The Economist - USA (2022-02-26)

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) findsa waytoscale
back. When a Russian airstrikekilleddoz­
ens of Turkish troops stationedinSyriain
2020, Mr Erdogan ordereda bombingcam­
paign against Syrian regimeforces,butnot
Russian positions. Turkeyhasalsobeensi­
lent about Russia’s anticsinBelarus.
But  Turkey  considersUkrainea strate­
gic partner. It opposed Russia’sannexation
of  Crimea,  backed  Ukraine’splanstojoin
nato,  and  shared  its  concernsaboutRus­
sia’s  naval  build­up  in  theBlacksea.Tur­
key  also  sold  Ukraine dozensof armed
drones,  vexing  Mr  Putin.Earlierthisyear,
Mr  Erdogan  and  Volodymyr Zelensky,
Ukraine’s president, signeda newdefence
co­operation  agreement. The war will
make  it  difficult  for  Turkeytobalanceits
commitments as a memberofnatoandits
warm  relations  with  Russia, says Alper
Coskun of the Carnegie EndowmentforIn­
ternational Peace, a think­tankinAmerica.
Turkey’s backing forUkrainehasalrea­
dy  helped  the  countrybuffitstarnished
nato credentials.  American diplomats,
used  to  taking  Turkey  totaskforitshu­
man­rights  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 ceasefire.Thatstopped
a regime offensive that wouldhavepushed
the insurgents and millionsofrefugeesto­
wards  Turkey’s  border.Sincethestartof
the  crisis  in  Ukraine,  ceasefireviolations
have  picked  up,  officialsin Ankara say.
This  is  not  a  coincidence. They believe
Russia is weaponising therefugeesagainst
Turkey.  “The  RussiansseeIdlibasasoft
spot for Turkey,” says oneofficial.“They’re
sending  a  message,  thatifwedosome­
thing they don’t like [inUkraine],theycan
make our lives difficult.”
Mr  Erdogan  said  earlierthisyearthat
Turkey would do whateverisnecessaryasa
nato member in the eventofa Russianin­
vasion.  But  in  practice there isonly so
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 affair.n

TheFrenchelection

Bills topay

F

or the past few months, rivals in

April’s French presidential election

havedwelttoexcessonquestionsofna­

tional identity and immigration. This

shouldsoonshift.EmmanuelMacron,a

former economyminister andone­time

investmentbanker,isexpectedshortlyto

confirmofficiallythatheisrunningforre­

election.Thisislikelytoturnthefocusto

theeconomy.Voterswillbejudgingnot

onlyMrMacron’seconomicmanagement

sincehetookofficein2017,buthowheand

his rivals plan to improvecompetitive­

ness,jobcreationandincomes.

As the French economy rebounds,

growthhasexceededexpectations.Aftera

contractionof8%in2020,gdprecovered

to pre­pandemic levels last autumn.

Growthin 2021 reached7%,itsfastestrate

foroverhalfa century,andbriskerthanin

Germany,ItalyandSpain.Thiswaspartly

thankstogenerousgovernmentsupportto

keepbusinessesgoing,peopleinjobsand

incomes protected. The injection of

€100bn($113bn),or4%ofgdp, partlyfrom

theeu’s recoveryplan,hasalsohelped.

OnMrMacron’swatch,Francehasalso

becomealotmorebusiness­friendly.He

hascuttaxesonbusinesses,replacedthe

wealthtaxwithanarrowerpropertytax,

introduceda flattaxonfinancialincome

andcourtedforeigninvestors.Forthepast

fiveyearshehasstucktothesamefiscal

policyandthesamefinanceminister:Bru­

noLeMairehasbeeninthejoblongerthan

anyonesinceValéryGiscardd’Estaingin

1969­74.In 2019 MrMacronpromisedthat

by 2025 therewouldbe 25 French“uni­

corns”,ortechfirmsvaluedatover$1bn.

Thatfigurewasreachedthreeyearsearly,

inJanuarythisyear.

Perhapsmostsurprising,theFrenchjob

marketisdoingrelativelywelltoo.Unem­

ploymentinthefourthquarterof 2021 fell

to7.2%,downfrom9.2%whenMrMacron

tookoffice.Thisisnotprincipallyowingto

governmentsupport:thenumberofpeo­

pleonfurloughschemeshasfallenfrom

8.4minApril 2020 to420,000inDecember

lastyear.Itlargelyreflectsthestrengthof

private­sector job creation. One reason,

saysPhilippeMartin,oftheCouncilofEco­

nomicAnalysis,anindependentadvisory

body,ispastlabour­marketreforms,par­

ticularlythosein2017.Amongotherthings

thesecappedthecosttoemployersofre­

dundancypayments.Insteadofprompting

more lay­offs, as some economists had

feared,thishasmadefirmsmorewillingto

hirestaffonpermanentcontracts.

The government has also invested

heavilyintraining.Thenumberofappren­

ticeshipshasrisenfrom290,000in 2017 to

a record720,000in2021.Theemployment

rateof15­64­year­oldsactuallyincreased

duringthepandemic.Evenolderworkers

nowstayattheirdesksforlonger.Forthe

50­64­year­olds,theemploymentrateisat

itshighestlevelsincethenationalstatis­

ticsbodystartedmeasuringit in1975.

Yet thereare two weakpointsto Mr

Macron’seconomicrecord.Thefirstisthe

stateofpublicfinances.Whenthepan­

demictookhold,hevowedtodo“whatever

it costs”,and hedid. The government’s

budgetdeficitwasstill7%in2021,andthe

levelofpublicdebtreached115%ofgdp, ac­

cordingtoofficialestimates.Francenow

belongstothegroupofthemostindebted

countriesintheeurozone,alongsideBel­

gium,Greece,Italy,PortugalandSpain.

France has nodifficultyservicing its

debt.ButMrMacronhasyettoshowthat

hehasa plantoreduceit.ValériePécresse,

the centre­right Republicans’ candidate

andhismostcrediblecriticontheecon­

omy,hasaccusedhimof“burningthrough

cash”.Shepromisestorestorefiscaldisci­

plineandcuta net150,000jobsfromthe

5.6m­strongcivilservice.

P ARIS

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