Who saw the crash coming? Well, careful readers of the FT would have recieved some warning. I refer not to the work of Gillian Tett or Martin Wolf - although both can claim some credit - but to this short story by Julian Gough, an Irish novelist based, which was published in the FT.  Gough’s account of the inflation of goat-prices in Somalia and their impact on the global economy now seems eerily like an allegorical warning of what was to befall us.

Mr Gough has now been rewarded - either for his literary flair or his economic insights - by having his story dramatised on BBC Radio 4. If you hurry, you can listen to it here - before they take the link down next Friday. The Hollywood movie goes into production next year, although the part of the goat is yet to be cast.

Until I arrived in Paris I was under the impression that Nicolas Sarkozy was experiencing something of a renaissance. The French presidency of the EU was generally felt to have gone well. Sarkozy is one of the few political figures in Europe who still radiates a sense of energy and purpose.

But it is not doing him much good in the opinion polls. The papers here report that the bounce he achieved in the second half of last year has now dwindled away and Sarko is now back down to approval levels of between 36% and 44% (according to which poll you choose) - and has fallen between 4% and 9% in just a month. He is back down to the (dis)approval ratings he was achieving during his bling period in the spring of last year. The main explanation for the fall in his popularity is pretty simple - the economy.

Sarkozy’s position at the G20 will be important. He has a good relationship with Gordon Brown and a famously frosty relationship with Angela Merkel. But the French position on international economic governance is actually closer to that of the Germans than the Brits. The French and Germans are keen on much tougher regulation of global finance, and think the Brits are still primarily concerned with warding off “over-regulation” of the City. And the French are also grumbling about the huge devaluation of the pound against the euro - and anxious about the impact this will have on French industry.

It has been fun talking about all this with French journalist friends. But like journalists everywhere, I find that first first and foremost they are pre-occupied by the sorry state of the press. Le Figaro is looking really thin and even Le Monde is under huge pressure. I was surprised to be told that Le Monde now has only one full-time reporter covering the EU in Brussels (plus another who does Belgium and Nato.) Just three years ago, they had a four-person Brussels bureau. These days even the French can’t afford to cover the EU properly.

What a fantastic Florida-like mess in the French Socialist Party. Martine Aubry - Jacques Delors’s daughter - claims to have won the leadership of the party, beating Segolene Royal by 42 votes out of more than 134,000 cast. Royal is demanding a recount and has accused Aubry of issuing an auto-proclamation to claim the leadership - a word redolent of Latin American coups.

Francois Hollande, the party’s outgoing leader, must have rather complicated feelings as he tries to sort all this out - he is, after all, Segolene’s estranged ex-husband. Meanwhile President Sarkozy is gloating openly, announcing grandly that - “Nothing unites the Socialist Party leaders except an astonishingly violent hatred.” It’s a great line. But he has a certain cheek, given that his own erstwhile rival - Dominique de Villepin - is now going to face trial for his alleged role in efforts to blacken Sarko’s name. What is the French for chutzpah?

The wrangles in the Socialist Party promise to be a great spectacle - even if the party’s chances of returning to power anytime soon look pretty slim. It reminds me of that old joke that academic politics is espescially vicious “because the stakes are so low”.

Thank you to Nicolas Sarkozy for providing such a dramatic and timely re-enforcement of my Tuesday column (see below). No sooner had I subtly insinuated that he was going crazy, then he took to the stage at the European Parliament and gave a speech calling for the creation of a European sovereign wealth fund. Its mission - it seems - would be to buy up strategic chunks of European industry.

The global financial crisis seems to have liberated Sarkozy to give public voice to the kind of stuff that French politicians normally save for late-night drinking sessions - capitalism needs taming, the Americans are crazy, we can’t have the Asians buying up our businesses, why can’t the state subsidise more big industrial projects…etc, etc. It’s all coming out.

