always felt itself to be a key actor in Libya due to its colonial past and it has key economic interests in the country.

Macron’s popularity in Italy had already sunk due to his behaviour on Libya, but the nationalisation of the shipyards further dented Macron’s political stature to the eyes of the Italian public. For someone hailed as the champion of European liberalism, such a protectionist move has been damaging. The Italian government has pointed out that Fincantieri’s acquisition of the yards was the soundest economic option under market rules. There is also the perception of double standards: over the past two decades leading Italian brands, worth a cumulative €101.5 billion, including Parmalat and Edison have been acquired by French competitors.

The perceived refusal of Macron to accept market rules, led to a feeling in Italy that Single Market freedoms apply for some and not others. The Italian press was merciless in highlighting the inherent hypocrisy in Macron’s position. A strong advocate of the four freedoms, including specifically the free movement of capital, he would be quick to contradict his principles in the name of French interests.

For Italians, Macron is seen, yes, as a liberal pro-European, but also as one who prefers to order à la carte. Whether his decisions are dictated by inexperience or are carefully-thought political moves, the French President looks as if he’s first and foremost acting with the interests of his country in mind. The perception in Italy has long been that when French interests clash with the goal of a more united Europe, Europe is sacrificed on a hexagonal-shaped altar. While arguably a legitimate stance, Macron’s position looks disingenuous combined with his embrace of strongly pro-European goals and risks creating tensions with key potential European allies when combined with his occasional absence of political and diplomatic tact.

A tough job ahead for le petit Napoléon

The decision to reconsider might be a sign that the French President is starting to learn the diplomatic game. Interestingly, at the official level Palazzo Chigi (the residence of the Italian PM) commented that “Italy is ready to work with Germany and France towards the goal of relaunching the European Union,” in a note following the German electoral results. Gentiloni’s government, Italian diplomatic sources have reported, were also pleased with Macron’s Tuesday speech. With general elections due next spring, however, Italian leaders from across the political spectrum may be wary of being seen as openly supporting the president nicknamed le petit Napoléon or even Micron by the Italian press.

Europeanists’ expectations were set very high following his electoral campaign and nothing short of a revolution through reforms in Europe (is that an oxymoron?) would really be seen as a victory for the French President. With Merkel in Germany internally focused on securing a governing coalition pulling her in different directions on Europe and the euro, and frictions with other key potential allies such as Italy, Macron’s reformist plans for the EU and Eurozone are likely to face a hard time in the near future.