From The Economist print edition
Mr Sarkozy's first year in the office has brought only limited change to France. Even if he grows less distracted, he may find reform harder to achieve
THE year since Nicolas Sarkozy was elected president of France, on May 6th 2007, has resembled a play in three strangely disconnected acts. In Act One, he was electrifying. The hyperactive new president pulled on his jogging shorts, threw out the dusty old presidential ways, recruited a broad-based multi-ethnic cabinet and set about dazzling the French with his pragmatic determination to talk straight and get things done.
In Act Two of “The Hyperpresident”, he was mortifying. Mr Sarkozy, Ray-Ban shades glued to his nose, squandered his popularity by turning his private life into an exhibitionist soap opera, earning the nickname President Bling-Bling. Seeming more concerned with his personal problems—a divorce, a new romance, a remarriage—than with those of France, he saw his ratings fall lower than any recorded in the first 12 months of a presidency during the 50-year-old Fifth Republic.
In Act Three, which has just begun, he is dissatisfying. He has adopted a more sober presidential style, admitted to mistakes and promised a fresh round of reforms. Yet the man who was elected to shake up France is now trying to do so without the broad consensus he enjoyed a year ago, with an increasingly restless majority in parliament and against a worsening economic backdrop.
One year in office is not enough to evaluate a leader definitively. Some of the boldest reformers did little in their first 12 months; Margaret Thatcher neither began privatisation in Britain nor confronted the unions until her second term. By many measures, Mr Sarkozy has achieved more in his first year than Jacques Chirac, his predecessor, did in 12. Yet Mr Sarkozy himself set the high standards by which he should now be judged.
In the course of his election campaign Mr Sarkozy promised a veritable rupture with the way France had been governed for the previous 25 years. During that time France's GDP per person was overtaken by Britain's and Ireland's, among others; unemployment was consistently higher than the European Union average; and France ran up a public debt amounting by 2007 to 66% of GDP. The son of a Hungarian father, not educated in the traditions of the elite Ecole Nationale d'Administration, Mr Sarkozy vowed to do things differently. “We must face up to the truth,” he wrote in “Témoignage”, his pre-election book. “For 30 years our country has weakened its capacity to create wealth.”
The French needed to work harder, he told the country that invented the 35-hour working week. They needed to invest more in brainpower; and the state needed to tax and spend less. A range of detailed pledges, from the reduction by four percentage points of the overall tax take over ten years to the abolition of special public-pension rights for railway workers, were spelled out. “I want to be the president who keeps his commitments,” he vowed. So it is against those promises that Mr Sarkozy should be measured.
Lunch-time in a busy left-bank restaurant, and one of the world's foremost economic theorists has just driven from the airport. But Jean Tirole, professor at the University of Toulouse l, has not come to Paris to discuss corporate-finance theory over the plat du jour. He is there on a fund-raising mission: touring the city's banks, hoping to secure cash for the new private foundation behind his Toulouse School of Economics, a faculty at the university to be launched on June 2nd. In a country where all university lecturers are civil servants and all degree courses are free, to find university bosses on non-stop fund-raising tours is quite a radical change.
Reform of higher education was among the first, and most urgent, of Mr Sarkozy's reforms. Only one of France's 82 universities makes it into Shanghai University's top-50 ranking. Most research is done off campus, in separate state-sponsored bodies. Auditoriums are overcrowded, campuses drab and deserted at weekends. Some 46% of all first-year undergraduates drop out. The brightest students do their best to avoid universities altogether, and instead fight to get into one of France's excellent grandes écoles (exclusive institutions outside the main system).
Last summer Mr Sarkozy granted the universities autonomy from central state control. This has freed them to recruit the lecturers they want, at salaries they negotiate, and to set up private foundations—with tax breaks for donors—to complement public finance. The idea, says one government adviser, is to encourage a dozen of the most go-ahead universities, such as Toulouse l, to transform themselves into centres of excellence, even if the rest carry on churning out unemployable sociology graduates as before.
As well as giving universities autonomy, Mr Sarkozy has boosted their budget by 43% over five years; required research and teaching staff to collaborate; sold state-held electricity shares to pay for proper campuses à l'américaine; and opened up enrolment to enable universities to “orient” students to appropriate courses. Valérie Pécresse, the universities minister, says she hopes these measures will halve the drop-out rate in five years.
In time these changes could supply France with perhaps a dozen high-quality campuses. Yet the university reform also illustrates the limits to Mr Sarkozy's efforts, as he has left untouched two elements without which it will be hard to sustain financing and improve quality: the selection of students (anybody with the baccalauréat can enrol) and tuition fees (there are none). Mr Sarkozy did originally plan to allow the selection of students, but only for master's degrees. Even this was quickly shelved after student unions squealed.
