To celebrate his victory in the French election, Emmanuel Macron chose to play the European anthem while walking through the Louvre square. Macron’s campaign was focused on a strong pro-European message of hope for the future of the European Union. However, a few days ago the new French President temporarily nationalised STX France’s shipyard to prevent the Italian company Fincantieri’s acquisition of STX. What is the real game Macron is playing with STX?
In May 2017, Fincantieri finalized the purchase of 66.6% of STX shares for 79.8 million euro. Former French President Hollande agreed to allow Fincantieri to buy STX after its former owner, the South Korean STX, went bankrupt. The agreement was celebrated by Calenda, the Italian finance and economic development minister, as “an important operation of the European political industry which will create a global player in the shipyard sector. It also demonstrates how the industrial sector can and needs to have a central role in the development of Europe’s future (…).” Indeed, Fincantieri and STX could have managed projects together of more than 40 billion euro and would have been able to compete with the biggest players in the world had Fincantieri been allowed to purchase STX.
Instead, a few months later, the new French President Macron promoted the nationalisation of STX. Such a protectionist measure seems to conflict with Macron’s pro-European and liberal values. However, Macron has already proven to think differently before. As economy Minister, he promoted stronger state in the economy when he increased the state’s stake in Renault.
Recently, he claimed France will create hotspots to process refugee applications in Libya. But this unilateral strategy goes against EU plans for managing the flow of migrants. In addition, Macron’s government has not improved the collaboration with Italy for the migrant crisis. Every day, hundreds of asylum seekers try to cross the Italian-French borders in the absence of a cooperation between the Italian and the French police.
It is not surprising that Macron’s will is to nationalise STX. But STX’s story is more complicated than it appears. STX France does not just produce passenger ships but also navy ships. Because of the Saint-Nazaire shipbuilding site, STX France is a highly strategic company for the French economy. The Saint-Nazaire harbour is one of the few sites in which ships of 220 thousand tonnes and 270 thousand tonnes can be built. In 2010, former President Sarkozy made the state acquire a 33.3% stake in STX France when the company was purchased by the South Korean STX. Sarkozy considered the Saint-Nazaire shipbuilding site critical, as it was the only French shipyard large enough to build aircraft carriers and big cruise ships.
It seems inexplicable that the French government allowed the purchase of Saint-Nazaire shipbuilding sites by a South Korean company and then stopped a European company from acquiring them. Fincantieri is an Italian enterprise owned by the Italian treasury ministry, which has 71.6% of its shares. Ficantieri is the biggest European and North American shipyard company and it is one of the most important players in the cruise ships, military ships and submarines industry. To illustrate, in 2016 alone Qatar ordered seven military ships from Fincantieri for around 5 billion euro.
Behind the official claims of the French government that the nationalisation of FTX would protect the more than 7000 employees of the company, there are economic and military drivers. As reported by La Repubblica, in the next months the Australian navy will commission 20 military ships for 20 billion euro. At the same time the Canadian navy will order 15 military ships. The companies controlled by the Italian government (Fincantieri and Leonardo) and the French government (Dcns and Thales) will compete to get the same contracts.
The cruise industry can be seen as another economic driver, as it is a very profitable sector. According to Sole 24 Ore, between 2017 and 2029 Fincantieri already has to build 29 cruise ships. The shipyard industry will create jobs and investments in the shipbuilding sites that win commissions.
In addition to the economic value of STX France, there is a strategic interest for the French government to maintain the ownership of the company and of Saint-Nazaire. As argued by G. Sapelli, “France will not sell the key to their military harbour to a foreign country. And it’s due to national interests.” In partnership with DCNS, STX France developed the BPC Ministral, a modern model of aircraft carrier. It is also the shipbuilding site of military corvettes, specific military ships (such as the 2014 Why Not?, a multitasking ship) and frigates.
In 2016, Fincantieri signed a business partnership with China State Shipbuilding Corporation (CSSC). The joint venture was sponsored by the American Carnival, one of the main clients of Fincantieri, which had already signed a historical partnership with China State Shipbuilding Corporation in 2014. The aim of Fincantieri and CSSC’s agreement is to develop and build cruise ships specifically for the Asian market. The implication of this collaboration is also the transfer of technologies and knowhow from Fincantieri to CSSC. The French government is concerned about the possible leaks of military and civil technologies from STX to CSSC.
There are three main reasons for France’s reluctance to sell STX to Fincantieri. Firstly, while China is not an enemy, it is not necessarily an ally to NATO or France. Selling STX could possibly cause a security breach as knowledge about military technology and ships may transfer to the country. Secondly, there are concerns that China will adopt the know-how and technologies from STX to start building military and cruise ships in China, thereby taking away possible business opportunities for European companies. Thirdly, the Saint-Nazaire shipbuilding site is a very profitable harbour, and it already has more than eleven orders of ships to work on. Civil and military shipbuilding is a remunerative sector, and no country would like to lose the opportunity to create economic and working opportunities for its people.