So let me point to a few obvious objections to this sovereign wealth fund proposal. First, these kinds of funds are generally set up by petro-states that are rolling in cash - Abu Dhabi, Russia, Norway etc. I haven’t noticed that the public coffers of the European Union are overflowing with funds that we simply don’t know what to do with.

Second, one of the things about SWFs is that most of them, have generally made sensible investments, for non-political purposes. Sarkozy seems to have something entirely different in mind: a fund that would be used to fend off unwelcome foreign investors, like that outrageous suggestion that Pepsico might buy Danone. Again, this seems a slightly dated concern. Give it a few months and we’ll be screaming for foreign investment.

Finally, small European states will rightly fear that any investments by an EU fund will be directed towards those nations with the most political muscle. And that is a recipe for a breakdown in the European single market - which is absolutely the last thing we need, in response to a recession.

“Europe wants the summit before the end of the year. Europe wants it. Europe demands it. Europe will get it.” So said Nicolas Sarkozy – president of France, and (until January) of the European Union – before jetting off to Washington over the weekend. There he persuaded President George W. Bush to agree to an international summit dedicated, says Mr Sarkozy, to nothing less than “re-founding the capitalist system”.

This trip to Washington was like a French fantasy come true: a successful attempt to push the US president into discussing global governance and the taming of capitalism. Now that visions of collapsing banks and soup kitchens are receding, the Europeans are enjoying the global financial crisis.

Mr Sarkozy’s energetic confidence has been bolstered by the conventional wisdom that Europe has had a good crisis. After a period of disorder, EU leaders pulled things together and came up with a plan that rescued the banks and restored a modicum of confidence.

Continue reading “Super-Sarko’s plans for the world“. Please post comments below.

The constitutional reforms pushed through by President Sarkozy yesterday are impressive for two reasons.

First, he got it done.

Second, despite the fact that he is regularly portrayed as a megalomaniac, Sarko is deliberately pushing through reforms that actually weaken the power of the presidency.

Of course, there is some dispute about this. The Socialist deputies highlighted the fact that the president will now be able to address parliament to suggest that some sort of cult of personality is being built up. But I thought this interview in Le Monde with Guy Carcassone, a law professor was pretty convincing. The prof argues that the main effects of the refroms are to strengthen parliament and that this is not “a constitutionalisation of Sarkozyism.” He also highlights another improvement. In future, proposals for new laws will have to be accompanied by an impact assessment.

The appointment of Bernard Kouchner as French foreign minister was both brilliant and bizarre. It was brilliant because in bringing Kouchner on board, President Sarkozy managed to co-opt one of the stars of the Socialist Party and one of the most popular men in France. Kouchner is revered because he founded Medecins Sans Frontieres. And also – perhaps – because he is articulate, good-looking and married to a TV star.

But choosing Kouchner was also a bit bizarre because he was one of the few high-profile French public figures to have supported the invasion of Iraq - albeit slightly equivocally and on humanitarian grounds. Given that France led the opposition to the Iraq war and - as Sarkozy himself has pointed out - was vindicated by subsequent events, appointing somebody who made the wrong call seemed odd.

But the experience of Iraq does not seem to have chastened Kouchner. This week he has made the headlines, by saying of Iran - "We have to prepare for the worst and the worst is war." This goes beyond even what George W. Bush has said. His preferred formula is that – “All options are on the table”.

Continue reading "Bellicose Bernard Kouchner"

Tony Blair thinks that the British media are too frenzied and aggressive (see yesterday’s post). But are the French media too passive and respectful of authority?

The question is raised by the current controversy over whether Nicolas Sarkozy was drunk at a press conference at the G8 summit. The suggestion was first made by a Belgian television newscaster and the accompanying video is certainly amusing and suggestive. But no French television station broadcast the footage. And the main French papers also ignored the story, until the Belgian TV newsreader was forced to apologise - a fact which was then dutifully reported in France.

Continue reading "Sarkozy slur"