As with universities, so with many other reforms. To be fair, Mr Sarkozy has achieved some clear, if controversial, successes. By appointing a Muslim woman as justice minister, he has sent a clear message of inclusion to the heavily Islamic banlieues (suburbs) that rioted so violently in 2005. He has extinguished the National Front as a political force, without pushing his hardline immigration policy unacceptably far. Abroad, he has mended Franco-American relations, sent troops to Afghanistan and helped to secure a simplified version of the EU constitution rejected by the French voters two years earlier. Yet his record on domestic reform is less radical than had been expected.
Consider, for instance, the abolition of the “special regimes” for public-sector pensions, which enabled 1.6m railway workers and others to retire early, often in practice at the age of 55. As a symbol of his determination not to cede to the street, it was a triumph. Nobody had touched the rules for over 50 years. Mr Chirac tried once, in 1995, but backed off after crippling strikes. Mr Sarkozy, by contrast, who had courted union leaders over lunch at smart Paris restaurants, withstood a nine-day strike and commuter chaos, to end the special regimes. Yet the price was a parallel promise by the railway bosses to boost final salaries on which pensions are based. As Guillaume Pépy, head of the national rail company, SNCF, concedes: “The figures on savings are not spectacular.”
Or take the promised overhaul of the country's rigid labour law. Under François Fillon, the prime minister, the government plans changes based on a deal reached after months of talks between unions and bosses. The main novelty is that employers will be able to end a contract “by mutual consent”, after which workers cannot go to court for further recompense. At present some 30% of layoffs, even consensual ones, are contested by employees and go before an employment tribunal; 70% of these go against the employers, according to MEDEF, their federation. Yet the reform leaves aside two far more constraining features of French labour law: the rules limiting the ability to shed workers if a firm is in profit and the 35-hour working week.
The president's team argues that the results so far are as much as you can expect, given the confrontational history of change in France. “We can't win all battles,” says one minister. “If we get 60% of what we try for, that's good enough; and it puts in place a structure for further reform.” Which may be true, up to a point. When a previous government tried to increase youth employment by making it easier for employers to lay off the under-26s if they needed to, it gave up after protesting students closed down campuses. Now fresh proposals for university reform, by contrast, are already on the table. Christine Lagarde, the finance minister, argues that each step forward is precisely due to the co-operative approach. “We're not pushing reforms down people's throats,” she says.
The trouble is that consensus-based incremental reform supposes that Mr Sarkozy will be able to build on the first round. Yet Act Two of “The Hyperpresident”, in which his popularity evaporates, suggests that this is far from guaranteed.
Disneyland, the Pyramids, Petra. The scenery changed, but the theme was constant: a new presidential romance. The period between December, when Mr Sarkozy was photographed with Carla Bruni at the Disney princess parade, until the royal pageantry of a different sort during the state visit to Britain in March, after they married, felt like a bizarre interlude in French political life. Reforms went on hold. Strange presidential proposals emerged from nowhere. If previous presidents considered that the public interest stopped at the bedroom door, Mr Sarkozy decided to allow the cameras in—literally, for one Paris Match photo shoot in his Elysée Palace bedroom. The French press splashed the celebrity president and the former supermodel, week after week, across the front pages.
Manifestly more fun than studying
The exhibitionism took its toll, though. The ruling centre-right party was swept out of town halls across the country in the municipal elections in March. From a high of 65% last July, Mr Sarkozy's popularity stood at 37% in April, according to TNS-Sofres, a polling company, while that of his prime minister, an unexciting, managerial sort, climbed. In one poll to mark the president's first year, 59% of respondents said it had been a failure. “The difficulties in his personal life gave the French the impression he was looking after his own problems more than theirs,” says one insider.
The problem now seems to have been taken in hand. Mr Sarkozy is to appear more presidential, and less interfering. He is now photographed in sober suits rather than jogging gear. Emotionally, he has been, says one aide, “restabilised”.
Part of this new phase is a revival of the reform programme. In a televised appearance last week, Mr Sarkozy promised to “carry out all the reforms head on” and not to let up. The mighty civil service is to be trimmed and streamlined, to cut the government's groaning budget deficit. Hospitals are to be reorganised. Ports, currently in the grip of unions, are to be deregulated. Union representation on company works councils is to be more democratic. The rules for unemployment benefits are to be tightened. The contributions period for public pensions is to be lengthened.
The centrepiece is Ms Lagarde's “modernisation of the economy” bill, designed to encourage a more entrepreneurial society by cutting red tape and putting the consumer, not the producer, first. It will, she argues, “blow a wind of liberty through the economy”. Retailers will be allowed to negotiate prices with suppliers (they are currently forbidden from selling at below cost). There will be a reinforced competition authority, with real powers to investigate and punish anti-competitive behaviour. All charges and taxes on start-ups will be abolished until such firms turn a profit. Rules that hit companies as they grow beyond ten or 20 employees will be phased in to encourage job-creation.
