- On the Brink: The Trouble with France by Jonathan Fenby
Little, Brown, 464 pp, £18.99, August 1998, ISBN 0 316 64665 2
There is a general impression, both inside the country and abroad, that France is floundering in the face of its many political, social and economic problems – which is why winning the World Cup was held to be so important. Jonathan Fenby’s fine book, On the Brink: The Trouble with France, explores the multi-faceted nature of this crisis, from the decline of the baguette to widespread political corruption.
Many British observers (though not Fenby) derive a certain amount of pleasure from the mess France seems to be in: the country’s supposed decline appears to confirm the wisdom of the policy choices made in London. While we privatised, so the story goes, the French naively maintained the state’s role in the economy. We broke our unions while they repeatedly cave in to theirs. We deregulated and gleefully espoused the economic philosophy of the New Right; they insisted on the need for a ‘European social model’ and generous welfare payments. We chose the US: they chose Europe, and preserved a highly irritating anti-Americanism. Many commentators in Britain and, increasingly, in France, have compared France’s political leadership unfavourably with New Labour and its self-congratulatory commitment to ‘modernisation’ and a broadly neoliberal economic programme. According to such analyses, the French, in order to sort themselves out, simply need to become more like us. The bicycle ‘race’ in Amsterdam last year after the EU summit, in which Lionel Jospin laboured behind a triumphant Tony Blair, symbolised the political reality.
It is, however, easy to exaggerate the degree to which France represents an alternative ‘model’ to that espoused in Britain. While privatisation has not progressed nearly as far there, the French state has, nevertheless, retreated. During Chirac’s premiership between 1986 and 1988, privatisations took place at a faster rate than at any stage in Britain. Despite promises by the left-wing Jospin Government, and the presence of a staunchly anti-privatisation Communist transport minister, a limited privatisation of Air France was announced in February this year. Although the French have long been, and still are, more sensitive to foreign ownership of key elements of their economy than the British, General Motors recently took control of the company which owns the Eiffel Tower, while despite regular outbursts by the political élite against the effects of American ‘hegemony’, fast-food outlets are the most rapidly growing sector of the Paris economy, putting many traditional cafés out of business. A cursory glance at the outskirts of any provincial French town illustrates the extent of this Americanisation. When I visited Poitiers recently I was struck less by the cathedral than by the hideous grills and burger bars that line the roads on the outskirts. Despite the aggressive rhetoric distancing Paris from Washington and the refusal, since 1966, to participate fully in Nato, France has always maintained tight military links with its Western allies. Here again, France isn’t as different as it might seem.
Nor has its recent economic performance been as poor as proponents of the crisis idea have suggested. With a population approximately the same size as Britain’s, France has an annual economic turnover of about a third more. Inflation is down and falling. Not only has the country had a regular trade surplus in the Nineties, but this hit a record figure – 231 billion francs – in 1997. All this despite a strong franc which, unlike the pound, did not depreciate following the spectacular implosion of the ERM some six years ago. (Britain has had a persistent trade deficit despite its massive de facto devaluation in 1992.) Nor has France suffered from the impact of globalisation and international capital mobility as many predicted it would. When, in the early Nineties, Hoover decided to move its headquarters from France, citing high social security contributions as its reason, this act of ‘social dumping’ spawned widespread fears that companies would move out of France in search of cheaper labour. Yet France is the world’s fourth largest recipient of foreign direct investment. In 1994, its multinationals were the third most prominent – after the Americans and the Japanese – in a list of the top 100 non-financial firms. Commentators in this country point eagerly to French unemployment figures as proof of its economic decline. Yet even here, there is room for caution, given the misleading nature of British unemployment figures.
What economic indicators fail to illustrate are the problems that lie ahead. France is doing pretty well for the moment, but its success is based on precarious foundations. This is not to say that the French face cataclysmic decline – the word ‘crisis’ is best reserved for states such as Russia or Indonesia – but in order to maintain the relative prosperity of recent years, political leaders will need to make changes that might well prove unpopular.
