Emmanuel Macron, a young former banker, is pushing through reforms of the French economy. But how far will Hollande let him go?by Christine Ockrent / April 23, 2015 / Leave a comment
Published in May 2015 issue of Prospect Magazine
Emmanuel Macron: “He has skilfully climbed into the upper echelons of the French system, making very few enemies along the way.” © Lemouton Stephane/ABACA/Press Association Images Emmanuel Macron, a 37-year-old former investment banker, is a relative newcomer to French politics. He was parachuted into ministerial office even though he has never contested an election. Despite that, eight months after his appointment as France’s Minister of Economy, Industry and Digital Affairs, he has gained the approval of voters dissatisfied with traditional politics and tired of empty promises. Macron has become the face of “reform” in France—a vague term which most people claim to approve of as long as change doesn’t affect their own vested interests. He stands on a platform described in the French political vernacular as “social-liberal.” Which is to say that he is much more liberal than many members of the conservative UMP (Nicolas Sarkozy’s party), who daren’t utter the word, and not social (that is, left-wing) enough for the dyed-in-the wool Socialist hardcore. In just a few months, Macron has shown himself to be one of the few public figures willing to speak out about the real state of the country without automatically putting the blame on his political opponents. He has rapidly come to embody attempts by the Hollande government to liberalise the French economy and, in particular, to reform the labour market, the rigidities of which are among the most significant brakes on the country’s competitiveness. Macron, appointed by the market-friendly Prime Minister Manuel Valls, favours the introduction of Scandinavian or German-style “flexi-security” agreements between workers and employers, in which companies are given greater discretion to cut hours and renegotiate salaries during an economic downturn, while jobs are protected. (In the recession that followed the global financial crisis of 2008, 1.5m jobs in Germany were made subject to such agreements; in France, by contrast, the figure was just 245,000.) France has been here before, of course. Hollande is not the first president to attempt to tackle the labour market regulations and social protections that many believe have held the French economy back. Jacques Chirac and his prime minister Alain Juppé tried it in the mid-1990s, and were beaten by a wave of public sector strikes. Sarkozy entered the Elysée Palace in 2007 on a promise of greater liberalisation, but any hope of significant change evaporated after the crash. “France has not conducted any reform for the past 10 years,” Macron said during a recent visit to Berlin. “The fact that our country is the most protective of its labour force is one of the keys to our 10 per cent unemployment rate… Overprotection of employees can also kill opportunities for others,” he added. “We need to speed up reforms because the French want jobs and a better life,” the minister concluded. A few weeks earlier, on a visit to the United States, he had stirred up a storm back home simply by saying that some young French people want to become billionaires, too. “A member of our government promoting wealth as a goal in life is just shocking,” one self-appointed guardian of the Socialist faith sneered, a reminder that the French left has still not reconciled itself to the market economy in the way that other social-democratic parties in Europe have. When he was running for President in 2012, Hollande declared memorably: “Our enemy is the world of finance!” Why, then, did Macron, part of a generation usually more tempted by careers in business than in public life, decide to jump into the political fray, and on the left to boot? And why has Hollande favoured him? He was born in 1977 in Amiens in northern France to a family of medical doctors. He likes to attribute his socialist leanings to his grandmother, a college principal, whose own parents were illiterate. Educated in a Catholic school founded by the Jesuits, Macron fell in love at an early age with his French teacher, Brigitte Trogneux, who was also in charge of the school drama club. He eventually married Trogneux, 21 years his senior and the mother of three grown-up children. They own a summer house in Le Touquet, an old-fashioned seaside resort on the Channel coast favoured by the local bourgeoisie since the turn of the last century. A friend of Macron told Paris Match that the marriage is a “true love story.” His marriage aside, Macron’s life story is typical of the trajectory followed by members of the French elite: studies in philosophy (he was for a while an assistant to Paul Ricoeur, a French disciple of the German phenomenologist Edmund Husserl); degrees in political science; a stint at the École Nationale d’Administration (ENA), the elite university for civil servants where Hollande, like most high-level French technocrats, was trained; a first job in a junior position at the Ministry of Finance, and early political ambitions in his native town, stymied by local Socialists wary of brilliant and ambitious young men trained in “la capitale.” Spotted by Jacques Attali, an advisor to former President François Mitterand and the perennial maverick of the French political system, and Jean-Pierre Jouyet, a lifetime friend of Hollande and his then companion, Ségolène Royal, Macron joined a group of economists invited to advise Royal during the 2007 presidential campaign. He became a member of “Les Gracques,” a group of leftish intellectuals who named themselves after two Roman senators who failed to reform the social order of the time—not a very good omen. Nostalgic for the approach of former Prime Minister Michel Rocard, Les Gracques identify themselves with the “modern left” and call on the French Socialists to abandon their Keynesian obsessions, adapt to globalisation, push for more European integration, conclude tactical electoral alliances with parties of the centre and so forge, at long last, a kind of French “Third Way”—20 years after Tony Blair