Hollande Signals Pro-Business Policy with Economy Appointment

Barack Obama Angela Merkel
Enrico Letta, François Hollande, Barack Obama and Angela Merkel, the leaders of Italy, France, America and Germany, talk on the sidelines of the G20 summit in Saint Petersburg, Russia, September 5, 2013 (Bundesregierung)

French president François Hollande has appointed the former banker Emmanuel Macron as his economy minister.

The move suggests the leftist is serious about reducing France’s high deficit and unemployment rate, moving his party in a more centrist direction in the process. Read more “Hollande Signals Pro-Business Policy with Economy Appointment”

Greens Leave Government After Hollande Names Centrist Premier

French interior minister Manuel Valls delivers a speech, November 9, 2010
French interior minister Manuel Valls delivers a speech, November 9, 2010 (Parti socialiste/Philippe Grangeaud)

France’s Greens broke away from President François Hollande’s coalition on Tuesday after the president appointed the relatively centrist interior minister Manuel Valls as prime minister.

Valls replaces Jean-Marc Ayrault after the Socialists were defeated in local elections on Sunday. The party lost more than 150 big towns to the right and the far right. Read more “Greens Leave Government After Hollande Names Centrist Premier”

French Businesses, Unions Skeptical of Hollande’s Promises

François Hollande
French president François Hollande answers questions from reporters outside the Elysée Palace in Paris, April 13, 2013 (Valsts Kanceleja)

Employers’ organizations and trade unions are skeptical of the reform pledges French president François Hollande made on Tuesday. The former are underwhelmed by the lack of detail while the latter fear job losses. Read more “French Businesses, Unions Skeptical of Hollande’s Promises”

France’s Hollande Laments High Labor Costs But Unlikely to Act

French president François Hollande has recognized that his country should cut labor costs to bring down unemployment, but his leftist government is unlikely to enact comprehensive reforms.

Many in the ruling Socialist Party are wary of reducing social contributions for employers or increasing work hours, which they feel would erode the French social model. Read more “France’s Hollande Laments High Labor Costs But Unlikely to Act”

France’s Hollande Vows to “Punish” Perpetrators of Syrian Gas Attack

François Hollande
French president François Hollande answers questions from reporters outside the Elysée Palace in Paris, April 13 (Valsts Kanceleja)

President François Hollande has said France is ready to punish those responsible for a suspected chemical attack in Syria last week, invoking the world’s “responsibility to protect” civilians in the country where tens of thousands have died since a civil war broke out more than two years ago.

Like American and British leaders, Hollande said he was certain a nerve agent had been deployed by forces loyal to Syria’s president, Bashar Assad.

Opposition activists have accused the regime of gassing hundreds of civilians in a suburb of the capital Damascus, prompting France’s foreign minister, Laurent Fabius, to call on the world to respond with “force.”

Hollande also reminded an annual convention of French diplomats in Paris that his country had been the first to recognize Syria’s opposition as the legitimate representatives of its people and he vowed to expand French support for the rebels who are battling Assad’s government. Read more “France’s Hollande Vows to “Punish” Perpetrators of Syrian Gas Attack”

France’s Hollande Unlikely to Reform Pensions

French president François Hollande answers questions from reporters outside the Elysée Palace in Paris, April 13
French president François Hollande answers questions from reporters outside the Elysée Palace in Paris, April 13 (Valsts Kanceleja)

French president François Hollande is unlikely to pull off a comprehensive overhaul of his nation’s pension system even as it faces a €14 billion shortfall this year.

Reuters reports that in spite of calls to reform from the European Commission and other European Union member states, Hollande’s own lawmakers “are determined to prevent any erosion in the old age provision enjoyed by the French.”

The European Commission in May urged France to initiate pension reforms by raising the retirement age. Hollande, who partially rolled back a retirement age increase enacted by his conservative predecessor, responded, saying the commission didn’t “dictate” policy. “It’s up to us and us alone to decide what path to take to obtain the objective,” he said.

Although average French pensions are lower than in many other industrialized nations, they are paid almost entirely by the state. Public pension spending accounts for 14.4 percent of annual French economic output compared to 12.9 percent in the rest of the European Union.

Since the end of the Second War War, French social security spending has nearly tripled. Altogether, it now accounts for a third of gross domestic product, more than in any Western country.

The pension fund’s deficit is projected to increase by €6 billion by 2020.

Hollande has warned the French that they might “have to work a bit longer” but rather than proposing changes of his own, his government has drawn in employers’ organizations and trade unions to negotiate a deal. “The merit of his consensus approach is that it avoids confrontation,” The Economist wrote last month. “But the downside is that all steps forward have to be balanced by concessions, so the overall result tends to be a soft fudge.”

A government panel has advised making wealthy pensioners pay more tax and extending the mandatory pension contribution period to 44 years — which would push up the retirement age for those that started working late, for instance after they finished a college degree, while allowing others to still retire in their early sixties. Labor unions, which usually support Hollande’s Socialist Party in elections, might get that number down or negotiate a longer period through which a rise is implemented, however.

The Economist pointed out that Hollande’s cautious approach is partly due to his low approval rating. No previous postwar French president was so unpopular one year into office. Hollande can ill afford to jeopardize his thin parliamentary majority by proposing bold entitlement reforms that would inevitably be rejected by the far left, even when a majority of French voters could welcome them.

An Ipsos poll in May found 61 percent supporting a rise in the retirement age while a BVA survey last month found 75 percent of respondents favoring public-sector pensions being brought in line with those in the private sector.