In the medium term, a major reform of the welfare state will be necessary. Ageing populations are everywhere placing a growing burden on health-care and pension provision, but France is at a disadvantage here relative to its major European partners. Not only has health spending risen faster than in any other major industrialised country over recent years – the urge to swallow copious numbers of pills in times of stress (particularly, it would seem, when cycling) shows no signs of abating – but, more seriously, France has virtually no private pension schemes. Like other developed nations, it faces longer life expectancy combined with a steadily falling ratio between workers contributing to pensions and those claiming them. In addition, state provision is very generous: payments range from two-thirds to three-quarters of gross wages, and are given from the relatively early age of 60 for men and women. All of this means that payments are likely to run out of control early in the next century. Budgetary constraints on education, meanwhile, have led to the sight, unimaginable in Britain, of schoolchildren demonstrating in the streets because they are unsatisfied with the quality of teaching they receive.
Until now the state has also played a very large part in industrial management. State ownership of key industries is seen by many Frenchmen as ‘a weapon to defend French production’, as Mitterrand put it, and across the political spectrum, access to high-quality state-controlled public services is considered an inalienable right. Indeed, in 1995 Alain Juppé launched an ill-fated attempt to introduce a Constitutional amendment protecting the right to benefit from public services against possible encroachment by either the EU or international market forces. Yet the state is now under significant pressure to limit its interventionism. For one thing, the close interrelationships of political, administrative and business élites – so-called pantouflage – have proved a fertile source of corruption and managerial incompetence. The spectacular Crédit Lyonnais débâcle, for example, which saw one of the household names in French commercial banking clock up massive debts and be bailed out by the state to the tune of some £4 billion, provided elements of both. Fenby chronicles this episode in impressive detail. In a world of high capital mobility, state ownership puts French firms at a disadvantage in the face of footloose international competitors. At the same time foreign companies shy away from buying stakes in state-owned enterprises, fearing that the French authorities will want to exercise control over their operations. Fenby quotes one observer as saying that to buy shares in these companies is akin to buying into the French Civil Service. Public ownership has also made it harder for French firms to emulate their competitors in raising capital on the international markets.
Although the effects of globalisation have not been as insidious as many predicted, its consequences are slowly becoming apparent. A proposed merger between Renault and Volvo fell through because the Swedish company was leery of a golden-share arrangement by which the French Government would have retained ultimate control of Renault. In the defence industry, where the need for transnational alliances is ever more pressing, because of the rapid and successful consolidation of American businesses, the Government’s continued desire to maintain control over key companies and, above all, prevent them falling into foreign hands, means that foreign firms are unlikely to seek partnerships with their French counterparts. British Aerospace, for example, has insisted that Aérospatiale can play no part in a European aeronautics consortium unless the French Government relinquishes a larger proportion of its shares than it currently seems willing to do.
Even under Chirac, the state carefully controlled privatisation by hand-picking shareholders, thereby ensuring protection from foreign ownership and the continued politicisation of management. Jospin clearly intends to maintain these procedures, and his Government has retitled the Privatisation Commission the Commission for the Evaluation of Share Ownership and Transfers. For this government, share allocations are not a matter for the market (despite the market-friendly finance minister Dominique Strauss-Kahn). Welfare state reform has been, if anything, even patchier. An ambitious reform programme introduced by Juppé has been systematically watered down since its introduction three years ago.
One reason for Jospin’s inaction is a fear of provoking the kind of popular backlash that has led to numerous strikes, demonstrations and outbreaks of direct action in recent years. The strikes that crippled the country in December 1995, in response to Juppé’s ambitious (if poorly presented) welfare proposals, illustrated how much feeling the issue can arouse. The threat of strike action by employees of publicly-owned enterprises acts as a potent deterrent for those anxious to take privatisation further.
