Clouded vision: Hollande’s last chance

François Hollande loves historic commemorations so much that he’s already made 25 speeches about the two World Wars. As his government collapsed last Monday Hollande couldn’t resist two more ceremonies to mark the 70th anniversary of the liberation of Paris. They were long scheduled, and although the worst crisis of his presidency had just exploded, with three rebel cabinet ministers openly contesting his economic policies, Hollande saw no reason to change his schedule.

His prime minister, Manuel Valls, stayed in Paris to vet outgoing ministers for inclusion in the new government.

In Brittany, Hollande stood in pouring rain, water sluicing down his coat and into his shoes, fogging up his eyeglasses. On a trip to Morocco last year Hollande made a joke of a similar deluge. This time he delivered his speech stoically in the downpour while France wondered why its president doesn't use an umbrella.

Arnaud Montebourg, the mischief-making economy minister with a long history of sniping at higher-ups, had sparked the crisis by criticising Hollande's alleged austerity policies at a fete in Burgundy.

Montebourg, always a ham for the television cameras, brandished a bottle of wine called Cuvée du Redressement. "I'm going to send the president a case of renewal vintage," Montebourg said, laughing, apparently playing on the possible sexual connotation of "redressement".

It’s one thing to have economic policy publicly criticised by the man who is supposed to be responsible for it, quite another to have one’s virility questioned. Hollande and Valls were furious. An aide to Valls said he nonetheless had to persuade “Soft Caramel” (one of Hollande’s nicknames) to dissolve the entire government, which was replaced on Tuesday by a younger, more centrist and more loyal cabinet.

"This really is Hollande's last chance," says the political scientist Pascal Perrineau, of the prestigious Sciences Po university. "No president of the fifth republic has ever been so unpopular, with a 17 per cent approval rating. Protest in the president's own party spread from parliament to the very heart of government, forcing him to react immediately, dramatically, with the government's resignation."

Drama out of a crisis

The crisis might have been resolved by sacking Montebourg. But “the prime minister pushed Hollande to dissolve the government, to dramatise what was at stake

and to show there’d be no more permanent conciliation,” Perrineau says. “Hollande’s character defect is that he tries so hard to reconcile opposites that his policies become incomprehensible. The prime minister wanted things to be clear.”

Hollande and Valls chose Emmanuel Macron, Hollande's 36-year-old economic adviser, to replace Montebourg as minister of the economy. A former banker from Banque Rothschild, Macron is the physical embodiment of Hollande's shift to the right. Where Montebourg advocated "deglobalisation," Macron embraces it.

The socialist party will hold its primary for the 2017 election in two years. Analysts doubt that Hollande’s timid reforms will bear fruit by then. An opinion poll published on Wednesday showed that 75 per cent of the French do not believe the new government can revive the economy.

We may see the same old socialist candidates – Valls, Montebourg, Martine Aubry and Ségolène Royal – slugging it out, sans Hollande, in the autumn of 2016.

This week Valls, not Hollande, was centre stage. Valls went on the evening news to deny that his government practises austerity. Valls received two standing ovations when he told a meeting of the business lobby Medef, “I love business.”

“Hollande knows how unpopular he is,” Perrineau says. “He’s hiding behind Valls to protect himself.”

Hollande "is becoming what he originally was: the leader of a little band of social democrats loyal to Jacques Delors, " says Hervé Algalarrondo, deputy editor of Nouvel Observateur magazine, referring to the former president of the European Commission.

In the early 1990s Hollande led a "current" within the socialist party comprised mostly of graduates from the same "Voltaire" class at the elite École Nationale d'Administration: his longtime partner Ségolène Royal, the secretary general of the Élysée Jean-Pierre Jouyet, his finance minister Michel Sapin and his defence minister Jean-Yves Le Drian.

But Hollande’s “current” won only 3 per cent of the vote at party congresses, where liberal economics were considered a nefarious Anglo-Saxon invention. So Hollande camouflaged himself as a dyed-in-the-wool leftist.

“Finance is my enemy,” he said in a 2012 campaign speech that was written by a friend of Montebourg. One can legitimately wonder if Hollande would have been elected if he hadn’t said it.

When he stood in the 2011 socialist primary Valls won only 5 per cent of the vote. Hollande remained a closet social democrat; Valls was open about his centrist leanings. Aubry, the party’s leader at the time, threatened to expel Valls in 2009 because he suggested the name “socialist” should be dropped from the party’s name.

The socialists hold all the levers of power – majorities in the upper and lower houses, and the offices of the president and prime minister – but they have rarely appeared so weak. “It’s a real civil war in the socialist party,” says Algalarrondo. “Like Sunnis and Shia.”

Portraying a socialist

Socialist rebels complained bitterly this week of betrayal by Hollande and Valls. Le Point magazine published an interview with Macron, the new economics minister, conducted just before his appointment, in which he advocated abandoning the 35-hour working week enacted by Lionel Jospin's government in 2000.

“Being socialist used to mean more theoretical rights for workers,” Macron said. “Reality forces us to reflect on real rights for everyone, including the jobless.”

In the face of an outcry, the prime minister announced that his government will not touch the 35-hour week. It was the first gaffe of the “Valls 2” government.

When Hollande was elected, a high-ranking European diplomat says, "People on the left of the Socialist Party and in Europe hoped he would stand up to Angela Merkel. They thought he was going to lead a bloc with Italy and Spain. Nobody realised how strong Merkel was."

In the present climate of Europewide fear of deflation and disquiet over economic stagnation, Hollande may obtain two of his three desiderata: a weaker euro (which would favour French exports) and more EU investment. Jean-Claude Juncker, the president-elect of the European Commission, wants to invest €300 billion in new infrastructures.

But the third wish, the one so fervently desired by Montebourg and his followers, for a relaxation of rules on deficit spending, is unlikely to happen. France has already received a two-year extension, until 2015, for compliance. “Nobody is arguing that countries who are highly indebted should be let off the hook,” he says.

The Italian prime minister, Matteo Renzi, “argues that countries who are making reforms should be given more time and room”, the diplomat continues. “The counterargument from the Dutch and Germans is that France keeps promising big reforms but they never happen.”

The new rhetoric from the Hollande administration sounds great, the diplomat says. “They talk, talk and talk, but we other Europeans want to see results. Hollande’s new line may be social democratic and social liberal by French standards, but cutting €50 billion over three years falls far short of what is needed. It’s farcical. Only within the Socialist Party does it appear radical.”