Can Sarkozy Save His Presidency Next Year?

Successes abroad could bolster the French president’s reelection chances in 2012.

After a little cabinet reshuffle last week, French president Nicolas Sarkozy is gearing up to take on the presidency of the G20 for the next year. Since the world’s largest economies failed to agree to balancing trade in Seoul this month, Sarkozy is hoping to push for international financial reform and boost his popularity at home in the process.

Sarkozy is facing tough reelection prospects as the opposition socialists have been on the rise since early this year when they won impressively in a string of local elections. Although the president was quick to abandon laissez-faire economics in the wake of the crisis, his overtures to the left have now come to an end as well. Sarkozy ousted the centrist ministers from his cabinet to replace them with conservative heavyweights including Michèle Alliot-Marie who, in 2007, considered challenging Sarkozy for their party’s presidential nomination. As foreign minister, she may well take the center stage in the coming year when France simultaneously chairs the G8 and the G20.

Sarkozy decided to keep François Fillon as prime minister who is far more popular than the president himself right now. The more conservative character of his new cabinet however along with the implementation of clearly right-wing policies in recent months suggest that the president is more concerned about a possible challenge from the right than one from the left.

Former prime minister Dominique de Villepin announced to run independently this summer and has fiercely criticized Sarkozy’s government for supposedly pursuing populist policies. He alleged on French radio in August that most cabinet ministers at the time were “unhappy and uncomfortable” with the president’s national-security strategy. Another former prime minister and sitting senator, Jean-Pierre Raffarin, expressed similar concern with Sarkozy’s “drift to the right” and what he described as “ridiculous” security policies, including the expulsion of Roma from France.

More recently, the president’s unwavering push for pension reform may have strengthened his image as a solid, law and order, slightly authoritarian leader but it came at the expense of necessary support from moderate voters who are now leaning to the left.

One potential challenger from that direction is Dominique Strauss-Kahn, a socialist party stalwart and currently the head of the International Monetary Fund. He is one reason for Sarkozy to try to keep the IMF out of European bailouts, financial rescue efforts and the rewriting of international finance rules.

Whether Sarkozy will manage to break the gridlock and persuade surplus economies as China and Germany to submit to a rebalancing of world trade as desired by the Americans and other slow growth economies, is difficult to tell. Despite rumors of personal animosity, he has fostered a close working relationship with German chancellor Angela Merkel. Together they have pushed for stricter financial regulation; European treaty reform in order to penalize countries that plunge to deep into the red; and together, they are attempting to draw Russia closer into the European sphere.

Possibly the greatest impediment to any global trade accord remains China’s refusal to appreciate its currency which keeps Chinese exports cheaper than they would be if the yuan were allowed to float. Sarkozy may try to foster consensus between China and the United States on this issue. President Hu Jintao’s visit to Paris earlier this month was undoubtedly designed to test the waters on the Chinese front.

International success will lend the embattled president renewed prestige at home but it can’t solve all of his problems. France maintains a high budget deficit and while Sarkozy’s government has promised to slash almost a hundred billion euros in spending, it has also vowed to avoid unpopular increases in income, corporate and value-added tax rates. Raising the retirement age has been a step in the right direction but France’s pension system needs far more comprehensive reform in order for it to survive financially into the second half of this century. The French economy is showing signs of recovery but unemployment remains high at 10 percent compared to neighboring Germany. Photo-ops with fellow world leaders can’t hide those facts.

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