After months of falling approval ratings and dwindling support from inside his party and government, it was hardly surprising when French President Francois Hollande announced on December 1 that he was not going to stand for re-election. His decision leaves the ruling Socialist Party (PS) in a precarious situation ahead of April’s presidential election.
To determine their candidate, the political left held the first round of open primaries on Sunday, January 22. Centrist candidate Manuel Valls, who served as Prime Minister under Hollande, was seen to have the best chance of winning. Yet while he has proceeded into the second round to be held on January 29, he faces tough competition from the left-leaning Benoit Hamon. Hollande’s former Education Minister, Hamon received 36.1 per cent of the vote compared to Valls’ 31.2 per cent. He can be expected to pick up votes from last Sunday’s third placed competitor Arnaud Montebough, which should give him a majority.
Hamon represents PS’ radical wing that disowns Hollande’s legacy, a factor that likely hurt Valls in the first round. In the recent TV debate between the Socialist candidates, Valls was hard-pressed to defend Hollande’s presidency. The attacks on the government’s liberalisation of the labour market clearly show that beyond selecting a presidential candidate, the primaries will determine the future course of the French left.
REVIVING THE FRENCH ECONOMY
Regardless of who becomes the next French president, they will have plenty of challenges to deal with. Despite Hollande’s attempts at reform, France’s economic growth remains sluggish, with unemployment remaining stubbornly high at around 10 per cent. Since 2012, France has also run a fiscal deficit greater than three per cent of GDP, thereby violating the EU’s stability criteria. So far, the EU Commission has given France time to consolidate its finances. However, if France fails to do so in 2017, it will likely have to pay a hefty fine (possibly as much as €1 billion).
The need for profound structural reform – most notably in the areas of taxation, insurance and fiscal policy – to revivify the economy is apparent, but its unpopularity makes the necessary adjustments hard to carry out. When Hollande tried to push through a reform package prepared by Economy Minister Emmanuel Macron last year, it was met with nationwide strikes, crippling the country’s transportation network. The reforms eventually passed, but they were watered down significantly in the process.
Macron has since resigned from his post and founded his own political movement as a vehicle for a presidential bid. He has surged in recent polls on a pro-EU platform that advocates pan-European solutions to issues such as migration and border controls, as well as an economic agenda that is open to universal basic income – a novel social security concept where every citizen receives a monthly payment from the government.
Other presidential candidates across the political spectrum are aware of the need to reform the French economy but they have widely differing ideas about what reform should look like. Francois Fillon, candidate of the centre-right Les Republicains, favours Thatcher-style neoliberal economic reforms. He champions strong austerity measures, reducing corporate taxes, increasing pension ages, simplifying the labour code and cutting government spending by an estimated $117 billion.
If these reforms were enacted, they would align France with German chancellor Angela Merkel on economic policy, particularly regarding fiscal responsibility. Merkel and Hollande frequently clashed over these matters; the French president sought to revive Europe’s economy and finances through investment while the German leader favoured austerity measures. Though Fillon’s plans are the most staunchly liberal, both Macron’s and Valls’ reform policies lean in the same direction – though Valls cannot express this too openly if he wishes to win the PS primaries.
Frontrunner Fillon’s plans differ radically from those of his main rival, Marine Le Pen – leader of the Eurosceptic populist National Front (FN). Her economic platform strongly resembles that of France’s radical left and is stridently anti-liberal. She advocates the nationalisation of banks, the introduction of taxes on all imported goods and abolition of the Euro. She asserts that these policies will restore the French economy to its former glory, and with these promises hopes to find favour with blue collar workers and voters in economically depressed regions who feel disadvantaged by the forces of globalisation and immigration.
DECIDING EUROPE’S FUTURE
Whichever economic policy France’s next president follows, there will be profound consequences for the EU’s future. After the Brexit vote and Italian Prime Minister Matteo Renzi’s resignation late last year, the EU is more dependent on the leadership of its two core members, France and Germany, than ever before. By buying government bonds and keeping interest rates low, the European Central Bank (ECB) has temporarily saved the Eurozone from disintegrating. However, the Eurozone crisis requires a permanent solution, which will force its leaders to implement deep structural reforms.
Regardless of the specifics of these reforms, they would likely involve altering the EU’s founding treaties, which would necessitate France and Germany working closely together. Beyond the Eurozone, ongoing terrorist attacks throughout Europe, lingering conflict in eastern Ukraine, and Russia’s growing assertiveness demand closer security cooperation between EU members. The European Parliament’s backing of a defence union in November 2016 demonstrates the bloc’s keen awareness of this issue.
In order for Europe to be able to deal with these challenges – especially Eurozone reforms – it must have a cooperative French president who can establish a good working relationship with both Germany and the southern EU states, which blame ongoing austerity measures for their economic distress. Although Fillon has been described as a Eurosceptic in the past, he is not opposed to the European project per se but rather seeks to strengthen the role of the member states by relying more heavily on the intergovernmental organs of the EU – the European Council and the Council of Ministers. Le Pen by contrast has made no secret of her desire to pull out of the Eurozone and the Schengen Area, and leave the EU if necessary.
FOG OVER FRANCE
By choosing Francois Fillon as their candidate, Les Republicains have significantly decreased Marine Le Pen’s chances of ascending to the presidency. Despite his neoliberal reform proposals, the former prime minister enjoys great popular support and his socially conservative views strongly resonate with many potential FN voters.
Le Pen has recognised the threat that Fillon poses and has repeatedly attacked him over his economic reform agenda and his strong Catholic conviction, which she says are incompatible with the principle of laïcité (France’s constitutionally mandated secularism). By taking a leftist stance on economic issues, Le Pen hopes to appeal to voters who have become disillusioned with the PS and the radical left.
Meanwhile, Emmanuel Macron has become a wild card, with some pollsters putting in him in first place nationwide. His strong ground campaign and his will to break with established principles on both the left and the right make him the unpredictable force of this election.
In the end, the election will depend – ironically – on the losing candidates and their voters. Their endorsement, or their decision to withhold it, could be decisive in the runoff elections. This factor prevented a Le Pen presidency in 2002, and it may well do so again in 2017.
David is the Europe team’s leader and senior editor. David has a background in EU financial and immigration legislation.