The French malaise

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The French malaise

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The European crisis has exposed France’s weakness. President Sarkozy’s record is poor, as he bids for a second term. Did De Gaulle create a presidency that does not work?

“L’état, c’est moi”—like Louis XIV, de Gaulle, commemorated above, built the office of president in his own image. No leader since has suited it


France is moving towards a moment of truth. The euro crisis, an unpopular president, rivalries within the Socialist party and a flatlining economy are forcing into question the balancing act performed by successive leaders for the past three decades. Abroad, the nation of Louis XIV, Napoleon Bonaparte and Charles de Gaulle likes to think of itself as Europe’s leader. This perception is now under threat. Meanwhile, at home, the very nature of the Fifth Republic is increasingly under question. Half a century after the general saved his country from disintegration and gave it a strong executive system of government, opinion polls suggest that an incumbent president could be defeated for the first time in 30 years.

Things will come to a head as France moves to its next presidential election starting in April 2012 against the backdrop of the European sovereign debt crisis, which began in Greece but has raised systemic political issues that France would rather avoid. Long gone are the balmy days of the 1980s when François Mitterrand, the former French president, and Helmut Kohl, erstwhile German chancellor, held hands at the first world war battleground of Verdun to symbolise the reconciliation between the two major protagonists of Europe’s 75-year civil war. Today, President Nicolas Sarkozy and Chancellor Angela Merkel peck one another on the cheek when they meet but, reflecting their nations, they are poles apart in temperament and mindset as they approach Europe’s existential challenges. While the Germans put their faith in rule-based systems, the French prefer to bank on their ability to conjure a solution out of adversity.

If the mercurial Sarkozy could pull off such a trick in the face of the eurozone crisis, he would not only be assured of re-election, but would mark himself as a leader of global stature—able to show that politicians do not always have to be outrun by markets. The integrationist vision of Jacques Delors, the pioneering head of the European Commission, might even burst back into life. France’s presidency of the G20, which draws to an end in November, would be crowned in glory.

But this isn’t going to happen. Sarkozy explains successive euro bailout agreements to the nation in grave televised addresses, and the French media accord him centre stage in their reporting. However, given the drawn-out nature of the crisis, this does not rebound to his credit. Although France has been integral to the European project since the start, it is hard to detect much enthusiasm for the European Union or the euro in the hexagon these days. The combination of German strength, an awareness that headlong enlargement of the EU and the single currency zone was not such a wise course to take, and the shadow of impending financial disaster all make the EU an achievement that dare not speak its name in France. In early October, an Ipsos-Logica poll showed that 94 per cent of French people regarded the state of the eurozone as “serious” for their country, but only 38 per cent thought the powers of the EU should be strengthened. In public, mainstream politicians express no qualms about the integrationist policies pursued since the 1950s, but it is not a subject that they like to dwell on. As Le Monde noted, during the recent contest to pick next year’s Socialist presidential candidate, the EU and the euro-crisis were “forgotten, neglected, relegated to the rank of a subordinate matter, in short, a distraction.” In private, one former centre-right minister recently remarked that France had been much happier in the era of the six-nation common market, and recalled that the original idea of a common currency had only included the continent’s stronger economic states. “It’s not perfect,” he added. “But we have to deal with what we have.”

***

On the world stage, France is increasingly playing second fiddle to Germany. Sarkozy’s leadership, with David Cameron, of the Libya campaign was only a temporary fillip. Europe’s Mediterranean nations, with whom Sarkozy saw a common purpose, are now at the eye of the euro-storm. His wider vision of a community encompassing north Africa may prove one day to have been astute, but not anytime soon. France’s influence in Brussels is not what it was.  The president may have pulled the relationship with Washington back from the days of “cheese-eating surrender monkeys” and “freedom fries” but the Obama administration looks to Berlin, not Paris, as its first port of call in mainland Europe.

The economy is a continuing source of vulnerability. The government projects 1.75 per cent growth for 2012, but the IMF predicts only 1.4 per cent, and JP Morgan puts it at minus 0.1 per cent. In a harbinger of what may be to come, there was no growth at all in France during the second quarter of this year, and the Bank of France estimates minus 0.1 per cent for the third.

