May 9, 2007
Why Sarkozy’s triumph portends strife in Europe
What does the election of Nicolas Sarkozy mean for France, the European Union and the world? The answer will depend on whether what now emerges is a European France, a French Europe or a France set against Europe. Any of these three outcomes is possible. Only the first would be desirable. Which it will be depends on Mr Sarkozy’s true identity. Will he be an economic liberal or a populist interventionist? It is probable that he will turn out to be a mixture of the two. If so, his arrival is likely to deliver the last of the three alternatives: France against Europe.
The French agree on few things. But on one thing, they have close to a national consensus: free markets and free trade are a diabolical Anglo-Saxon plot. In a thought-provoking book on the challenge for French policymakers, Georges de Ménil, himself an American-trained liberal economist, ascribes this hostility to the legacies of Catholicism, Cartesian rationalism, revolutionary utopianism, nationalism and the dominance of the state*.
For a modern politician of the right, such as Mr Sarkozy, it is the last two elements that are most important.
The remainder of Martin Wolf’s column can be read here (FT.com subscription required). Discussion from our guest economists is free.
Charles Wyplosz: I largely agree with Martin. Sarkozy has come out from the presidential election campaign as a mixture of internal pro-market reformist and external protectionist. He has shown some interest for solving Europe’s problem with the failed Constitution but has also used Europe as a convenient scapegoat to project the image of a man who cares for those who suffer from external competition, ready to battle against the Commission, the ECB and WTO.
There is no doubt that Sarkozy intuitively understands the benefits of competition in free markets. This makes him the first post-war French president determined to free the French economy from the grip of the countless interest groups that have been enormously successful for decades. These interest groups include trade unions, the upper echelons of the administration, retailers, banks, and many more. At the same time, Sarkozy knows that free competition is seldom observed in a modern economy. He understands how large industrial groups operate in a world of monopolistic competition, often using government support to achieve their aims. To him Anglo-Saxon free markets include Bush’s defence of the oil industry and protection of US farmers or the British government refusal to talk of arms sales to Saudi Arabia. In other words, he is no star-gazing free-marketer.
How will he balance these no-nonsense views? As Martin argues, it is a fair bet that he will combine internal reforms with external protectionism, using the latter to gain public opinion support to press the former. Obviously, this will mean France against Europe. But real life is not black and white. Over the last decade, a declining France has withdrawn itself from European integration efforts, as the rejection of the Constitution well illustrates. This is not good for Europe. If France is deeply reformed, unemployment will be rolled back. It may be difficult to imagine how mass unemployment is sapping all aspects of life in France. Worried about their children’s future, parents yearn for protection from what they perceive as hostile forces; this includes globalization and the emergence of a dynamic new Europe. With half of them unemployed and unemployable, the young living in the suburbs – most of them from immigrant families – feel estranged and, not entirely wrongly, see themselves as victims of racism. Those with insecure jobs only wish to become insiders and the long-term unemployed have been asking for Christmas bonuses, and obtained them. The bloated civil service is viewed as the ultimate protection. Competition is seen as a threat, not an opportunity.
Changing all of that is what Sarkozy wants to do. If he succeeds, France will emerge self-confident and willing to take risks, including in European affairs. In the long run, the success of French reforms will benefit Europe. The hard part is in-between. There will be difficult, possibly ugly moments. Sure it would be better to have a real free-market man in the Elysée Palace but, at least in comparison with previous inhabitants and potential would-be presidents, the new one is the best that France can get. After all, nobody’s perfect.
Posted by: Charles Wyplosz | May 13th, 2007 at 8:50 pm | Report this commentMartin Wolf: Charles is surely right: Mr Sarkozy was better than his rival. At least he recognises that something has to change. I agree, too, that a French liberal was not on offer.
I hope Mr Sarkozy will reform France without wrecking Europe. But his strong restatement of traditional French agricultural protectionism has me worried, as does his repetition of his belief in the EU’s obligation to protect its citizens against the forces of globalisation.
It is going to be an exciting ride. Let’s hope it reaches a sensible destination, whatever the detours along the way.
Posted by: Martin Wolf | May 24th, 2007 at 4:02 pm | Report this comment