World In Review 2012

French Discontent Imperils Sarkozy

By David Gauthier-Villars

PARIS—One morning recently, Nicolas Sarkozy summoned a top aide to discuss his fading re-election  prospects. Yet another poll was pointing to victory for his rival, Socialist François Hollande, in the presidential election taking place this Sunday.
“I know what my strategy should be,” Sarkozy said to the aide, according to a person who was present. “But I sometimes get lost.”
Sarkozy was elected five years ago on a pledge to restore France’s economic power by encouraging entrepreneurship and rewarding “those who wake up early.” He promised change and revival, and said France should become more like the U.S.
On Sunday, however, Sarkozy could join the long list of leaders swept aside by Europe’s economic  crisis or by austerity measures that proved unpopular with voters. Ten have fallen so far, including Italian Premier Silvio Berlusconi and Spanish Prime Minister José Luis Rodríguez Zapatero.

Sarkozy Moments
In September 2007, Sarkozy and German Chancellor Angela Merkel held a news conference outside Berlin after their third bilateral meeting since Sarkozy’s June inauguration.
It is still possible for the combative 57-year-old Sarkozy to pull off a comeback—mainly if he can persuade undecided voters to swing his way in the closing hours—though he trails Hollande by a sizable deficit of at least five percentage points.
Defeat would cap an extraordinary reversal of fortune for a president the French had elected on promises to create more jobs and cut the country’s state sector. Today, the world’s fifth-largest economy is saddled with a record debt of €1.7 trillion ($2.24 trillion), about €500 billion  more than when Sarkozy took office in 2007. The jobless rate has risen to a 13-year high of 10 percent.
The result is that, even more than five years ago, France is struggling to come to terms with its diminished position in the world. France is falling behind the stronger economy of its neighbor Germany, and many citizens worry their country could follow the path of other debt-choked euro-zone nations. On Thursday a new poll showed 62 percent of French people fear the country could end up in a similar economic situation to Greece or Spain, which are in the throes of deep social crisis.
France is nowhere near the Greek situation. As of late last year (and before the second Greek bailout), France’s debt stood at 86 percent of GDP, vs. more than 150 percent for Greece. But France’s political and economic  direction matters greatly to Europe as a whole: Among other things, France is a pillar of the region’s shared currency, the euro, at a time when euro-zone members are still searching for a solution to the overload of government debt menacing their economic union.
French voters’ disorientation is playing in favor of Sarkozy’s rival,  Hollande, a 57-year-old party leader. The Socialist candidate has himself said that if he wins on Sunday, his victory will be more a judgment of Sarkozy than an assessment of his own merits.
“If France wavers, the fate of the entire euro zone could be at stake,” said French economist Christian Saint-Etienne.