The Sarkozy administration plans to cut €11bn from the 2012 budget deficit, but public debt will still rise—to 87.4 per cent of GDP next year—because of increased guarantees to the European Financial Stability Facility, and because debt servicing is expected to cost €48.8bn a year. Unemployment remains at almost 10 per cent, the average level of the last three decades. Youth joblessness is far higher, at 23 per cent—up from 18 per cent in 2008.

For many of these reasons, market operators and bond vigilantes appear to be targeting France in a trail that leads from Athens via Lisbon and Madrid to Rome and ends up on the banks of the Seine, with maximum benefits to be had for traders holding a short position against France’s triple A rating. So there are sudden attacks on French banks sparked by nothing more than a newspaper cartoon strip. The Paris bourse index lost 25 per cent of its value in the third quarter of this year. (Germany, it must be said, suffered as badly.) The main banking target, the Société Générale, was down 51 per cent and France’s largest bank, BNP, dropped 40 per cent in that quarter.

This may all be normal for a medium-sized power caught up in an unfolding economic crisis of this scale. The planners of the 1980s and 1990s, who assumed smooth progress from the single market to the common currency and on to ever-greater union, failed to grasp the problems presented by such a large, often heterogeneous group of nations operating without a common fiscal policy or adequate controls on the behaviour of individual governments. Europe is now suffering the consequences.

For France, however, the disjunction at the heart of the EU is all the more testing because of the unravelling of the equation forged by De Gaulle after his return to power in 1958, in which Paris provided political leadership while Germany was content to be the economic motor for the European project, as payment for its past sins. The Franco-German Treaty of 1963 was the most important bilateral agreement concluded in Europe since the Nazi defeat, but it was reached on the understanding in Paris of who was top dog. The photo of the signing at the Élysée had Chancellor Konrad Adenauer and Prime Minister Georges Pompidou standing as equals—with the towering frame of De Gaulle between them, monarch of all he surveyed.

That was, of course, in the days when Germany was divided. Like a number of other European leaders, Mitterrand was none too keen on reunification when it came in 1990 and gave support only in return for Germany agreeing to give up the primacy of the deutschmark in establishing the common currency. Once Germany had absorbed the cost of unity, the die was cast—and not in France’s favour. Germany is bigger, richer and more populous than France and, given its national strengths, size does count. As the  writer François Mauriac once put it in pre-unification days: “I love Germany so much that I hope there will always be two of them.” Moreover, the Germans gritted their teeth and implemented reforms that boosted their economic competitiveness. The rise in French industrial output over the past year was only one-third of that in Germany. And France’s budget deficit is 5.8 per cent of GDP, making a mockery of eurozone targets, while Germany’s is a sober 1.7 per cent.

In a world where perceptions shape market sentiment, France belongs to southern Europe—not to the virtuous group of nations to its north and east. Its big state puts it among those who spend too much money they don’t have. The fact that
the areas where the state spends most lavishly—health, education, transport—are objects of national pride rather than examples of living beyond the country’s means only deepens the mismatch. Sarkozy seems flaky and often ill at ease beside the stolid figure of Merkel, and France arouses kneejerk prejudices abroad, even among those who holiday there. In the US media, for instance, the immediate reaction to the allegations against Dominique Strauss-Kahn was to assume guilt simply because that was the way a Frenchman was likely to behave (the same assumption was made in much of the British media, too). By contrast, most French people could not believe the news—at a weekend party in the Loire Valley, where I was with a number of local dignitaries when the news broke, the suspicion was of a “complot” against the former IMF head. Polls showed some 60 per cent of French believing this, combined with indignation at his “perp walk” in front of the world’s media.

The mismatch between France and much of the developed world is all the greater because, despite the army of French portfolio managers in the City of London and the wealth by marriage of Strauss-Kahn himself, the country has never been entirely at home with money, especially not since the rise of “les golden boys” of finance. The manipulations of “rogue trader” Jérôme Kerviel at Société Générale caused another round of drum-beating about the evils of finance. Historically, business was deemed best left to the Huguenots and Jews, and finance is often given the dread tag of being “Anglo-Saxon”—in other words, Anglo-American. In a 2007 TV debate François Hollande, long-time first secretary of the Socialist party and presidential hopeful, crystallised the sentiment felt by many of his compatriots when he said “I don’t like rich people.” He went on to say “If we don’t dominate money, money will dominate us.”

