France, Unlike US, Is Deep into Stimulus Projects

French workers normally take off much of the summer, but this month, there is something of a revolution going on here at this former royal chateau roughly 30 miles southeast of Paris. The throngs of tourists will be jostling alongside stonemasons, restoration experts and other artisans paid by the French government’s $37 billion economic stimulus program.

Their job? Maintain in pristine condition the 800-year-old palace of more than 1,500 rooms where Napoleon bid adieu before being exiled to Elba and where Marie Antoinette enjoyed a gilded boudoir.

Besides Fontainebleau, about 50 French chateaus are to receive a facelift, including the palace of Versailles. Also receiving funds are some 75 cathedrals like Notre Dame in Paris. A museum devoted to Lalique glass is being created in Strasbourg, while Marseilles is to be the home of a new 10 million euro center for Mediterranean culture.

All told, Paris has set aside 100 million euros in stimulus funds earmarked for what the French like to call their cultural patrimony. It is a French twist on how to overcome the global downturn, spending borrowed money avidly to beautify the nation even as it also races ahead of the United States in more classic Keynesian ways: fixing potholes, upgrading railroads and pursuing other “shovel ready” projects.

“America is six months behind; it has wasted a lot of time,” said Patrick Devedjian, the minister in charge of the French relance, or stimulus. By the time Washington gets around to doling out most of its money, Mr. Devedjian sniffed, “the crisis could be over.”

Gallic pride aside, Mr. Devedjian has a point. While he plans to spend 75 percent of France’s stimulus money this year, the White House is giving itself until fall 2010 to lay out that big a share of the American expenditure. And many experts predict that Washington will fall short of that goal.

As it turns out, France’s more centralized, state-directed economy — so often criticized in good times for smothering entrepreneurship and holding back growth — is proving remarkably effective at deploying funds quickly and efficiently in bad times.

“All projects must start in 2009,” Mr. Devedjian said. “We want rapid results.”

The confidence evident in the words of Mr. Devedjian, a close adviser to President Nicolas Sarkozy, echoes a broader pride among French business and political leaders that their government has done a better job dodging the worst of the economic turmoil than its European neighbors like Britain, Germany and Spain.

The Organization for Economic Cooperation and Development expects France’s gross domestic product to drop 4 percent from the peak of the economic cycle, far less than the 7.4 percent plunge expected in Germany, the nation’s economic rival.

AP French Worker

The economic decline and loss of jobs are also likely to be significantly milder than in Spain, Belgium and Britain, according to the group, a Paris-based intergovernmental research and policy advisory agency for the world’s industrialized countries. (By comparison, the American economy is expected to shrink by 3.5 percent before starting to grow again.)

While many economists predict Germany and much of western Europe will remain in recession through mid-2010, France’s official statistics agency expects the economic situation to stabilize by the fourth quarter of 2009, about the same time many analysts predict that the American economy will finally start to improve.

“There’s a growing possibility that G.D.P. could grow in the third or fourth quarter,” said Eric Dubois, head of the short-term analysis department of Insee, the National Institute of Statistics and Economic Studies.

For all the confidence expressed by the French, though, France remains highly vulnerable to the threat of rising unemployment. The O.E.C.D. expects the French jobless rate, currently 8.9 percent and lower than the 9.5 percent rate in the United States, to hit 11.2 percent by the end of 2010, above the expected American peak of 10.1 percent.

“There has been a lag with unemployment, but now it will start to bite,” said Hervé Boulhol, head of the France desk at the O.E.C.D.

Paying for all those jobless French will not be cheap. Under French job regulations, unemployed workers are guaranteed up to 67 percent of their former salary and can collect as much as 70,000 euros ($98,000) annually in benefits for two years.

Indeed, without major changes in government policies, France faces costs that will probably be crippling in the long run. “We’re insulated from the shocks, but the next generation will pay for it,” Mr. Boulhol warned.

For now, though, the deluge seems far off into the future at Fontainebleau, much as it did to Louis XIV, the Sun King, who spent each fall here for his annual hunt. The well-tended gardens and canals shimmer in the summer sun, while artisans clean stonework and repair the courtyards and kitchen buildings where royal feasts were once prepared.

MORE FROM NYTIMES.COM

Current DateTime: 04:58:27 12 Nov 2009
LinksList Documentid: 22528754

• Business
• DealBook Blog
• Small Business News

“This was the heart of the castle because court life revolved around meals,” said Jacques Dubois, a spokesman for the Château de Fontainebleau. “And this money allows us to finish construction that’s been going on for years.”

It is easier to find money for castles and cathedrals, of course, in a country that believes “art is equal to other investments, not secondary,” as Mr. Devedjian puts it. But the largess is driven as well by President Sarkozy’s support for more spending to combat the recession, even if it means borrowing more and running up big deficits.

That contrasts sharply with the commitment by the German chancellor, Angela Merkel, to hold down stimulus spending and move as quickly as possible to curb her government’s budget deficit.

So what about the criticism that Europe is not being as aggressive as the United States in combating the global slowdown, with only tepid stimulus packages?

That’s not the way the French see it.

“You lost time with changing a president and no decisions were made in the last three months of 2008,” Mr. Devedjian jibed. “Nothing happened in January 2009, and in February, there was just a speech.”

“The country that is behind is the U.S.,” he said, “not France.”

—Alice Pfeiffer contributed reporting from Paris.

This story originally appeared in the The New York Times