Wednesday, 23 April 2014

Hollande: time to dissolve parliament and call national elections?

Rumours that François Hollande may dissolve parliament and call elections began to circulate a week ago when he said in public that he would not stand for re-election if he and his government did not succeed in reducing unemployment. This was a significant statement because it is by no means certain that he will be able to lower unemployment given the economic outlook. Also, he is said by some advisors to be adopting a policy of secretive 'bunkerisation' at the Elysée and is becoming weary at the constant criticism he is receiving in the press. He was also shocked by the extent of voter dissatisfaction that saw the socialists trounced in recent national local elections.

This spectacular defeat forced Hollande to be seen to react, and that's why he let PM Jean-Marc Ayrault go and installed Manuel Valls in Matignon to replace him. But the change has not been anything like effective so far.On the contrary, things have gone from bad to worse.

The day Valls was named a group of 100 socialist dissidents let him and Hollande know that they might not give the new government the parliamentary vote of confidence that would officially allow it to take office and begin work. They backed down in the end but the tone was set - the dissidents were here to stay.

What are the dissidents angry about? They are angry at Hollande's Social-Democratic conversion, which they say goes against everything that socialism represents. They feel that nothing is being done to make life easier for ordinary citizens and that the poor are being milked dry to help the rich. In other words, their objections are of an ideological nature.

Meanwhile, the reality on the ground remains dire. France failed recently to persuade the EU to give it more time to get its finances in order. This latest demand was the third in so many years and the EU's curt refusal showed that it has finally decided to force France to engage the structural and economic reforms that it has been trying to put off or has not been able to implement.

Further bad news followed in the form of Hollande being obliged to fire a prominent Elysée advisor because he was suspected of a conflict of interest in his business dealings. The opposition poured oil on the flames and Hollande's popularity ratings began to fall even further.

The extent of his unpopularity became painfully clear to him today when he was roundly bood by socialists who had come to hear him speak at a ceremony to mark the 100th anniversary of the death of legendary founding socialist Jean Jaurés, a man of deep socialist convictions who is still revered within the party today. Accusing him of betraying socialism and Jaurés' legacy, the protestors also demanded to know why he had not held his election promises to be 'the enemy of finance'.

Then, just this afternoon, the dissidents decided this afternoon to reject planned spending cuts by the government and either vote against them in parliament or abstain. These cuts are designed to contribute to the €50 billion the government is trying to raise to honour François Hollande's New Year promise to cut the business sector some tax slack to enable companies to keep prices down and hire more staff. That plan is the 'Pact of Responsibility', and Hollande said at the time that it was "urgently needed". Four months on however, almost no progress has been made on it and this is largely due to the dissidents' stalling tactics.

In other words, Hollande is facing a serious backbench revolt that is holding up reforms and legislation and he and his government have been unable to move forward on changes at a time when they are of the utmost importance.

How long can this situation be allowed to continue? A massively unpopular president and government, open revolt in his party, a paralysed parliament, the country is to all intents and purposes at a standstill.

François Hollande is very much aware of his situation and may well be thinking that if he cannot be permitted to implement his own policies that it's time to begin to consider dissolving parliament and asking the people to decide in legislative elections. If this were to happen the result would almost certainly be a victory for the opposition UMP and a 'government of cohabitation' between Hollande and his enemies, who may, ironically, be more open to his more liberal plans. As to the dissidents, many of them would be out of a job.

What if the dissidents threw out his cuts when they are voted upon? What if he threatened dissolution? Would the threat force the dissidents to climb down? We don't know yet, but we do know that something must be done, and soon, to ensure that France has a functioning government at the very moment it most desperately needs one.

Sunday, 6 April 2014

Suicidal French socialists should take Winston Churchill's advice

Courtesy of AFP/Archives
It has been a week to the day since the Socialists and the president were handed the biggest defeat in local elections ever recorded during the 5th Republic. The nature of the cabinet reshuffl that has followed seems to indicate that Hollande has recognised that his government needs to speak with one voice if it is to be credible, and Valls is determined to put a stop to the squabbles and contradictory declarations that characterised Ayrault's reign.

Yet, incredibly, Valls and Hollande are today facing the biggest revolt by backbench Socialists since Hollande became elected, and the cacophony of dissent is deafening. Added to this is the fact that the ecologists have decided not to participate in the new government, thus weakening it from day one.

It began on the very evening that the election results were announced, but it went relatively unnoticed at first. Consisting of a document called The Conditions for Confidence - For a Contract of the Majority, it demands that the government and Hollande change their policies and insists that Hollande must implement his election promises. It goes on to outline a series of measures its authors say should be taken immediately in order to change course.

The reason for the dissent is that Hollande and Valls have made it clear that the government's policy package is to remain more or less intact. This means we shall see more cuts and more money - €50bn - dedicated to helping businesses to create new jobs. It's a brave - some would say foolhardy - move designed to get France's economy back on track and reduce deficits.

Who is behind it? The main instigator seems to be no less that party First Secretary Martine Aubry, a woman who has never hidden her disdain for Manuel Valls and who is still licking her wounds after being defeated in her efforts to become Prime minister after Hollande's victory. This led her to refuse a cabinet post and keep her distance from Matignon. So far the document has been signed on to by 86 députés and senior left-wing figures, including the First Vice-president of the National Assembly and the presidents of several parliamentary commissions. At least a couple of dozen more are expected to sign it before Valls presents his new policies to parliament for a vote of confidence next Tuesday.