The trouble is, however, that the circumstances have changed. Mr Sarkozy can no longer lean on his popularity to take on vested interests. Worse still, the economic outlook has turned against him.
Although the French economy has held up reasonably well so far, the global credit crunch is beginning to bite. Eric Chaney, chief economist for Europe at Morgan Stanley, reckons that “some sort of credit crunch is unfolding in the funding of French companies”. The IMF recently cut its forecast for GDP growth in France to just 1.4% for 2008. As companies scale back and growth slows, Mr Chaney is forecasting unemployment, which has dropped to 7.5%, to rise to 8.3% next year.
This will make it far harder for Mr Sarkozy to rally public opinion. The French already feel their pockets squeezed: rising food and fuel prices helped push annual inflation to 3.2% in the year to March, the biggest rise for 11 years. Business confidence has fallen, and consumers are more pessimistic than for 21 years (see chart).
Yet the government has little room for manoeuvre. It has been inexcusably slow to repair the public finances. The budget deficit in 2007 reached 2.7% of GDP, against 2.4% forecast; the European Commission says it will hit 3% next year. Spending cuts—through, for instance, eliminating teaching posts—have already drawn protests on the streets. And the government played its fiscal-stimulus card last year with €13.5 billion-worth of tax cuts on overtime pay, mortgage interest and inheritance. Mr Sarkozy's campaign promise to reduce the overall tax take from its current 43.5% of GDP (Germany's is 34.7%) seems to have died a quiet death.
The president's camp insists that he will not use harsher economic times as an excuse for inaction. Indeed, some argue that fiscal constraints may even force the government to stick to certain reforms, particularly cuts in the civil service. Yet there is a more worrying alternative: that the president, shorn of his good poll ratings, will be tempted to pacify resistance with crowd-pleasing gestures. In the past Mr Sarkozy has sometimes tried to win peace by making simplistic promises or by giving ground. He has yielded to fishermen, taxi-drivers, the family lobby and others. When ArcelorMittal, a steel giant, recently announced the closure of a factory in eastern France, with the loss of 595 jobs, Mr Sarkozy rushed to the plant and promised workers state aid to save it.
For at the heart of Sarkonomics is a contradiction: Mr Sarkozy promises both to create an entrepreneurial, risk-taking society and to protect workers, factories and jobs. When he was running for president, his campaign stop of preference was the factory floor, where he would surround himself with industrious-looking men in hard hats and promise never to let France lose its factories, because, “Once the factories go, everything goes.” He may call himself a liberal but he also believes in national champions, and in a strong industrial policy to defend them.
Mr Sarkozy's supporters argue that his tirades against the outsourcing of jobs are distractions, since there is not much he can do about it. So far, ArcelorMittal appears to be going ahead with its factory closure regardless. But his message is worrying because the French, despite having plenty of first-rate global companies—Michelin, L'Oréal, Renault, Carrefour—are particularly fearful of globalisation. A recent Globescan pollshowed that only 41% of them believe that the market economy is the best system (compared with 59% of the British). They need to hear that France is a beneficiary of global capitalism, not simply a victim. See poll results.
Mr Sarkozy himself has argued that the French are not as conservative as they like to think. Despite the constant theatre of protest, they are often ready to change. They no longer drive at reckless speeds on the roads (thanks to speed cameras), nor smoke in bars or cafés (a cigarette ban). Resistance to change, rather, is concentrated in France's producer lobbies: taxi-drivers, pharmacists, notaries, retailers, teachers.
The coming months will test whether Mr Sarkozy is willing to take on such groups. It would be easier with high poll ratings. But the prime minister's popularity suggests the French may be fed up with their president's behaviour rather than with his reforms, and he may sense this. “I am sure that Nicolas Sarkozy doesn't want to end up like Chirac,” comments Philippe Manière, director of the Institut Montaigne, a reformist think-tank. “People would laugh at him, saying Sarkozy is like Chirac with new batteries.”
In this regard his friend, Tony Blair, has a telling piece of advice. In 2005, after eight years in Downing Street, the then British prime minister reflected on his experience of implementing change. “Every time I've ever introduced a reform in government,” he said, “I wish in retrospect I had gone further.” Words for Mr Sarkozy, the architect of rupture-lite, to reflect on.
Mis en ligne le 09/05/2008 par Pierre Ratcliffe. Contact: (pratclif@free.fr) sites web http://paysdefayence.blogspot.com et http://pierreratcliffe.blogspot.com