Many civil servants, such as bus and metro workers, can retire in their early fifties, a source of much grievance in a country where one in five is employed by the government. Yet here, too, the president is unlikely to act. Reform, The Economist wrote, “would touch the backbone of Mr Hollande’s public-sector electorate, particularly the nearly one million teachers.”

Hollande, Rajoy Claim French, Spanish Economies Recovering

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Evening falls in the Montmartre district of Paris, France (Unsplash/John Towner)

The leaders of France and Spain believe their economies are close to recovery even though they have shown meager growth recently, if any.

In a television interview on Sunday, President François Hollande promised that the second half of 2013 “will be better than the first.” He cautioned Frenchmen against pessimism. “We must not succumb to self-criticism,” he said.

Spain’s prime minister, Mariano Rajoy, similarly insisted in a speech last week, “Our economy has turned the corner and we are at the start of a change in trends that will allow us, with effort, to create jobs again.”

Spanish officials are hopeful that growth will return in the third quarter of this year instead of the fourth, as many analysts expect.

However, neither European country looks set for a recovery. Read more “Hollande, Rajoy Claim French, Spanish Economies Recovering”

France’s Hollande Lambastes Austerity, Germans Shrug

French president François Hollande answers questions from reporters outside the Elysée Palace in Paris, April 13
French president François Hollande answers questions from reporters outside the Elysée Palace in Paris, April 13 (Valsts Kanceleja)

The German response to French president François Hollande’s reinvigorated campaign against austerity in Europe has been underwhelming. Commentators in the only major eurozone economy that posted modest growth in the first three months of this year recognize that the Socialist Party leader’s rhetoric is mainly aimed at his own base.

Both the conservative Die Welt and liberal Frankfurter Allgemeine newspapers believe that Hollande uses Germany as a “bogeyman” or “punching bag” to shield himself from left-wing criticism.

While the French president refuses to describe his administration’s budget policy as “austerity,” it is aimed at fiscal consolidation, however slowly. Far leftists, including Hollande’s own industry minister, Arnaud Montebourg, would rather the government borrowed more to finance stimulus spending. “What is the point of fiscal consolidation if the economy goes to the dogs?” he wondered during an interview with Le Monde last month.

Hollande similarly blamed austerity during a news conference in Paris on Thursday for pushing European economies into recession yet maintained that budgetary “rigor” — largely tax increases in his country — is needed to keep investors’ confidence and therefore French borrowing rates low.

Die Welt‘s Sascha Lehnartz suspects that by positioning himself as a “fighter against the menace of Merkel’s diktats,” referring to the German chancellor who is seen as Europe’s main champion of austerity, Hollande “gains leeway at home that he can use to enact unpopular reforms” in the labor market and pension system.

The French leader must recognize that his counterparts in the wealthier north of Europe are unlikely to accept economic governance in the eurozone, the pooling of national debts or more European investment to combat youth unemployment, initiatives he called for on Thursday, when such proposals would effectively entail the permanent subsidizing of weaker states in the Mediterranean. But by campaigning for them nevertheless, he proves his left-wing credentials and can implement economic and fiscal policies that his own party would otherwise consider too right wing.

Although not all of Hollande’s party is so critical of German policy. The Frankfurter Allgemeine‘s Christian Schubert points out that for moderate Socialists, Germany actually “serves as an example in the effort to become more competitive.”

It was the Social Democrat chancellor Gerhard Schröder who enacted labor market reforms in the last decade that allowed Germany to remain a strong exporting economy. Manufacturing in France, by contrast, is declining. Hourly labor costs there, at €34, far exceed the European average of €23. France’s 34.4 percent corporate tax is more than twice as high as Germany’s 15.8 percent rate while investment income is set to be taxed at the same rate as regular income, further discouraging private-sector investment.

Labor market reforms enacted by the French parliament on Tuesday only slightly eased rigid job protection rules. Further liberalization is needed to persuade businesses to raise hiring. Hollande also seeks another increase in the pension age while he campaigned last year to bring it down to sixty after conservatives had raised it to 62.

France Won’t Pull Troops Out of Mali Before Year’s End

President François Hollande said on Friday that French forces in Mali will be drawn down to 1,000 by the end of the year. 4,000 French troops are currently deployed in the West African country to suppress an Islamist insurgency there.

In a television interview, the French leader said troop levels will be cut in half by July when presidential and parliamentary elections are scheduled to take place in Mali. He insisted that there was no preference for any candidate in Paris. “The days when France chose Africa’s heads of state for it are over.”

Hollande previously insisted that his soldiers would stay in Mali until sovereignty was restored. “There is still a whole part of the north that remains unconquered,” he said during a visit in February. Militants have sought refuge there since they were driven out of the cities and major towns in the center part of the country by French and Malian forces early this year. Read more “France Won’t Pull Troops Out of Mali Before Year’s End”

France to Stay in Mali Until “Sovereignty Restored”

French forces will remain in Mali until sovereignty is restored in the country and neighboring West African troops are able to take over the counterinsurgency effort, President François Hollande said on Saturday.

The French leader, who visited the Malian capital Bamako as well as the northern city of Timbuktu, which was conquered on the northern rebels less than a week before, said, “We have not yet finished our mission. But we do not foresee staying indefinitely.”

France’s foreign minister Laurent Fabius had said on Wednesday that the country would pull its troops out of Mali “quickly” after the Islamist insurgents had been driven out of the cities and main towns in the central and northern parts of the country.

Hollande cautioned on Saturday that while French and Malian soldiers had inflicted “heavy losses” on the rebels, the uprising wasn’t eliminated altogether. “There is still a whole part of the north that remains unconquered,” he said. Read more “France to Stay in Mali Until “Sovereignty Restored””