It begins by declaring that "dialogue with the new government begins now" and goes on to list its demands. Here are those that are directly related to the economy;
[We must] obtain a reorientation of Europe that puts an end to the policies of austerity that have pushed Europe into recession [by establishing] sustainable budgetary trajectories....
[We must] concentrate public means on the real creation of jobs and intensify industrial renewal. For that, we must substitute a national investment pact, negotiated with companies, for the more costly conditions that are without conditions [for business] that are being considered right now in the Pact of Responsibility.
[We demand] measures in favour of low salary earners, fiscal reform and a progressive CSG [a tax that helps finance the Social Security system] and an effort in favour of those on modest retirement benefits.
[We need to] Reaffirm and amplify the choices and engagements undertaken in 2012: beef up efforts to regulate financial and banking activities.
To put that into plain English;

- France should confront the EU (and Germany) and demand that the very budgetary constraints that France helped to create to save the euro should be scrapped in favour of a more laxist approach that would increase national debt, thus risking the ire of the markets, the IMF and the moneylenders.
- France should create tax-funded jobs, thus increasing the tax burden on households in order to create artificial jobs that don't create wealth. Also, business should be forced to contribute to the effort, thus lessening the possibility of them creating real jobs and frightening investors away.
- More public money should be found to help the less well off.
- Hollande should put his "I am the enemy of finance" promise into effect, with stricter demands being placed upon the markets and banks, despite the fact that doing so unilaterally would ensure that France became the international paria of the world of business, lending and investment.

In other words, this document demands that France revert to the very policies that got it into this mess in the first place. Hollande tried them for almost a year until it became clear that doing so risked driving the economy straight over a cliff and pushing the country into a deep recession.

French socialists still seem to be stuck in a timewarp in which believe that business, bosses and the rich are their enemies and that France can tax its way out of debt using their money. Adopting these policies would be akin to committing economic suicide and Hollande and Valls should reject these demands out of hands.

I am reminded of these wise words;

"I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket trying to lift himself up by the handle."- Winston Churchill

Thursday, 3 April 2014

Hollande and Valls create France's first ever de facto Social-Democrat government

Manuel Valls, French Social Democrat
The day after the Socialist's and François Hollande's crushing defeat in the local elections saw not only Hollande but a slew of other government heavyweights insisting that yes yes, "we have heard the message of the French people."

Well, they may have 'heard the message', but Hollande has clearly decided that it's not because he heard it that he should listen to it. That's why he has chosen to continue to implement his highly unpopular policies, which consist of a mix of measures designed to help businesses, tax households and kickstart a decrease in France's record unemployment rate via structural reforms. Going further, he has eliminated a couple of dissenting voices in the ranks of the cabinet and installed Manuel Valls in Matignon. But why Valls?

Hollande's presidential election campaign was highly ambiguous, alternating as it did between promising to reform France's antiquated job market and saying he was the "enemy of finance", or saying he would reduce public spending yet promising job creation based on it being financed by the state. However, after a few initial months trying to borrow his way out of debt whilst continuing to spend he was sharply reprimanded by the EU, investors and the markets. It was at this point that he took the plunge and opted for what is called in France 'the social compromise'. This is the name given to the post war acceptance by the left that the head-to-head ideological class fight against capital was doomed to defeat and that it had become necessary to trade off some of its more hardline values and compromise more with a changing world. In other words, Hollande began to 'do a Tony Blair' and adopt more liberal policies.

Mid-January saw Hollande announcing his 'pact of responsibility', a plan to inject money into the business world and make it easier for companies to hire and fire, and to drive his point home he announced that he was a Social-Democrat in the sense that he was going to "take action to reach a compromise with big business." The announcement was roundly condemned by the left wing of his party and all the other left-wing parties, the press didn't quite know what to make of it all, and the public became even more disillusioned with him than it had been up till then. But the government was rattled by the extent of the revolt, which reached its peak when the local elections came around, hence Hollande's drubbing. Hollande now needed a whipping boy, a sacrifice to feed to the lions of public opinion.

Enter Manuel Valls. He was a natural choice for two reasons. Firstly, he is a stickler for discipline, and party discipline in particular. During Ayrault's time dissention was rife within the cabinet, which sent out conflicting statements on just about everything to the point where the government looked more like a rudderless ship with a rowdy and rebellious crew aboard than anything else. Valls, however, is expected to restore order and impose a more coordinated and disciplined system of communicating with the press and public, whereby unofficial press statements and interviews shall become more sparse and dissention within the ranks sanctioned. Think 'professional', instead of 'amateur', politics.

More importantly however, he has been chosen because he shares Hollande's political and ideological approach. Intensely disliked by left-wingers, he, like Hollande, is a self-proclaimed Social-Democrat whose ideas have often been compared to those of Tony Blair. He will be best remembered at the Interior ministry for continuing to implement policies from the days of Sarkozy that resulted in a no-nonsense policy of deporting Roma and other illegal immigrants as well as failed asylum-seekers.

He is also known to be a critic of the dogmatic left-wing approach to fixing problems that consists of clamouring for more spending as well as tighter controls over the business sector. A pragmatist, Valls considers that the only way out of the economic hole that France is in is to reform its employment legislation, help businesses to create jobs and accept that belts are going to have to be tightened. In other words, he is a 'Hollandist'.

The Hollande-Valls tandem shall probably last until the next presidential elections, three years from now, and between now and then they are to steer the country through a round of spending cuts, debt-paying and structural reform of the economy in general that is designed to get the country back on its feet.

One may agree or not with these policies, but one thing's for sure, Hollande and Valls are no longer representative of a socialist agenda. They are implementing an unabashedly social-democratic agenda. If they fail, the right will sweep back into power like a tsunami, and the Socialist Party will be in opposition yet again after just one term in office.

But if they succeed, they will, ironically, have effectively killed off French Socialism and replaced it with fully-fledged social democracy.