Hapless Hollande’s French Farce Flops

‘Hollande’s ministers are falling out among themselves and criticism from his left-wing allies is getting ever more strident’

Dispatches EU Europe France

Cast your mind back, if you can, to the summer of 1983. François Mitterrand was President of France and the French Socialist Party led a government containing four Communist Party ministers. Times were good for the English tourist. One pound bought 12 francs. A good lunch in the Dordogne was yours for a snip.

Times were less bright for the French. The extensive nationalisation of French banking and industry combined with significant increases in public spending on pensions and other social benefits had produced a jump in inflation, an alarming balance of payments crisis and two devaluations in eight months. A third devaluation was soon to follow.

Haunted by the Left’s unhappy experience of government in the 1930s, Mitterrand and his supporters had to decide what to do: plough on regardless of the consequences, leave the European Monetary System, and embrace protectionism; or call a halt to their reforms, reign back public expenditure, and adopt a policy of economic “rigour”.

The dilemma they faced was a profound and enduring one. In the 1920s Léon Blum, France’s first socialist premier, had drawn a distinction between the exercise and the conquest of power. While the first indicated a left-wing majority in parliament, it was the second that began the transition to socialism. In 1981 the provincial and bourgeois Mitterrand had been elected on a mandate to “break with capitalism” but now, after only two years in power, this seemed little more than a pipedream.

In the event, Mitterrand opted for “rigour”, the Communists withdrew from government, and the construction of Europe replaced the building of a socialist society as the primary political objective. If Mitterrand survived, he did so only through the deployment of supreme Machiavellian skill and by reducing his colleagues to servile and self-interested courtiers.

What remained — and what arguably still remains for the French socialists — was a glaring contradiction between a radical rhetoric and social-democratic pragmatism, between the language of opposition and the practice of government.

The years that followed were not easy ones for the French Left. Under Mitterrand, prime ministers came and went, each to little effect. One was even his former mistress. Later, in 1997, the Socialists were gifted a parliamentary majority by an inept Jacques Chirac, but when the decent if uncharismatic Lionel Jospin presented himself as the Socialist candidate in the 2002 presidential elections he was beaten into third place by the Front National’s Jean-Marie Le Pen. Many on the Left preferred to indulge themselves by voting for Marxist candidates rather than for a man whose government had overseen a reduction in unemployment. When, in 2007, the Socialists fielded their first female candidate for the Presidency, Ségolène Royal, she fared not much better.

It was in this tawdry, self-obsessed world that François Hollande flourished and where — thanks in no small part to the sexual indiscretions of Dominique Strauss-Kahn — he rose to the top. If he possessed a skill, it was that of managing the warring factions of his own party. 

What followed — as is only too evident — was a massive confidence trick perpetrated upon a gullible French electorate. Posing as “Monsieur Normal” — a pose seemingly not dented by the fact that he had recently left the mother of his four children — Hollande managed to convince sufficient of his fellow citizens that economic austerity could be brought to an end by the single and simple expedient of taxing the rich. What those voters failed to notice was that Hollande was also telling them that he intended to honour France’s obligations to the European Stability and Growth Pact by bringing down France’s budget deficit. The great deceit was to pretend that there were no difficult decisions to be made.

No one perhaps could have anticipated the sheer scale or rapidity of the political disaster that was to ensue. From the day of Hollande’s inauguration as president, when his plane to Berlin was struck by lightning, little if anything has gone right. One year in and Hollande is the most unpopular president of the Fifth Republic, with an approval rating of around 25 per cent. At the equivalent point of his presidency Nicolas Sarkozy stood at 40 per cent. In a parliamentary by-election north of Paris in March this year the Socialist candidate saw her vote decline by over 60 per cent in nine months.

The details of this precipitous decline have at times bordered on high farce. Only weeks after Hollande’s arrival in the Elysée Palace, his new partner, the Paris Match journalist Valérie Trierweiler, successfully sabotaged the political career of Ségolène Royal in what looked like little more than an act of spite against the woman Hollande had lived with for over 20 years. Sarkozy’s wife, Carla Bruni, was at least a class act. 

Not long after this domestic crisis made the headlines, France’s most famous actor, the inebriate Gérard Depardieu, announced his intention to take out Belgian citizenship in protest at planned tax rises. That Hollande’s Prime Minister, the lacklustre Jean-Marc Ayrault, chose to describe this gesture as “pathetic” did little to dissuade Depardieu from subsequently accepting a Russian passport from Vladimir Putin. Seeing the star of Cyrano de Bergerac dressed as a Russian peasant has done little to enhance the self-esteem of the culture-loving French.

Nevertheless, recent evidence suggests that a narrow majority of the French electorate still see Hollande as both honest and likeable. It is in his lack of other qualities that his problems lie. A poll published in Le Monde to coincide with the end of Hollande’s first year in office showed that 27 per cent of its sample thought him competent; that only 20 per cent believed Hollande knew in which direction he was going; and that a mere 18 per cent judged him capable of uniting the French. Worse still, a meagre 14 per cent were of the opinion that he possessed authority.

In short, in the eyes of the French electorate, Hollande lacks leadership, his government is ineffectual and amateurish, and both have consistently underestimated the problems facing France now and in the future.

