French President Outlines Controversial Plans for Second Half of Mandate

In the past two days (22-23 June), French President Nicolas Sarkozy has presented plans to boost popular support for the government as he embarks on the second half of his mandate. Sarkozy made use of the new constitution to break with the past and address the French parliament, the first president of the republic to do so in over 100 years. The changes he announced and started implementing yesterday have turned heads. The measures aim to boost support for the remainder of his and the centre-right government's mandate until 2012, and focus on boosting economic growth and speeding up administrative reform.

Continuing Forwards

Sarkozy's plans show his determination to tackle the challenges that lie ahead over the next three years. The economic downturn may have curbed his leeway to implement popular projects but he was careful not too sound defeatist. In his speech on Tuesday (22 June), Sarkozy touched on a number of inter-related topics, which can be split into two big categories: administrative reform and the economy.

Regarding the former, Sarkozy called yet again for a trimming of the number of elected politicians at the regional and local level. Sarkozy pledged to eradicate waste of public funds and urged deputies and senators to reassess their expenditure. The president made a popular but slightly controversial statement, claiming that the high budget deficit has been caused by unnecessary expenditure by state officials and elected politicians and excessive bureaucracy with its "too high running costs". He further pledged continued support for an increase in the level of autonomy in the overseas departments, which he will visit on 25-28 June.

As regards the economy, Sarkozy proposed that each dismissed employee should retain his/her salary and obtain suitable training for a year. The government will present its pensions reform plans in mid-2010; the president pledged to consider all proposals made by the social partners carefully, and to further discuss means of boosting the funds for social security transfer payments. Furthermore, the government will present three top priorities for investment in the French public sector in the coming years; the discussions will start on 1 July and will bring together representatives of the private sector, parliamentarians, and social partners. Sarkozy further stressed the government's continued support for environmentally friendly policies and his determination to push through the controversial Hadopi law on Internet piracy.

Cabinet Reshuffled

Yesterday evening also saw the third cabinet reshuffle in two years (see France: 19 January 2009: French Government Undergoes Minor Reshuffle Ahead of Difficult Year). The changes are significant at the periphery but the centre is almost untouched. Eight new members are joining the cabinet as the number of ministers rises from 16 to 18. Most of these are from the ruling, centre-right Union for a Popular Movement (UMP). Four ministers are leaving, causing a major shock in the cabinet. Controversially, Sarkozy and Prime Minister François Fillon are welcoming a member of the government-friendly centrist opposition party MoDem to the cabinet in the form of Michel Mercier, previously a senator. The outspoken and popular secretary of state for human rights affairs, Rama Yade, is changing portfolio and becomes the new secretary of state on sports. The minister for cultural affairs, Christine Albanel, is being replaced by Frédéric Mitterrand, a novelist and film producer whose uncle was former centre-left president François Mitterrand. Rachida Dati, who reluctantly but successfully stood in the June 2009 European Parliament elections, will be replaced by a veteran in the cabinet, the previous minister for the interior, Michèle Alliot-Marie. Brice Hortefeux, the previous minister of labour affairs and a close friend of Sarkzoy, will become the new minister of the interior. Hortefeux's post is being taken over by Xavier Darcos, the previous minister for education. Darco's post is going to Luc Chatel, the previous secretary of state on industry and consumer affairs. Chatel retains his post as government spokesperson though. The new secretary of state for the industry is Christian Estrosi, previously the mayor of the southern town of Nice.

Outlook and Implications

Three years may seem like a long time, yet Sarkozy will have hardly any breathing space during this period. The bulk of the remainder of his mandate will be taken up with attempts to resolve the sharp economic downturn. This should take the wind out of the sails of the vociferous trade unions, and sting the main opposition party, the Socialist Party (PS). Public perception will count for a great deal in the run-up to the polls in 2012; government opponents will try to whip up anti-government sentiment with references to the economic and financial market crises, the bank bailouts, and high unemployment rates. The government will look to avoid mass protests such as those that occurred in early 2009 at any cost.

The French government now expects the fiscal shortfall to stand above 7% of GDP in both 2009 and 2010; however, Sarkozy has ruled out increases in taxes or cuts in expenditure, even asserting that he will not follow austerity policies because "austerity policies have always failed in the past". Sarkozy's reluctance to admit that the public deficit will have to be brought down is expected to create friction with Germany and with the European Central Bank (ECB). The European Commission has launched an excessive deficit procedure against France, urging it to bring the deficit below 3% of GDP by 2012. However, IHS Global Insight cannot see how this can be achieved without tightening fiscal policy sharply.

Both Sarkozy and the government have lost their initial sparkle and appeal as non-conformists and inclusive decision-makers. Back in 2007, Sarkozy was often described as the king of purchasing power, a thought-provoking, straight-talking, and very proactive president who was more approachable than his seemingly elitist predecessor, Jacques Chirac. Although he remains the frank and thought-provoking politician many French people voted for, he has lost his title as king of purchasing power and also seems less approachable, with widely reported—albeit perfectly usual—links to media moguls and successful businesspeople. The cabinet reshuffle sees the two symbols of ethnic representation, Rachida Dati and Rama Yade, effectively demoted, and may mark the end of Sarkozy's attempts to display his meritocratic, inclusive, and non-conformist approach to policy-making. However, the inclusion of members of opposition parties in the cabinet shows that he has retained his pragmatism.