Expert View: Bigmouth strikes again - but Sarkozy must succeed
To reform the French monolith won't be easy. Let's cut him some slack
Sunday, 8 July 2007
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Honeymoons in politics seem painfully short these days. While all eyes in London have been trained critically on the Brown revolution, Nicolas Sarkozy's arrival has, if anything, proved more dramatic. As the new French President seeks a "rupture" with the past, he poses some serious challenges to the existing European order and to his fellow leaders, including our new Prime Minister.
Mr Sarkozy is very different to Gordon Brown. Glamorous and charismatic, he is also only too capable of opening his mouth just to change feet. In domestic politics he has never quite been forgiven by the left for referring to slum rioters as "scum". And other European leaders are starting to get used to similar language in economic policy. Last week there were gasps of horror as he tore up what many saw as a solemn promise to abide by the stability and growth pact requiring a more balanced budget.
In Frankfurt and London there are the beginnings of a "stop Sarkozy" campaign that seeks to portray him as dangerously backward-looking. Some of these criticisms are fair. His calls for taxes across Europe to rise to French levels, and for the UK to join the euro to end "social dumping", seem provocative and interfering. And when he seeks to increase the degree of political interference in the European Central Bank's deliberations, he deserves a firm slap on the wrist.
There is a lot said on this latter point in France at present. Take the recent comment by Peugeot-Citroën's new boss, Christian Streiff, that the euro is now 30 per cent overvalued against the yen. Nonsense. Why in that case are German exports now booming? There is a general attempt to link European monetary policy with high French unemployment. This, frankly, is pure sophistry.
France's employment problems are much more deep rooted. They go back to the Mitterrand government of the early 1980s and its punitive tax and nationalisation policies. A Thatcherite-style purge and return to free markets has not happened in France in the 25 years since.
This is the French political reality and it is one that Anglo-Saxon critics, including our new PM, must understand. To reform the French monolith will not be easy, and we need to cut Mr Sarkozy some slack.
Take the corporatist Mitterrand inheritance and the long commitment to dirigisme, or state direction of the economy. In some ways this gives Mr Sarkozy great power to change things for the better, and Paris is alive with rumours on the fate of the bosses of SNCF, EDF and La Poste. Unfortunately, it also gives him the ability to interfere - such as the talk of greater control of Airbus and the obsession with national champions.
However, he is committed to privatisation, and many of the Mitterrand legacy stakes are to be addressed, such as Renault, Safran, EDF and Air France. More importantly, Mr Sarkozy has also started the much more important battle to reform France's medieval labour laws. Labour minister Xavier Bertrand stuck to his guns in seeking to push through two key measures in the coming weeks: the requirement for 48 hours' notice prior to a strike and for a secret ballot. In France, both of these measures smack of la Thatcher, and quite rightly so. It is difficult to justify the stranglehold imposed by trade unions on all labour negotiations when they represent a mere 8 per cent of the French workforce.
It is common in the City to complain that the "Club Med" economies are a millstone round our more dynamic necks. We must recognise the political realities of removing that millstone. France needs Mr Sarkozy at this juncture.