***

France’s problem is not simply one of waning global prestige, or economic stature. The domestic scene is also full of pitfalls that successive administrations have skirted around. The problem starts at the very top.

Like Louis XIV, Charles de Gaulle understood when he founded the Fifth Republic that the best basis for stability, after the nation had been ripped apart by the war in Algeria, was to fuse the notions of the state and the head of the governing executive. Although he was a crafty and ruthless operator, the general knew that only by appearing to rise above the fray and to represent the country of which he had “a certain idea” could he get away with his audacious project. This was to alter fundamentally the way France ran, away from the legislative-based regimes of the Third and Fourth Republics to an executive administration that took on aspects of an elective monarchy.

Ever since De Gaulle committed political suicide by calling a referendum he was doomed to lose in 1969, the office he created has gone downhill—for the simple reason that it was shaped for one man, and there has not been another like him. His intense self-belief enabled France to punch far above its weight, but ultimately led him to undermine his project of national unity and greatness, especially as he held on to power into his late seventies, increasingly out of touch with a changing world. The general’s successor, Georges Pompidou, was highly competent but lacked the necessary aura. His successor, Valéry Giscard d’Estaing, was an accomplished technocrat who lost contact with the public and failed to win re-election. Instead, Mitterrand was swept to office as the first president of the left in 1981 on a wave of hope. He implemented important reforms, but was marooned by utopian economic policies and then surrounded by a sea of cronyism and corruption. The neo-Gaullist comeback kid, Jacques Chirac, was genial and energetic and made his mark by opposing the Iraq war, but achieved little.

Then came Sarkozy, who lacks the coherence and gravitas the office requires. He has, however, concentrated power in the Élysée to an unprecedented degree. Although the presidency has always been supreme during the Fifth Republic, heads of state traditionally allowed the premier and government ministers a degree of latitude. This has been signally lacking since 2007 in what has become known as a “hyperpresidency” which has left the government forlorn, and removed the shock absorbers de Gaulle had built around the summit of power.

The son of a minor Hungarian aristocrat, Sarkozy was a shooting star of the right as a young man, his career promoted by Chirac (just as Chirac’s had been by Pompidou). The two men fell out when Sarkozy backed the former prime minister, Édouard Balladur, against Chirac as the right’s candidate in the battle to succeed Mitterrand. In his memoirs, Chirac called the younger man “irritable, rash, overconfident and allowing for no doubt, least of all regarding himself.” But Chirac took him back into government as interior minister, and had to be reconciled to Sarkozy running to succeed him in 2007.

It has never been in Sarkozy’s nature to show self-doubt—he may, of course, never feel any. This makes things worse, since he is prone to change course: having come to office in 2007 as an advocate of less power for the state and more for the private sector, he took to denouncing “laissez-faire capitalism” and “the dictatorship of the market” a year later. Had he become a socialist, he was asked? “Maybe,” he replied.

The overriding impression is that he is not sérieux—or “sound”—a quality the French like in their leaders. His marriage to Carla Bruni, the former model and singer, was seen as part of a pattern that went with his taste for “bling” ostentation and the hospitality of France’s tycoons. He has recently sought to project a more presidential image, including visits to the provinces and sorties abroad, but one may surmise that the conservative middle class are not convinced: Senate elections this autumn brought losses for his party in traditionally conservative departments, such as Morbihan in Brittany.

The president is a guerrilla fighter, not a strategist, and his short-term forays into reform do not provide either the reality or the image of an administration with a long-term purpose. His initiatives have, for the most part, borne little fruit. This is not completely his fault, given the resistance he has faced. The country prides itself on its revolutionary spirit, yet it remains deeply conservative—after all, the overthrow of the monarchy was followed by a military dictator in the shape of Napoleon, and the 1968 student riots and strikes bequeathed a large conservative majority in parliament. Today, this conservatism takes the shape of an almost religious veneration for the costly, swollen French state. It is, in the words of the historian and political commentator Jacques Julliard, “seen as the last defence against the damaging effects of neo-liberal globalisation.” The celebration of the state on 14th July is the high point of the calendar: the bust of the republican symbol, Marianne, modelled on a reigning beauty of the day, stands in every mayor’s office.

Sarkozy pledged to shake up the state’s powerful hold by easing labour legislation, encouraging competition and limiting public sector pensions and perks, but the task required a far more focused and resolute effort than he has mounted. There has been some reform of the expensive and unfair state pension system, but progress has been limited by demonstrations and strikes. Although weak overall, France’s trade unions remain strong in key public sector industries, and the government has settled for a series of compromises rather than all-out war.