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Like  many other European presidents, Sarkozy’s ability to push through unpopular policies has been hampered by the debt crisis. But his leadership style, too, has come under fire as being unfocused in ways that have hurt his re-election effort.
In his five years as French president, Sarkozy has been a man in constant motion—part of his leadership strategy of “moving at the speed of light,” as he described it to aides ahead of his May 2007 election. “I’ll be bombarding France with initiatives, and the opposition will get exhausted in trying to catch an ever-moving target,” he said at the time, according to people present for the conversation.
Sarkozy has been a prominent figure on the global stage. He revived a stalled European treaty, tackled the sovereign-debt crisis with German Chancellor Angela Merkel, and led two simultaneous Africa wars, in Libya and the Ivory Coast. At the same time, he kept a grip on domestic politics. He imposed an increase in the standard retirement age despite strong popular resistance, winning praise from debt-rating companies.
Sarkozy also got divorced, remarried and had a child in his five years as president. And he was caught on camera sending text messages during a meeting with Pope Benedict XVI.
“It took me time to embody the presidential function,” Mr. Sarkozy has said.
Patrick Devedjian, a senior minister in Mr. Sarkozy’s administration in 2009 and 2010, said, “There is a major flaw in the ‘moving target’ strategy: Political action becomes illegible.” Even if the work has “achieved considerable things, they will all go unnoticed.”
His presidency got off to a rough start. He had promised a “rupture” with the patrician style of many previous French presidents. “I won’t betray you, I won’t lie to you and I won’t disappoint you,” Mr. Sarkozy said at a victory rally the day of his election.
The next day, Mr. Sarkozy and his then-wife jetted to Malta for a cruise on a billionaire’s yacht. Mr. Sarkozy was pelted with criticism over his lifestyle and alleged closeness to France’s business elite—something he has strongly denied. Nevertheless, the controversy continued throughout his term.
Sarkozy recently said that his failing marriage helps to explain some of his actions early on. “I made a mistake,” Sarkozy said in April, referring to the Mediterranean cruise. “Part of my brain was busy trying to salvage something, and I did not seize the impact such a symbol would have.”
Sarkozy took office on May 16, 2007, and quickly went on the move. A few weeks into his presidency, he traveled to Brussels to inform other European governments  that France would renege on its pledge to balance its budget by a 2010 deadline. He unveiled tax cuts worth about €15 billion a year, saying the “fiscal shock” would invigorate economic growth.
The cuts offered benefits for blue-collar workers as well as a “fiscal shield” designed to protect wealthy households from paying more than 50% in taxes on their overall income. Later, as the European economic crisis took hold, the “fiscal shield” would open Mr. Sarkozy to harsh criticism.
Ethnic tensions also fired up quickly. The president created a ministry of national identity and launched public forums on what it means to be French. The debate, however, unleashed a torrent of xenophobic, often anti-Muslim, comments that Sarkozy struggled to mute. The controversy undercut what had been seen as a positive byproduct of his election: Mr. Sarkozy, the son of a Hungarian immigrant, described himself as a “little Frenchman of mixed blood,” and his victory had been viewed as a sign that France was at peace with the diverse origins of its people.
Soon, another issue came to dominate France’s news agenda: Sarkozy’s private life. Sarkozy divorced his wife and soon after was seen visiting the  Disneyland theme park near Paris with Italian fashion model and singer Carla Bruni. In a show on state television France 2, French stand-up comedian Anne Roumanoff said: “It’s Snow White marrying the dwarf,” a reference to Sarkozy’s short stature.
Meanwhile, the global financial crisis started contaminating France.
In late 2008, French Senator Jean-Pierre Fourcade used a closed-door gathering of centre-right lawmakers around  Sarkozy to voice concerns that France’s budget deficit and debt risked spiraling out of control. His words carried weight given that Fourcade is the last French finance minister to have  presided over a balanced budget surplus, in 1974.
“I hear you, Jean-Pierre,” Mr. Sarkozy said. “But debt is not my priority, I must focus on boosting spending power.”
Just days later, the chief executives of French auto makers Renault SA and Peugeot SA met with Sarkozy and warned him that, unless a rapid solution was found to bring down ballooning inventories, they would have to lay off thousands of workers.
Mr. Sarkozy responded by granting €3 billion in government loans to each company and introducing a cash-for-clunkers plan—solutions that  were widely imitated in Europe and in the U.S.
In the closing days of 2008, the French president hit the brakes on some of his overhaul plans. Students  were staging massive protests in Greece, and the French president feared the movement might spread to France, aides said.
The government let the budget deficit grow to 7.5 percent of GDP in 2009, from 2.7 percent in 2007, and, on top of that, raised €35 billion to fund a number of projects, ranging from the renovation of historical monuments to university research. “I will never conduct a policy of austerity because austerity always failed,”  Sarkozy said in a June 2009 address to lawmakers in Versailles.
In 2010, fearful that France’s deficit and debt could veer out of control, Sarkozy announced he would partly undo a 1983 law that had lowered the pension age to 60 from 65.
The opposition Socialist party argued that it was wrong to ask ordinary people to work longer even as Sarkozy’s government was granting tax rebates—the “fiscal shield”—to the privileged. The fight escalated after the French press reported that Liliane Bettencourt, the heiress to the L’Oréal cosmetics empire and France’s richest woman, was benefiting financially under Sarkozy’s “fiscal shield” programme. Again, Sarkozy was dogged by criticism that he was too close to the wealthy.
France’s defense minister, Gérard Longuet, has come to Sarkozy’s side. “This was unfair because, even though Nicolas Sarkozy is genuinely fascinated by successful people, he lives like a monk,” he said in an interview.
Despite nationwide protests, the French  Parliament passed measures to gradually increase the retirement age to 62 from 60. Public transportation was disrupted by the unrest—but not paralysed, due to measures Sarkozy had earlier introduced that made it harder for railway workers to strike. The president eventually scrapped his “fiscal shield.”
In January, Standard & Poor’s Ratings Services announced it would cut France’s debt rating. Sarkozy revived some of the overhaul plans he had axed in the depths of the crisis. He said he would boost the competitiveness of French companies by cutting payroll taxes and increasing sales taxes paid by consumers.
And in February, Mr. Sarkozy kicked off his re-election campaign. “The plan is simple,” he told aides, according to people present. “We go at full speed, and then we accelerate.”
Courtesy: Euro News