transformed the British Labour Party. Until now, the ideological pendulum in France has been stuck in the past. In 2007, disillusioned with politics after Sarkozy’s victory in the presidential election, Macron resigned from public service and in September 2008 joined the investment bank Rothschild & Cie. He performed wonders, negotiating some substantial deals, including the $11.8bn acquisition of Pfizer’s baby food business by Nestlé. He was soon elevated to the position of partner. In the course of his four years at Rothschild, Macron made enough money to be able eventually to look for new and exciting, if less profitable, challenges. “In that kind of exercise,” he told an interviewer subsequently, referring to the profession of banking, “you become a sort of prostitute. Your job is all about seduction.” When it comes to seduction, Macron has few equals. Charming, respectful of his elders, boyish but never brash, he has an intellect that his admirers describe as “Anglo-Saxon”—witty and constructive rather than elegantly cynical in the mode favoured by the Paris elite. He also speaks very good English (rare among members of his caste), something that took the City by surprise when he came to London last year to promote the Hollande government’s policies. Just 11 years after leaving ENA, Macron has skilfully climbed into the upper echelons of the French system, attracting much praise and making very few enemies along the way. When, in 2007, Royal lost the election and her companion at the same time, Macron took Hollande’s side. In 2011, after Dominique Strauss-Kahn, at the time head of the International Monetary Fund, withdrew from the race for the Socialist presidential nomination, Hollande won the party’s primary. A skilled political operator with no other professional experience and little exposure to world affairs, he ran his presidential campaign the old-fashioned way: he promised heaven to traditional Socialist constituencies (teachers, civil servants), without ever explaining that France faced such severe challenges that the old recipes might no longer be enough. Macron was critical of what he saw as France’s economic sclerosis. When the newly elected president decided to impose a 75 per cent tax rate on high earners, the young banker snorted: “It’s like Cuba without the sun!” He even dared to criticise the 35-hour working week introduced by Lionel Jospin, the former Socialist Prime Minister, in 2000. Macron described it as a trap which paralyses business. He argued that it should be lifted to give companies more leeway when times are hard, as long as the workforce is consulted. When these remarks were made public in August 2014, Macron had been working in the Elysée as Hollande’s Deputy Chief of Staff for almost two years and had just been appointed Economy Minister. For once, he hastily backpedalled, claiming that his words, uttered when he was a private citizen, had been taken out of context. He had accepted the job, he said, on the condition that he always be allowed to tell his boss when he disagrees with him, and why. The first two years of Hollande’s presidency had been erratic. His promise to bring down unemployment in a few months became a trap as the economic and social situation in France continued to deteriorate. The government’s economic policy was supposed to boost demand while raising taxes. Public debt had to be cut, but new jobs were created in the public sector. The French became convinced that they were being made to submit to harsh austerity measures. Arnaud Montebourg, the minister in charge of “industrial renewal,” who trained as a lawyer, made feverish calls to nationalise failing industries and impose more protectionist measures. The government continued to lose support, while Hollande became the most unpopular President in the history of the Fifth Republic. Jean-Marc Ayrault, then Prime Minister, a decent but unimaginative carbon copy of Hollande himself, proved not to be up to the job. Meanwhile, the President, a firm believer in Nikolai Kondratiev’s theory of economic cycles, was convinced that the economy would eventually rebound. Yet he had no choice but to change his Prime Minister. “French “social liberalism” had a new face—a baby face at that” To the consternation of the leftist fringe, he turned to the more market-friendly wing of the Socialist Party and chose Valls, the popular Interior Minister, as Ayrault’s successor. This confirmed Hollande’s determination to distance himself from the economic policies he espoused in his first two years in office. A disciple of Rocard and Jacques Delors, the former President of the European Commission, and a self-proclaimed social democrat, the new Prime Minister considers French socialism to be dangerously obsolete. It is no coincidence that he was nicknamed “the French Tony Blair” when he ran for the party’s presidential nomination. Installed as Prime Minister, Valls’s ambition was to inject some liberalism into the centre-left—hence measures to help investment, stimulate growth, make labour regulations slightly more flexible while lowering public expenditure and giving in to German pressure to undertake more energetic reforms. Reshuffling his team, he got rid of Montebourg and other champions of “true socialism” and appointed Macron to the economic portfolio. French “social liberalism” had a new face—a baby face at that: the satirical TV show Les Guignols de l’info, a French version of Spitting Image, portrayed him sitting on the government benches in the National Assembly wearing a nappy. A few months later, Macron put his name to a new bill designed “to promote growth and unlock the economy.” It touched upon so many aspects of economic life that it read rather like a Surrealist catalogue. Its most daring propositions concerned the loosening of restrictions on Sunday trading. The debate on the issue among Socialist MPs took on an almost theological tinge, the dispute being over whether to allow for trading on 12 or five Sundays per year. The bill also proposed to curb over-protected professions like notaries and lawyers, who were quick to take to the streets to denounce the death of freedom in the country of Voltaire. It also recommended