Early on, Sarkozy’s aides pointed to the entrenched strength of those who opposed change—from teachers to train drivers. But he has been in office for more than four years, and should have more to show for it. The economic growth and fall in unemployment heralded when he took office in 2007 has not materialised. Promised tax reforms have turned out to be faltering, as has liberalisation of the labour market, both of which continue to act as a disincentive for employers to expand. The president’s tough language on crime and law and order has not brought any significant reduction of tension on suburban housing estates with high populations of second-generation immigrants. Cuts in the civil service, which accounts for 45 per cent of the government budget, have been slow. Initiatives to foster local enterprise have not reversed the depopulation of the countryside, which the French cherish but where they prefer not to live. These failures, and lack of leadership, leave a vacuum just where the Fifth Republic constitution calls for a quasi-regal figure, guiding the nation from the heights.

***

What happens now? The latest polls suggest Sarkozy will get only 21-22 per cent of the vote in the first round of the presidential election, picking up further support from the centre-right for the second and decisive round. The strength of the main opposition was shown when the two leading Socialists, François Hollande and Martine Aubry, both registered overall support of between 46 and 51 per cent soon after Strauss-Kahn’s fall from grace. The Socialists’ September victory in the Senate was all the more significant because it is chosen by an indirect election that usually favours the centre-right; it also followed earlier victories in local elections in 2010-11. There is dissent among those in the ruling UMP party who see Sarkozy leading them to defeat: the president of the Senate was reported to have muttered that Sarkozy had “killed him” and driven off without a word after handing over to his Socialist successor. There is also the minor but persistent rivalry with the former premier Dominique de Villepin who, despite Chirac’s backing, was unable to resist the Sarkozy onslaught of 2007 but remains an unyielding, if quixotic, presence in the neo-Gaullist ranks.

Travelling through France, one finds a lot of floating voters who do not like or trust the president; it is not so much a matter of what he does as who he is, or appears to be. “He promised so much but has not delivered,” one hotel owner told me this autumn. “He’s a politician like the rest.” Some pollsters in Paris say the key to the outcome of the election lies not in the degree of support Sarkozy may be able to whip up, but how far his deep-rooted unpopularity extends, stemming mainly from his days as a hardline interior minister. No matter how presidential he seeks to become, the real Sarkozy is, for many, the man who indulged in shouting matches with hecklers on provincial walkabouts, or who dismissed teenage rioters in the suburbs of big cities as “racaille” (scum). Many may agree with him, at least in private, but that is not how the president is meant to speak.

Electorally, however, his rhetoric enabled him to fish in the pool of Front National (FN) voters. The far-right party’s peak came in 2002, when its veteran leader Jean Marie Le Pen won 16.8 per cent of the first round vote, edging out Lionel Jospin, the Socialist candidate, in one of the biggest upsets of modern French politics. When Sarkozy ran in 2007, Le Pen won only 10 per cent, but the FN is far from a spent force. The latest polls credit the new leader, Le Pen’s daughter, Marine, with 16 per cent of the first round vote next year. The movement is powerful in representing “the France that says no”—no to modernisation, no to immigration, no to Europe and certainly no to a Greek bailout. It is probably the top choice of blue-collar workers, and can win the sympathy of a constituency of small shopkeepers and artisans who feel left out and whom the mainstream right has failed to enlist. Marine Le Pen, whom Bernard Henri-Lévy has described as “more dangerous” than Le Pen père, has succeeded in giving her movement a more modern face and shunted some of the dinosaurs of her father’s day to the sidelines. An increasingly confident platform presence, she projects herself as an ordinary woman who cares for the everyday concerns of her fellow citizens. Nonetheless, Jospin’s defeat still looms large in the national memory, and is likely to spur left-leaning voter turnout and deter a “protest vote” of  2002 proportions in the FN’s favour.

The Socialist party has yet to construct a convincing economic policy, and relies mainly on making the most of Sarkozy’s unpopularity. It is primarily a party of white-collar workers, many of them in the public sector, and this inhibits its freedom to modernise. Serious debate has been avoided, for fear of showing disunity. The leading figures are familiar actors with uninspiring records and a lack of international or financial experience.

