By Jacques Sapir
The French government has just been forced into two setbacks – on the retroactive tax on savings accounts and the environmental tax. These two measures have crystallized a latent discontent, and the retreat on the environmental tax is particularly symbolic. This is all happening in seriously depleted political conditions. But the decision to postpone the Ecotax does not change the problems of Brittany.
It is clear that the Euro, but also the various European regulations, are ruining the economy of the region and France in general. We see the problems of slaughterhouses, companies like Doux and Gad. And now the Tilly- Sabco Guerlesquin (Finistère) factory. Production is set to stop in January 2014. This company is currently Europe’s number two chicken farmer, so this is an important business. Exports account for 90 % of production. But with a strong Euro, competition from emerging countries and the removal of European aid, the company has accumulated losses, which forced the announcement of the suspension of activity.
The reasons for Hollande’s retreat
There are many reasons for Hollande’s retreat. The first is political. Never has Hollande’s popularity been so low. Indeed, the collapse in support is unprecedented in the Fifth Republic. The social movement brewing in Brittany threatens to spread, and could lead to a flashover.
The unpopularity of the President, and the government, drastically limits his room for manoeuvre. Faced with opposition movements, even if they are not particularly virulent, Hollande will be left with no alternative but to retreat. His recent decisions over taxation, in Bretagne and elsewhere, send a signal to all lobbyists. And the “firmness” he demonstrated on October 31 with respect to the leaders of French football clubs won’t do anything to change this perception of him.
To this obviously political reason, we must add economic reasons. It has been said before, the root cause of stagnation in Brittany, and indeed the whole of France, has a name: the Euro. But as we celebrate the twentieth anniversary of the Treaty of Maastricht (1993), there can be no question of a politician accustomed to compromise like Francois Hollande to challenge what he thinks is a founding treaty.
It was argued that the Economic and Monetary Union, or the eurozone, would lead, by its mere existence, to 1-1.5% additional growth. In reality quite the opposite has happened. The Euro kicked off the economic destruction of Europe, except Germany. The Euro forces on participating countries unbearable constraints due to the presence of Germany in the Single Currency. The spirit of the Treaty of Maastricht is at stake, not just the conditions of its application.
Even if the Treaty had been implemented better, if it had progressed towards a social and fiscal Europe as quickly as we advanced towards Economic and Monetary Union, the differences in competitiveness would come to the fore because of the different structures of the countries concerned. The Euro imposes a single currency for countries whose economies are structurally different, and this is the cause of all evil.
However, if he wants to keep the power to decide and govern, if he wants to be something other than a straw in a terrible storm, Hollande should understand the miseries that overwhelm France. Economic and Monetary Union has brought only misery in France and Southern Europe. Just look at the unemployment figures for the month of September:
Greece : 27.6 % unemployment with 57.3 % unemployment among young people under 25s.
Spain : 26.6 % unemployment with 56.5 % unemployment among young people under 25s.
Cyprus: 17.1% with 43.9% unemployment among young people under 25s.
Portugal: 16.3% with 36.9% unemployment among young people under 25s.
Italy: 12.5% with 40.4% unemployment among young people under 25s
Ending EMU, that is to say, the Eurozone, returning to those countries, and France above all, monetary sovereignty, would allow them to resume strong growth, which they desperately need. However, it is doubtful that the French President is ready for such a change in policy, even if reason should dictate otherwise.
François Hollande up against the wall
Hollande is now up against the wall, and the government of Jean -Marc Ayrault is at an end. It exhausted itself too suddenly and too fast. He faces paralysis with three and a half years to go as President. Four possibilities are thus opened up.
The first, which is closest to the natural approach of our President, is doing nothing , and try to maintain, against all odds, this government and a political line which has been permanently discredited. This would leave France with three and a half years of stagnation. It is not clear that France can afford this and inaction could lead to social explosions of unexpected violence. An alternative would be a reshuffle at the margins, changing nothing of the main features of the (non) government.
The second possibility is a cabinet reshuffle making Manuel Valls, the Interior Minister, Prime Minister. Hollande would seek to capitalize on the current popularity of Valls. But in doing so, he takes the risk of burning him up prematurely. Moreover, the choice of Manuel Valls is consistent only if accompanied by an opening to the centre-right. But the political centre in France is like the legendary “Bermuda Triangle”: just as you reach it, it disappears. This government could pull a Valls illusion trick for a period of 6 months to a year, but afterwards France would be in a worse state than today. A Valls government would be a red rag to the Left Front and the Socialist Left party, while at the same time, any extra strength from centrists would probably be insufficient. The country would go from social crises to political crises, leading to a probable dissolution of the Assembly within a year.
A third option would be a government of technocrats, who would be apparently apolitical, but in reality completely subservient to Brussels and the European Union, and with the objective of a federal Europe. Such a solution would be so abhorrent to the majority of French it would face immediate resistance that would certainly be massive (as in the Brittany case) and probably violent. Far from being a guarantee of political calm it would be accompanied by an escalation of the challenge to the Government. This option would not be a solution, either economically-speaking (because it would be illegitimate) or politically speaking (because it would provoke the nation to rise against it).
There is a fourth possibility: the call to a man whose prestige and position would guarantee a break in current economic policy without breaking with the democratic and Republican framework. A man with the beliefs and skills to carry out “another policy” to which a growing number of French people now aspire. Those who know the French political scene recognize this man: it is Chevènement. He would have the authority and legitimacy to pursue this new course – he has become the apostle and herald for it for many years now – without a dramatic break in the current legal framework.
Russeurope November 1, 2013
Translation/edit by Revolting Europe