Sarkozy's peculiar cocktail of laissez faire and nationalism
France's President is shaking up the system, says Jonathan Fenby
Sunday September 9, 2007
The French treasure what they call 'l'exception francaise', meaning the national characteristics, values and attitudes that set them apart from other nations. Since May, France and the rest of the world have been struggling to come to terms with l'exception Sarkozy.
The hyperactive sixth President of the Fifth Republic is one of a kind. Though undoubtedly a man of the right, he does not fit into conventional political boxes. His ministerial choices have ranged far and wide, with an unusual number of women appointed, including finance minister Christine Lagarde. He has cherry-picked prominent Socialists, proposing that former finance minister Dominique Strauss-Kahn should head the IMF.
But behind the novelty lie some very old-fashioned principles. For demonisers on the left, Sarkozy has signed up to the evil inheritance of Reagan, Thatcher and Blair. His policies are paybacks to his rich backers, designed to do down working people.Didn't he give the proof of his readiness to sell out traditional French values by taking his summer holiday in the US (Paris Match magazine respectfully airbrushed out his 'love handles' from its spread of holiday snaps) and eating hot dogs with George Bush?
And what about the way he relaxed after his election victory with a break on the yacht of one of France's takeover masters?
In fact, Sarko-economics are a much more complex mix, particularly as regards the corporate world. That has become plain with last week's resolution of the long-running Suez-Gaz de France merger saga. Though he can sometimes allow himself to become reflective, the teetotal President is a man who prizes action above all else - he is the first French head of state to gear up for the day by going jogging, sometimes with the Prime Minister, Francois Fillon, in tow.
On his return from New Hampshire, Sarkozy leapt into action on the matter of the long-stalled Suez-GdF merger. In a speech to the employers' federation, the President laid down that Suez must divest itself of its environment arm. Then he spoke to Suez's biggest shareholders. They included the heads of two banks, Credit Agricole and the Caisse des Depots, and of the nuclear power group Areva. There was also the Belgian tycoon Albert Frere of Groupe Bruxelles Lambert, one of a select few invited to dine with Sarkozy at Fouquet's restaurant on the Champs-Elysees on the night of his election victory.
Once the President had won them around, the Suez chief executive, Gerard Mestrallet, agreed to drop his opposition to selling a majority stake (65 per cent was agreed on) of the company's internationalised water and waste management business. So far, so good, it might seem. A business-minded President gets a result in the shape of the €70bn deal announced last Monday.
In truth, this was an extremely old-fashioned statist stitch-up of industrial policy as practised by the Gaullists in the 1960s and 1970s, and then by the Socialists under François Mitterrand. The reason the merger was promoted in the first place under the Chirac administration was to save Suez from a takeover from Italy. Paris's view that the Suez-GdF deal sets a template for European energy policy rings alarm bells in Brussels. Just as the EU energy market is meant to be opening up, the French state will, in effect, control the new group with a 40 per cent stake.
During his brief tenure as finance minister under Chirac, Sarkozy blocked Siemens from taking over Alsthom. That this hardly fits with his supposed embrace of the market presents him with no problem. What Sarkozy wants are results, however they can best be achieved. Thus he was ready to deal with the Suez shareholders and, on another front, to take the most flexible union leader to lunch at a Paris restaurant rather than calling a grand meeting at the Elysee with all the union chiefs to discuss freeing up the labour market.
His initial wave of economic legislation certainly shows that he wants to encourage a market economy and shrink the public sector. The President won a political victory of sorts on the first count when the leader of the Socialist Party, Francois Hollande, said that he would not reverse relaxations to the 35-hour week, and declared: 'The French must work more.' He can also take comfort in the fall in unemployment to 8 per cent from the 9-10 per cent rate under his predecessors.
Sarkozy is out to relax labour-market regulations and reduce the power of public sector unions. The basic aim is to ratchet up France's high hourly productivity into higher annual growth through longer working hours. Sarkozy needs growth to maintain both his reform programme and his popularity rating, and the problems ahead were brought home last week when the OECD downgraded its growth forecast for France from 2.2 per cent to 1.8 per cent for the year (well below the 2.5 per cent for the eurozone as a whole).
The head of the employers' federation, Laurence Parisot thinks the French are ready for what she says could amount to 'the strategic revolution'. The country, she says, needs to give its companies the punch of its rugby team.
Are the French so sure? Sarkozy's poll ratings remain high, at about 70 per cent, but other surveys show most of those questioned expressing pessimism about the future.
It may be argued that Sarkozy is simply playing politics with economic policy, catering to nationalism on Suez-GdF or in suggesting that the independence of the European Central Bank should be reduced and reviving the old French theme that governments should have more of a say over ECB policies that affect national economies.
But there is more to him than grandstanding. The President has adopted the French exception as his own. It may all blow up, as the pace Sarkozy sets proves his undoing - the editor of the weekly magazine l'Express has compared him to a man riding a bicycle without brakes. There is an interesting ride ahead, and Europe had better understand what it has on its hands. · Jonathan Fenby i