François Hollande, who can look like an overgrown schoolboy and is known for his cutting wit, ran the party during the debacle of 2002 and failed to become the presidential candidate in 2007. An amiable 57-year-old, he has been a backroom party manager who also established a political base in Chirac’s deeply rural department of the Corrèze. When Strauss-Kahn was in the running, Hollande seemed to lack the stature of a president. But after the imbroglio in New York, he became the front runner, showing his seriousness by losing weight and seeking to convince people he was up to the job despite never having held ministerial office. He even gave up riding around on his trademark three-wheeled motor-scooter after it was pointed out that this made him look like a pizza delivery man—although he still sometimes takes the passenger seat to get through traffic jams.

His main rival in the Socialist primary election, Martine Aubry, 61, will always be linked with the ill-conceived 35-hour week introduced when she was labour minister. Former party secretary, mayor of Lille, and daughter of Jacques Delors, she has a lot of credentials but appears too earnest, too wedded to her party to arouse national enthusiasm. Ségolène Royal, who was formerly Hollande’s partner (they have four children), ran as the unsuccessful candidate in 2007. Royal enthuses her supporters, but puts others off with her Joan of Arc self-belief. This year, she refused to drop out of the battle for the Socialist candidacy despite low poll ratings, and eventually crashed to only 7 per cent of the vote in the first round of the October primary.

No wonder that the party yearned for Strauss-Kahn to return from the IMF to lead it to victory. We know what happened to that dream, but the Socialists appear to have digested his disgrace well. Although some Strauss-Kahnians may imagine that he still has a role to play as an elder statesman, that looks very unlikely. The notion that a man whose wife’s wealth enabled them to enjoy palatial homes in Paris, Marrakesh and Washington was a natural champion for a party with such ambivalence towards money was always a bit of a stretch. But his removal from the contest reopens the danger of infighting.

The party is split between those who want to supervise a more efficient and better regulated market economy, and those who hanker for state control of the kind brought in, with disastrous results, during the initial phase of the Mitterrand presidency. One side sees the need for a lighter state; the other regards the preservation of the public sector with all its post-1945 trimmings as the raison d’être of their movement. They greet the recurrent strikes against change not as evidence of conservatism, but as the voice of 1789 reborn.

The Socialists’ proposal to separate retail and investment banking and their attacks on cuts in public spending and state sector jobs hit a chord, even if they cannot square the circle of public expenditure and debt. But, more fundamentally, half a century after Germany’s Social Democrats jettisoned Marxism with their Bad Godesberg manifesto, the French Socialists have still not gone through such a purification. Ségolène Royal claims that “financial markets want to turn us into their poodles” and denounces “anarchic globalisation,” without any acknowledgement of the many French companies—from makers of luxury goods to exporters of high-speed trains and airliners—that have benefited dramatically from globalisation. Arnaud Montebourg, the Socialist deputy, threw his hat in the presidential ring as an “anti-globalisation” candidate, and did unexpectedly well with 17 per cent of the vote in the first round of the primary. He has sold 40,000 copies of his tract “Votez pour la démondialisation!” (“Vote for deglobalisation”) advocating state control of banks and increased tariff barriers—a recipe that echoes National Front’s rhetoric. Kneejerk attacks on evil bankers and denunciations of outsourcing jobs to low-cost countries get cheers at party meetings: polls show that nearly 50 per cent of the French back higher import tariffs, with particular suspicion of low-cost manufacturing in China and India. But hard thinking about how the left should govern in the 21st century is simply not being done in a party that, in many ways, seems quaintly old-fashioned.

Such factors, as well as Sarkozy’s skill as a campaigner, make it possible that the left will blow it once again. Polls show that only just over half the voters have made up their minds who they will back next May. Hollande’s 39 per cent score in the first round of the Socialist primary (to Aubry’s 31 per cent) was decent but not convincing, as he did not gain 50 per cent of the 2.5m votes cast. On the other hand, the president’s attack-dog style has lost its appeal and he, as the incumbent, suffers most from the general disdain for politicians. The problem stretches well beyond him. The system set up by De Gaulle, for himself, is proving more and more difficult for mere mortals to operate. The domestic and European dynamics have shifted. France and its president are no longer at the epicentre. That is a bitter pill to swallow—but it is also a reality which will become harder and harder to deny.

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