François Hollande, France’s Socialist leader, is steering a middle-line path

FRANK PERRY/AFP/GETTY IMAGES - This file photo from March 14, 2013 shows crew members waiting to take part in a reflagging ceremony of the MSC Preziosa vessel at the STX shipyard in Saint-Nazaire, France. South Korea's troubled STX Group is considering selling its European assets including its shipyards in France and Finland.

ST. NAZAIRE, France — This Atlantic port is the heart of France’s shipbuilding tradition, where the British came to have the Queen Mary 2 built a decade ago and where Royal Caribbean recently ordered a $1.5 billion floating palace for island-hopping by the masses.

When the St. Nazaire STX Shipyards’ majority shareholders in South Korea announced that they were selling out, therefore, the reflex here was almost automatic. Leftist union activists turned to the Socialist government in Paris with a demand for nationalization, saying it was the best way to preserve France’s shipbuilding prowess and guarantee 2,000 jobs in the yards and 4,000 more in service and supply firms.

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But President François Hollande’s ministers in Paris replied with an immediate no. The issue, they said, was not who holds the capital but how many ships are on order. Another private investor will buy in, they predicted, provided the shipyards maintain their healthy finances and line up a solid list of projects.

The response was emblematic of Hollande’s government, which this month completed the first year of a five-year term. The president, a Socialist elected with backing from the far left, has nevertheless steered France along a market-oriented path, trying to navigate the European financial crisis without Greece-style austerity but also without challenging the European Union’s demand to bring down deficits.

Hollande’s version of Socialism caused a sensation in December when Industry Minister Arnaud Montebourg threatened to nationalize an Indian-owned steel plant to save it from being closed down. Prime Minister Jean-Marc Ayrault swiftly countermanded the industry minister and stepped in to run the negotiations, ruling out nationalization. The plant has since been allowed to close, generating continuing protests by labor union activists, who accuse Hollande of betrayal.

As a result of such decisions, Hollande has encountered persistent and often angry criticism from the left as well as the right. With policies decried as unclear, three-fourths of those queried in opinion polls have qualified his choices as bad for the country. His popularity has hit dismal lows, undermined by his tentative style, and his own aides have nicknamed him “Pépère,” the equivalent of “Pop.”

Chafing at Hollande policies

For the conservative followers of former president Nicolas Sarkozy, Hollande has failed to bring down government spending far enough; it still represents more than half the economy. For his Socialist Party — including some of his ministers — and for groups further to the left — Greens and the Left Front — he has bowed to the penny-pinching demands of international finance instead of opening public spending valves.

The Left Front’s leader, the obstreperous Jean-Luc Mélenchon, last week sponsored an anti-Hollande demonstration attended by tens of thousands of people demanding increased government spending. “If you don’t know how, we do,” Mélenchon blared to a cheering crowd at the evocative Place de la Bastille.

Ayrault announced several days later that Hollande’s government planned to chart a major investment program, partly to stimulate economic activity, but would finance it by selling down the government stake in major industries. Although it was under conservative leadership for years, the government retains $80 billion worth of shares in a dozen key industries, such as Air France and electricity and gas suppliers.

For some, the chafing at Hollande’s policies has taken the form of Germany-bashing, because Chancellor Angela Merkel champions the European Union’s budget-balancing treaty. Claude Bartolone, president of the French National Assembly and a preeminent Socialist figure, called recently for a “confrontation” with Merkel over spending restrictions undertaken as part of the E.U. fiscal discipline treaty.

Hollande, although stepping away from Sarkozy’s close partnership with Merkel, has carefully preserved cordial relations. In other ways as well, his handling of the “Merkozy”-imposed fiscal treaty has provided a window into his governing style.

As a candidate, Hollande denounced the treaty as an instrument of hardship for the working class and vowed to renegotiate it if elected. But once in office, he signed it as it stood, accepting the requirement that deficits be reduced to 3 percent of gross domestic product by this year and zero within two more years.

Unable to reach the 3 percent goal without even more painful cuts and taxes, however, he petitioned the European Commission in Brussels and early this month obtained a two-year extension. Although he finagled the extra breathing room, Hollande was careful to emphasize that France was still bound by the E.U. deficit reduction obligation.

‘Reasonable path’

The maneuver has pleased neither the right nor the left. But Hollande’s middle-line policy, often referred to as Scandinavian-style social democracy, drew praise from at least one supporter: the popular musician AndréManoukian. “Today, this seems to be the reasonable path, even if it is not very sexy or even very spectacular,” he said in an Internet comment.

Le Monde, the paramount French newspaper, also endorsed Hollande’s determination to avoid austerity while prudently paring back the deficit with added taxes and limited budget cuts. In a front-page editorial, Le Monde described Hollande’s neither-nor policy as unprecedented for a Socialist president.

Although he had never held high office, Hollande has his own experience to guide him. He was a young economic adviser to ­François Mitterrand, the Socialist who became president in 1981 and set about nationalizing major industries in alliance with the Communist Party. The result was disaster; two years later, Mitterrand made a U-turn, starting a wave of privatization that turned Socialist doctrine on its head.

But Nathalie Durand-Prinborgne, a Workers’ Force union delegate at the sprawling seaside shipyards here, said nationalization is still the only way to guarantee the future, because the government is necessary to arrange financing for such large investments as a ship. Without the government and its investment tax credits, she said, the St. Nazaire shipyards would never have snagged the Royal Caribbean contract, which provides three more years of work.

“For me,” she said, “nationalization is the only way to keep this site alive.”

 
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