After decades of stalling, a day of reckoning for France

By Jonathan Fenby

August 25, 2014

Hollande’s actions will have ramifications at home and in the rest of Europe, writes Jonathan Fenby

After two years of compromise, France’s President Normal has met his moment of truth. The stand-off betweenFrançois Hollande, the Socialist head of state, and the leftwing of his own party that erupted at the weekend, resulting in the purging of anti-austerity leftwingers from the government, has ramifications stretching far beyond the immediate confrontation. These will have significant implications both for the way France is run and for Europe. There is a distinct possibility of a period of chaos, reflecting the deep concerns at the root of themorositéunder which the EU’s second state is labouring.

The catalyst was in itself no great surprise.Arnaud Montebourg, the outspoken leftwing economy minister, said in a speech and newspaper interview that conformism was an enemy and “my enemy is governing”. He added: “France is a free country which shouldn’t be aligning itself with the obsessions of the German right,” and called for “just and sane resistance”. He has followed an anti-German, anti-austerity line since the 2012 presidential election. As Mr Hollande has moderated the reflationary, high-tax measures on which he was elected, his minister has looked increasingly out of step. But when Mr Hollande appointed centre-left Manuel Valls as his prime minister in March after catastrophic local elections, Mr Montebourg was promoted along with his ally, Benoît Hamon, the education minister.

This was typical of Mr Hollande, who spent much of his career as a backroom party manager. For all the institutional power of his office, he is weaker than predecessors because, unlike them, he is a creature of his party rather than having moulded it to do what he wants. He is an accidental president who got where he is because of the scandal that enveloped Dominique Strauss-Kahn, who would otherwise have been the natural Socialist candidate in 2012.

Mr Valls was popular in the country – though less so now – and a president with an approval rating below 20 per cent needs all the help he can get. But the Socialist ranks see him as dangerously social democratic and an advocate of tough law and order of a piece with the left’s bête noire, former president Nicolas Sarkozy. Mr Montebourg’s anti-capitalist, anti-German rhetoric, meanwhile, goes down well with party members and backbenchers in the National Assembly.

Now, Mr Montebourg has thrown down the gauntlet and his ally, Mr Hamon, announced his departure on television news. The former economy minister said that France has to stop the economy being sunk by austerity, and he and Mr Hamon claim there is a majority in the EU opposed to the policies of German chancellor Angela Merkel. Mr Hollande has to react if he is not to lose all credibility. He has told Mr Valls to form a government “consistent with the direction set for the country”. That means cutting the budget deficit and easing taxes on business to injectsome life into the flatlining economy, cutting double-digit unemployment and getting to grips with structural factors that make France uncompetitive.

It is an agenda administrations of left and right have put off since the collapse of the race for growth under François Mitterrand in the 1980s, when Mr Hollande was a government adviser. The stakes are heightened by the political environment that has deteriorated to the point where some ask whether the Fifth Republic founded in 1958 can still function.

Mr Valls will form a cabinet of like-minded politicians, possibly reaching beyond Socialist ranks. That, and a rebellion by Mr Montebourg and ministers of his stripe claiming to represent true socialism, could split the party, costing it its parliamentary majority. A general election would be, primarily, a referendum on Mr Hollande, who pledged to be a “normal president” but has put in an abnormally ineffective performance. Unless he could stage a miraculous revival, he would inflict defeat on his supporters. The mainstream right UMP party would form a government in a period ofcohabitationbetween a president and his opponents.

A grand coalition might be the only way to achieve structural reform but would face serious practical problems in governing

Such a grand coalition might be the only way to achieve structural reform but would face serious practical problems in governing. The mainstream right is divided between Mr Sarkozy on the comeback trail and former premier Alain Juppé, who this month threw his hat into the 2017 presidential ring. Marine Le Pen, leader of the far-right National Front, enjoys the highest personal approval ratings; because of the electoral system, the party would probably win few seats but that would enable it to step up its assault on the system. Meanwhile, Socialist rebels would form an opposition bloc on the other side, with vocal support from the hardline Left party of Jean-Luc Mélenchon.

This would bode ill for the euro, and for EU co-operation. The tendency to blame outsiders – primarily Ms Merkel – for France’s woes would flourish amid the rising concern about national identity that lies at the root of the nation’s “morosité”.