The War of the Roses—The French Government Reshuffles (8/28)     Print Email
Sunday, 03 August 2014

By Jacqueline Grapin, Founder and Chairman of The European Institute, Writing from Paris

The symbol of the French socialist party is a rose, with each group on the left claiming to be personified by the rose. But recent political events demonstrate that several roses do not always make a bouquet.

Commentators now speak of a “war of the roses,” in part because it is on the occasion of the popular “fête de la rose” on Sunday, August 24 that Arnaud Montebourg, then Minister of the economy, delivered a nasty critique of the government’s economic policy, laced with biting irony that not only highly insulted the President and Prime Minister but caused a governmental crisis. 

The following morning, Manuel Valls, Prime Minister since April 2014, submitted his government’s resignation to President François Hollande. The President immediately instructed Prime Minister Valls to form a new government. By Tuesday, it was unveiled, with most of the heavy-weight ministers reappointed, but the weakest and less cooperative members of the group eliminated. Arnaud Montebourg was replaced by Emmanuel Macron, a young, reputable economist familiar with the private sector. The new government has fewer ministers than before and is more homogenous. Manuel Valls version of socialism prevailed. The new government is clearly social democrat in bent, meaning more to the center than to the left, and more realist with regard to ensuring economic efficiency.  

The leftist parliamentary majority which was elected in May 2012, in parallel with President François Hollande, is composed of several different groups, with different ideas. Although belonging to the electoral majority, the extreme left does not participate in the government. The Greens were involved in the first socialist government in 2012, but they left it on the occasion of the government reshuffle on March 31, 2014. They are now outspoken critics.  

The socialist party itself is divided into several groups. First, the traditional socialists who favor “Keynesian” policies, meaning favorable disposition to redistribution. They believe that providing purchasing power to the less wealthy part of the population encourages consumption and economic growth. But, at a moment when the French public debt is close to 4.3 % of GDP, distributing resources that the State does not have results in serious economic imbalances not acceptable within the European Union. It therefore generates additional taxation discouraging the initiatives from investors and private companies.  

Another section of the party embraces modern economic liberalism, realizing that it is necessary to generate resources before distributing them, and accepting that in order to do this in an open global economy it is necessary to have more competitive enterprises, not burdened by unnecessary taxation. The tax burden in France is the highest in Europe: 57 % of GDP (against an average of 49 % in the EU). This group admits that it is necessary to reduce public spending, including the cost of multiple administrations at national, regional, departmental and municipal levels.  

Most of the difficulties encountered by the French government come from the fact that the May 2012 election won by the left was interpreted by its winners as a mandate to implement “ the politics of the left.” In reality, the public expressed mostly a rejection of the previous president, Nicolas Sarkozy, and a hope for better economic conditions. Initially distributing resources to the public when the deficit was already extremely high and additional public debt hardly acceptable, did not result in better economic conditions for the country in the first two years of the five-year mandate. Together François Hollande and Manuel Valls have changed course to focus on investment and competition in order to generate badly needed growth.  

Closer to Brussels  

This new posture will facilitate relations with the European Union. Both François Hollande and Manuel Valls are calling for more investments to be made at the European level to encourage growth in the whole of Europe. By promoting a more responsible budget policy in France and turning to a more harmonious posture vis-à-vis Brussels, they hope that the chance of obtaining better economic results will be higher.  Their problem will be to maintain the support of the parliamentary majority at home that they need to vote the laws and policies they will propose. That may be a gamble. The government is counting that most representatives of the left, in spite of their frustrations, will still support proposals from the leadership. In case of a new general election, the likelihood of all socialist members and representatives of the left getting their seats back in the parliament looks less than likely, considering the state of public opinion. Self-destruction not being an option for many of them, this should be an incentive to come together to vote when needed. Charles De Gaulle, who knew what he was talking about, used to say: “the French are capable of anything, even of the best.” It is even more true of the French left.