The Economist (2022-02-26) Riva

The Economist February 26th 2022 Europe 51

“Each side is doing its dance,sizingupthe
other, but there’s alwaysthedangerthey
will come to blows.” Whentheydo,oneof
them (usually Turkey) findsawaytoscale
back. When a Russian airstrikekilleddoz-
ens of Turkish troops stationedinSyriain
2020, Mr Erdogan orderedabombingcam-
paign against Syrian regimeforces,butnot
Russian positions. Turkeyhasalsobeensi-
lent about Russia’s anticsinBelarus.
But Turkey considersUkraineastrate-
gic partner. It opposed Russia’sannexation
of Crimea, backed Ukraine’splanstojoin
nato, and shared its concernsaboutRus-
sia’s naval build-up in theBlacksea.Tur-
key also sold Ukrainedozensofarmed
drones, vexing Mr Putin.Earlierthisyear,
Mr Erdogan and Volodymyr Zelensky,
Ukraine’s president, signedanewdefence
co-operation agreement. The war will
make it difficult for Turkeytobalanceits
commitments as a memberofnatoandits
warm relations with Russia,saysAlper
Coskun of the Carnegie EndowmentforIn-
ternational Peace, a think-tankinAmerica.
Turkey’s backing forUkrainehasalrea-
dy helped the countrybuffitstarnished
nato credentials. American diplomats,
used to taking Turkey totaskforitshu-
man-rights record, are praisingitsstance
on Ukraine. It helps thatTurkeyhasbegun
to mend fences with theuae,EgyptandIs-
rael, all of them Americanallies.
Russia has ways of temperingTurkey’s
support for Ukraine, however.Nowhereis
this as clear as in Idlib, aprovinceinnorth-
east Syria packed withover3mcivilians
and controlled by Islamicextremists.Two
years ago, Turkey, whichbackstheinsur-
gents, and Russia, whichbackstheSyrian
regime, agreed to a ceasefire.Thatstopped
a regime offensive that wouldhavepushed
the insurgents and millionsofrefugeesto-
wards Turkey’s border.Sincethestartof
the crisis in Ukraine, ceasefireviolations
have picked up, officialsinAnkarasay.
This is not a coincidence.Theybelieve
Russia is weaponising therefugeesagainst
Turkey. “The RussiansseeIdlibasasoft
spot for Turkey,” says oneofficial.“They’re
sending a message, thatifwedosome-
thing they don’t like [inUkraine],theycan
make our lives difficult.”
Mr Erdogan said earlierthisyearthat
Turkey would do whateverisnecessaryasa
nato member in the eventofaRussianin-
vasion. But in practicethereisonlyso
much Turkey is preparedtodoforUkraine.
Recently one of the primeminister’stop
advisers suggested thatTurkeywouldnot
align with foreign sanctionsagainstRus-
sia, calling them “useless”.InsteadTurkey
had tried to position itselfasapossible
mediator between RussianandUkraine—a
notion that now seemsnaive.MrErdogan
would have loved to preservecosytieswith
Russia, but the war in Ukraineislikelyto
prove the end of the affair.

TheFrenchelection

Billstopay

F

or the pastfew months, rivalsin

April’s French presidential election

havedwelttoexcessonquestionsofna-

tional identity and immigration. This

shouldsoonshift.EmmanuelMacron,a

formereconomyministerandone-time

investmentbanker,isexpectedshortlyto

confirmofficiallythatheisrunningforre-

election.Thisislikelytoturnthefocusto

theeconomy.Voterswillbejudgingnot

onlyMrMacron’seconomicmanagement

sincehetookofficein2017,buthowheand

hisrivalsplantoimprovecompetitive-

ness,jobcreationandincomes.

As the French economy rebounds,

growthhasexceededexpectations.Aftera

contractionof8%in2020,gdprecovered

to pre-pandemic levels last autumn.

Growthin 2021 reached7%,itsfastestrate

foroverhalfacentury,andbriskerthanin

Germany,ItalyandSpain.Thiswaspartly

thankstogenerousgovernmentsupportto

keepbusinessesgoing,peopleinjobsand

incomes protected. The injection of

€100bn($113bn),or4%ofgdp,partlyfrom

theeu’srecoveryplan,hasalsohelped.

OnMrMacron’swatch,Francehasalso

becomealotmorebusiness-friendly.He

hascuttaxesonbusinesses,replacedthe

wealthtaxwithanarrowerpropertytax,

introducedaflattaxonfinancialincome

andcourtedforeigninvestors.Forthepast

fiveyearshehasstucktothesamefiscal

policyandthesamefinanceminister:Bru-

noLeMairehasbeeninthejoblongerthan

anyonesinceValéryGiscardd’Estaingin

1969-74.In 2019 MrMacronpromisedthat

by 2025 therewouldbe 25 French“uni-

corns”,ortechfirmsvaluedatover$1bn.

Thatfigurewasreachedthreeyearsearly,

inJanuarythisyear.

Perhapsmostsurprising,theFrenchjob

marketisdoingrelativelywelltoo.Unem-

ploymentinthefourthquarterof 2021 fell

to7.2%,downfrom9.2%whenMrMacron

tookoffice.Thisisnotprincipallyowingto

governmentsupport:thenumberofpeo-

pleonfurloughschemeshasfallenfrom

8.4minApril 2020 to420,000inDecember

lastyear.Itlargelyreflectsthestrengthof

private-sectorjobcreation.Onereason,

saysPhilippeMartin,oftheCouncilofEco-

nomicAnalysis,anindependentadvisory

body,ispastlabour-marketreforms,par-

ticularlythosein2017.Amongotherthings

thesecappedthecosttoemployersofre-

dundancypayments.Insteadofprompting

morelay-offs,assomeeconomistshad

feared,thishasmadefirmsmorewillingto

hirestaffonpermanentcontracts.

The government has also invested

heavilyintraining.Thenumberofappren-

ticeshipshasrisenfrom290,000in 2017 to

arecord720,000in2021.Theemployment

rateof15-64-year-oldsactuallyincreased

duringthepandemic.Evenolderworkers

nowstayattheirdesksforlonger.Forthe

50-64-year-olds,theemploymentrateisat

itshighestlevelsincethenationalstatis-

ticsbodystartedmeasuringitin1975.

YettherearetwoweakpointstoMr

Macron’seconomicrecord.Thefirstisthe

stateofpublicfinances.Whenthepan-

demictookhold,hevowedtodo“whatever

itcosts”,andhedid.Thegovernment’s

budgetdeficitwasstill7%in2021,andthe

levelofpublicdebtreached115%ofgdp,ac-

cordingtoofficialestimates.Francenow

belongstothegroupofthemostindebted

countriesintheeurozone,alongsideBel-

gium,Greece,Italy,PortugalandSpain.

Francehasnodifficultyservicingits

debt.ButMrMacronhasyettoshowthat

hehasaplantoreduceit.ValériePécresse,

the centre-right Republicans’ candidate

andhismostcrediblecriticontheecon-

omy,hasaccusedhimof“burningthrough

cash”.Shepromisestorestorefiscaldisci-

plineandcutanet150,000jobsfromthe

5.6m-strongcivilservice.

PARIS

Ahealthyeconomy,ailing

publicfinances

Bouncing back, at a price

Source:Eurostat

20

10

0

-10

-20

2017 21201918

QuarterlyGDP,%changeonyearearlier

France

Euroarea

15

12

9

6

3

0

2017 18 19 2120

Budget deficit, % of GDP

France

Euro area