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French President Dismisses Government, Calls In The 'Blairites'

Politics / France Apr 02, 2014 - 12:12 PM GMT

By: Andrew_McKillop


Tony Blair To The Rescue

French president François Hollande dismissed his Prime Minister and cabinet on Monday following his Parti Socialiste's massive loss of power, symbolized by PS mayors and councillors being voted out in 155 large cities, following the 23 and 30 March local elections. Key PS “bastions”, where in some cases Hollande's party has held uninterrupted power for 100 years, such as Limoges, fell with other bastions such as “red” Toulouse and Angers. The supposed xenophobic and unconstitutional, racist and Nazi-leaning Front National of Marine Le Pen made huge gains.

Hollande quickly turfed out his ultra loyal PM Jean-Marc Ayrault, described as a center-right socialist on the French political spectrum, replacing him with the “Blairite” right wing socialist, the former Interior minister Manuel Valls, sometimes also called Emmanuel Valls.

The government headed by Ayrault had presided over 12% unemployment affecting 3.4 million persons, using French official data from the national economic and statistics agency, INSEE which excludes large numbers of younger and older persons in temporary jobs from its tally. Le Pen's NF claims the real “score” and sore of unemployment in France is above 4.6 million jobless, closer to 16% of the adult population able to work.

Mr. Valls, described as having a youthful air and a reputation for widespread popularity in the country, and within his party, is also championed as “a Blairite modernizer or Clintonian”. To date however his best-known public action in the economic domain was to give his support to more taxes in the battle which raged inside the PS on creating and launching a new tax, called the “TVA sociale” or “social VAT”, designed to increase taxes on consumption across the board, from food to Ferraris. This “TVA sociale” would be additional to the existing VAT, raising its minimum rate to about 20%.

So-called modernizers inside the PS, who support Valls, claim that higher consumption taxes are the only way to fund and finance lower charges on enterprises, draw in more foreign investors and enable lower income and revenue taxes on wealthy French.

Statements by Valls on his intended economic policy and his circle of advisors, to date, have also featured the argument that “in general” income levels are too high in France, making this a prime cause of the country's loss of competitiveness in global markets.

The Cheshire Cat Programme

The biggest winner in local elections was the former party of Nicolas Sarkozy, the center-right Union for a Presidential Majority (UMP), which won more than 100 of the cities and towns lost by the Socialists. The UMP has been split, and re-split since Sarkozy's defeat in the 2012 presidential elections, and its economic program is uncertain and controverted even within the UMP. Valls has however openly supported some of the economic reforms supported by some leading members of the UMP's, mainly an increase in work weeks, presently judged as too short, and a major increase in the retirement age, to perhaps 65 years.

This however does not address the overall loss of interest, concern and faith among French for the political process. The UMP has since 2012 been unable to craft a positive economic message able to draw in younger voters, afflicted by extreme high unemployment. Like the PS, the UMP is accused by younger persons of simply leaving French youth “on the sidelines' of the economy and society. Opinion polling and exit polls run by Ipsos and other pollsters in the local elections showed that in many large cities, in their so-called “troubled suburbs” where youth unemployment is typically 50%, neither the PS nor UMP attracted more than 5% of younger voters. Ironically, in these “troubled suburbs” which are more accurately called ghettos due to very high numbers of recent immigrants, Le Pen's NF, with an extreme hardline on immigration, scored more votes than the “mainstream and constitutional” parties.

Another winner in several major cities, was the EELV coalition of ecology, environment and far-left politicians, which argues for a complete “open door” immigration policy, and is radically opposed to Valls. This is despite the EELV being a formal member of Hollande's previous government under Jean-Marc Ayrault.

To date and this will change, Valls has steered clear of the economic policy and reform issue, and has polished his main political pitch – of being tough on crime as Minister of the Interior and as mayor of the Parisian suburb of Evry, and being tough on certain “overstay immigrants”. This features his campaign as Interior minister, called victimization or even racist by the EELV and the Far Left alliance, to deport smaller groups of mostly Romanian-origin “Roms” or gypsies on an episodic basis, despite them holding European Union member state passports, theoretically entitling them to complete freedom of movement in Europe.

Media attention to the Rom deportation project was massive, earning Valls a large amount of criticism, parried by his Ministry deporting small selected groups of Roms, mainly to Romania and Bulgaria by air, with a 300-euro “severance pay” check for each deportee. Follow-on TV documentaries and press reports on this project showed that the majority of deported Roms merely used their 300-euro exit payment to pay for a return trip – to France – with or without swapping their identity documents and passports among the Rom community!  Valls subsequently ordered ADN tracking of deportees, but by late 2013 the project has been essentially abandoned, after formal complaints by the Romanian government and Brussels, on discrimination.

Valls had however levered a reputation for himself, in France, of being “hardline on crime and illegal immigration”. This has enabled him to repeatedly argue that the FN of Marine Le Pen, also demanding the deportation of Roms, is “racist and xenophobic”.

Flamby Hollande and the Economic Good Time

President Hollande almost instantly earned the nickname 'Flamby', a curiously French eccentric soubriquet due to “Flamby” being a 1950s-vintage childrens' dessert. Dating from the postwar austerity era but at the end of sugar rationing, foodstuff producers turned to sugar-laden, but still chemically colored and chemically flavored desserts to beguile French children. Hollande's economic thinking comes straight out of a Flamby pot.

One of his statements before moving out Ayrault and moving in Valls, was that “in general France must reduce taxes” This he said was the message that France would hammer home at all meetings in Brussels of Economic Commission watchdogs on member state budget and debt issues. His new Prime Minister is dedicated to raising taxes.

Hollande has on occasions, with subsequent denial of course, argued that every kind of tax in France must be cut – and sometimes eliminated. Payroll taxes, for example, should be suppressed, or heavily cut by his post-January-2014 Pact of Solidarity, now being renamed by Valls, but at present undefined and not enacted. This would favour employment and growth by radically, or partly cutting charges on enterprises but would immediately cause a loss of tax revenues to government presently estimated, by the UMP and other sources at 50 billion euros a year.

Hollande has also pushed hard on the ecology-environment gas pedal. His new Valls government will need the previous near-automatic support in parliament, from EELV members. The main problem, here, is that as of April 1, decidedly not an April Fool's joke, the EELV central committee has formally stated it will not sit with or have any part of a Valls government and is withdrawing all present EELV member from government. The EELV Minister for Housing, Cecile Duflot has already resigned saying that any government headed by Valls will not have her support.

Flamby politics are however well suited to the strange EELV agenda or shifting set of policies, programs and projects. Electric cars are a classic example. All-electric car sales in France only run at a few hundred a year, with the apparent number inflated by also including part-electric hybrids to mask the very low numbers of all-electric cars sold. This is within a total car market that although highly depressed ran at 1.79 million in 2013 according the CCFA, but despite this the EELV claims that all-electric cars can or will become “the majority car in France”. State subsidies on all-electric cars are presently a minimum of 6300 euros each, and can go higher, but even with this massive gift of taxpayers' money, and of course government debt, they typically cost car buyers more than 20 000 euros each.

The French road fleet electrification program is taken seriously by Hollande, he says, just like his “personal conviction” that global warming is a “potential catastrophe”. The bottom line is deficit spending to keep the Greens happy alongside everybody else. Valls will have a hard row to hoe and can be counted on to radically shift his government's policy and programs, depending which way the wind blows, today and how Flamby is feeling, today.

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2014 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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