Of the latter, the most pressing are unemployment and the lack of growth. One of Hollande’s few purported successes has been to secure agreement between the leading employers’ organisation and trade unions on a series of measures designed to restore the competitiveness of the French economy but this, unsurprisingly, has done nothing to prevent unemployment rising by over 350,000 in a year to what are now record levels at over 10 per cent of the workforce. Scarcely anyone believes Hollande’s promise that unemployment will start to come down by the end of 2013.

The figures on growth look equally bleak. During his election campaign Hollande repeatedly suggested that he would be able to convince Brussels and Berlin to change course. Not only did he overestimate his own powers of persuasion (and presumably underestimate Angela Merkel’s determination) but he also failed to grasp the gravity of the crisis afflicting the eurozone. The reality is that there has been no growth in the French economy for the second consecutive year. With GDP and household consumption set to fall, not only can France not meet its obligations to Brussels on deficit reduction but the only way it can move towards that goal is to raise taxes and cut public expenditure. Even the government’s own newly created High Authority for Public Finances has criticised the optimism of its budgetary forecasts. Indeed the situation is so bad that, in February, the Minister of Labour, Michel Sapin, went so far as to suggest that the French state was effectively bankrupt.

With the tax burden already standing at around 46 per cent of GDP, Hollande’s room for manoeuvre is very small. Soaking the rich is no longer an option as France’s Constitutional Court has ruled that the proposed tax rate of 75 per cent on incomes above €1 million a year is unconstitutional. In addition to increases in VAT, therefore, the government now estimates that 70 per cent of the cost of deficit reduction will be met by cuts in public spending. Where these cuts will be made has yet to be fully identified but the universality of child benefits looks a likely target, as does France’s generous pension provision. In each case election promises are being broken.

But one case more than any other illustrates the failure of Hollande to meet the expectations of his voters: that of the two Arcelor-Mittal steel blast furnaces at Florange in eastern France. On February 24, 2012, mounted atop a truck, Hollande promised the workers of these two plants that, if closure was threatened, the state would come to their rescue. Having rejected the proposal of his minister of industrial renewal, Arnaud Montebourg, that both plants should be temporarily nationalised — Montebourg also indicated that the company’s head, Lakshmi Mittal, was no longer welcome in France — the government embarked upon a process of negotiation. At the end of April 2013 Arcelor-Mittal shut down both furnaces.

So the impression has been one of drift and indecisiveness, of a president and a government bereft of ideas and of ministers out of their depth. 

And this was even before the revelations relating to Jérôme Cahuzac, the budget minister responsible for cutting tax evasion. Despite his own denials before parliament to the contrary, Cahuzac turned out to have a secret Swiss bank account holding more than €600,000 (£515,000). How much and when Hollande knew about this remains unclear but his subsequent attempt to impose greater financial transparency on his government and France’s parliamentarians has done little to endear him to the political class. Above all, Hollande’s electoral promise to establish a post-Sarkozy, post-bling “exemplary republic” is in tatters.

The parallels with the earlier misfortunes of François Mitterrand are all too obvious. Hollande’s ministers are falling out among themselves and criticism from his left-wing allies is getting ever more strident. Hardly a day passes without calls for an alternative strategy and new initiatives. 

Military intervention in Mali has brought little political advantage. Legislation on gay marriage united bitterly divided opponents on the Right and, like Mitterrand’s earlier legislation on Catholic schools, brought many thousands of mostly young protestors out onto the streets. The only difference was that, this time, the demonstrators were met by tear gas.

Worst of all is the seeming unwillingness to address France’s long-term problems. Something of their scale can be grasped by looking at the parlous state of France’s car industry. Figures show that in ten years production has declined by 50 per cent. In the last year alone production declined by over 13 per cent. Several Renault factories are working at 30 per cent capacity. This is a picture common to large sections of French industry.

Unemployment, and youth unemployment in particular, is not a new problem. Nor is public debt. But both are much higher than they were in Mitterrand’s day and membership of the euro now denies France the option of a quick-fix devaluation of her currency. France has the highest rates of corporation and capital gains tax in Europe. Public spending accounts for 57 per cent of GDP. The labour market remains rigidly inflexible. 

There is evidence to indicate that Hollande knows that these issues must be tackled. He spoke recently of the need to remove the “blockages” in French society and the economy that hinder growth and innovation. But does he have the political will and support to carry out sustained reform? 

After all, this is the man who, on the campaign trail in January 2012, proclaimed that his “real adversary” was “the world of finance” and who, only two months ago, outlined his determination to wage an “implacable struggle” against the dangers of money and greed.

Hollande’s latest move — one fraught with dangerous political consequences — has been to encourage his colleagues to blame France’s economic woes not upon the euro, but specifically upon Germany and what, at the end of April, the Socialist Party described as “the obstinate selfishness” of Angela Merkel.

Resorting to populist rhetoric in order to keep intact his parliamentary majority is a strategy of which even Mitterrand would have been proud. Sadly, it might also indicate Hollande’s true measure.

Of course, standing by the Seine and looking across to the Ile-de-la-Cité, all looks well with France. But with the economy now officially back in recession and Brussels increasing its demands for savings and reform, the prospects are that protests in the street will become increasingly vociferous and violent and that the political extremes on both the Left and Right will flourish. For François Hollande and his government the months ahead promise to be very difficult indeed.