making it easier to lay workers off, as well as faster court rulings on labour disputes—a particularly sensitive issue in a system overloaded with social regulation. To anyone patient enough to scroll through all 185 pages of the draft bill, it is hard to see why it took two weeks and 89 hours of parliamentary sittings, day and night, and eventually a constitutional manoeuvre to get it through the National Assembly. The trouble came from some hardcore Socialists, nicknamed “les frondeurs,” the “rebels,” who threatened to vote against the proposed law, while some members of the opposition were tempted to support it. Throughout the process, it was interesting to see how Macron behaved in parliament: he was always eager to explain, willing to discuss every last detail of his proposals instead of brushing off his opponents’ arguments. This was the mark of a neophyte, some commentators sneered. For his admirers, it was the making of a modern politician, a view borne out by his performance in the opinion polls ever since. “I’m sorry, but I’m not open to shallow compromises to justify a vote,” Macron told fellow party members—a change from the usual habit of producing a text so full of contradictions that nobody knows how to implement it. Once it has been approved by the Senate, the “loi Macron,” as the bill has become known, will be adopted officially in early May. Macron knows that the law bearing his name is only a start, however. He has acknowledged that “we have to do more to promote a supply policy, more to help investment, more to give flexibility to our labour regulations!” And he hinted that a “loi Macron 2” would soon be on the cards. He is particularly keen to bypass the legislation on the 35-hour week and to allow companies to negotiate working hours and salaries directly with employees. “My wish,” he said, “is to go further with this law.” But now that he is in politics, Macron also knows how to abide by some well-entrenched French traditions. For instance, he recently opposed the sale of Dailymotion, a very successful French start-up, to the Chinese company PCCW, which allowed Vivendi, a domestic media conglomerate, to make a bid. He also outsmarted Carlos Ghosn, the Chief Executive of Renault-Nissan, by raising unexpectedly the level of state investment in the company, thereby increasing government influence over its long-term strategy. Macron may be a liberal by local standards, but now that he is a prominent member of the French government, he intends to play the part to the full. He made an impressive television debut, confronting Florian Philippot, Marine Le Pen’s main advisor and another énarque (graduate of ENA), and demonstrating the incoherence of the far-right Front National’s economic programme. But he has also had to spend considerable amounts of time fending off persistent questioning from journalists about the money he made while working in banking. At the end of March, the Socialist Party endured yet another defeat in local elections, the fourth since Hollande took office. Was he going to change course once again, swinging this time to the left and ditching the Valls-Macron brand of social-liberalism? The Prime Minister moved quickly, announcing on television: “We have no other choice but to continue and to accelerate the modernisation of our economy and our welfare system. It is the only proper method to curb the Front National and to meet our compatriots’ legitimate needs.” This was a clear message to the Socialist Party, and it was approved by Hollande, who believes he has no choice but to stick with a consistent strategy for the remaining two years of his five-year term. Yet the Socialist Party remains divided over economic policy. Weakened by the Socialists’ poor electoral performance in the north, her fiefdom, Martine Aubry, the Mayor of Lille and a candidate for the presidential nomination in 2012, has formally abandoned the leadership of the party rebels and is rallying to the government line. But she also claims to have softened the hard liberal edges of the Valls-Macron programme and to have wrung significant concessions out of the government on social protections. The rebels, meanwhile, continue to denounce “the naive liberal principles” of the party leadership. There is clearly no consensus among Socialists on economic and social policy. The only thing holding them together is the fear of losing further support under pressure from both Le Pen and Sarkozy. Putting together a common platform for the next presidential contest will be a Herculean task. For the time being, Macron is sticking close to Valls. He knows that he now represents the policies that rebel Socialist MPs denounce as inconsistent with the party’s electoral mandate. With only two years to go before the next presidential election, Macron has become the Prime Minister’s main ally in trying to convince the French people that serious reforms have to be undertaken. Meanwhile, Valls’s room for manoeuvre has shrunk along with the Socialist Party’s standing in the polls. He, in turn, has no choice but to stick to his convictions, and to Hollande. Macron may dream about a presidential career (some of his friends suspect he does), but he also needs Valls to protect him. He carries no political weight of his own, has never won an election and has more supporters outside the Socialist Party than inside. And public opinion is known to be fickle. There will not be a second “loi Macron.” The Prime Minister says there is no need for one. He now insists that reforms can be implemented without another round of legislation, and has made incentives for small and medium-sized business his priority. Has Macron stolen too much of the limelight? “Not such a major piece of legislation, after all,” Hollande muttered a few days ago, loud enough for journalists to hear. The President still believes in his mantra: that growth is just around the corner. He has little time to prove he is right. Macron has a much longer way to go. Now that he has tasted political success, he may well never go back to investment banking. But in the short to medium term, his future, and the future of economic reform in France, is entwined with that of Valls.