The failure actively to reconsider the state’s role has its roots in a realisation that drastic reform might only exacerbate the country’s most serious problems. Unemployment in France has hovered around 12 percent throughout the Nineties. More than three million people are out of work, and although there are signs that the rate might now be falling slowly, youth unemployment is very high: it rose from just over 20 per cent in 1992 to just short of 26 per cent in 1996. Even if French unemployment rates are no higher than they are in Spain, for example (and lower than in parts of southern Italy), its effects are more pernicious. French society is relatively urbanised and lacks the strong informal networks, based on family, church and local community, that perform such an important supportive role in southern Italy in particular. References to ‘la fracture sociale’ are becoming more and more frequent. At New Year dozens of cars were burned by gangs of disaffected youths throughout France; more than sixty were destroyed in Strasbourg alone.
The rise of the Front National is the most obvious political consequence of this social dislocation. It may at times be able to ‘clean up’ its message, especially when offering its support to the mainstream Right, but the FN remains a racist party, its intellectual leadership now provided by Bruno Megret, the intelligent and articulate potential successor to Jean-Marie Le Pen. Its current policy centres on the notion of ‘national preference’ – or giving priority to natives in jobs, housing and welfare. It is hardly surprising, with high unemployment and rising uncertainty about the future of the welfare state, that the Party is attracting increased support. Indeed, of all European states, France comes second only to Belgium in terms of the number of its population – around four out of ten – who admit to racist sentiments.
The FN has also penetrated into mainstream politics – the former Gaullist prime minister Edouard Balladur’s endorsement of the slogan of national preference shows the vulnerability of the mainstream Right to populist FN propaganda. The sight of Charles Pasqua, the RPR deputy who has done more than anyone to legitimise the FN, kissing the Jules Rimet trophy and speaking affectionately of the positive role played by the immigrant community in France’s history, was one of the most distasteful of last summer’s World Cup. In the regional elections of 1998 the FN once again attracted about 15 per cent of the vote but in 19 regions it effectively held the balance of power in the newly elected assemblies. Many right-wing notables found themselves dependent on FN votes to secure regional Presidencies. Three of them resigned after being elected with the help of FN votes but five others, despite dire warnings from the leadership of the centrist UDF party, did not. Their number included the former defence minister, close collaborator of Chirac and UDF heavyweight, Charles Millon.
Much attention has been devoted to the multiracial nature of the winning French team in the World Cup. Its playmaker is of Algerian origin, its most accomplished defender was born in Ghana and adopted by a French priest. In all, eight of the 22-strong squad were non-whites. Chirac himself, in his Bastille Day address, referred to ‘this team simultaneously tricoloured and multicoloured’. The slogan chanted by the million and a half people who paraded on the Champs Elysées following the victory was ‘Blanc-black-beur’ (beur is slang for ‘North African’). The words ‘Zidane for President’ were flashed onto the Arc de Triomphe, and Algerian flags were waved beside the Tricolour. The significance of this goes far beyond football, partly because Le Pen has in the past criticised the presence in the French team of ‘players from abroad’, who do not, or cannot, sing the Marseillaise before matches, and has even used their presence to explain the side’s lack of success.
The impact of the World Cup will be limited, however, if parallel developments do not reinforce the anti-racist cause. True, the Jospin reforms of nationality and immigration legislation that preceded the competition were steps in the right direction, but the Cup has not generated new jobs – despite the opportunities afforded by the English to the (re)building trade in Lens and Marseilles – and the FN itself shows no signs of toning down its aggressive stance. Only a few days after the final, its municipal councillors declared their intention to divert arts funding away from multiracial projects and towards ‘traditional’ French ones.
In the past, foreign policy has provided an escape route for governments facing unpalatable domestic choices, but this is no longer the case. De Gaulle used his nuclear weapons programme and his aggressive quest for independence from the Americans to rally political opponents to his new Republic and instil a more self-confident mood in the population. Since the end of the Cold War, however, this kind of social imperialism has been less practicable, the emergence of a unipolar world having made it much more difficult for France to parade its independence. Attempts to stand up to what many French people see as the unbearable arrogance of the United States are fraught with difficulty. A notable example was France’s quixotic insistence that Washington cede control over Nato’s southern command to a European. Withdrawal from Africa, failure to create a European alternative to Nato and an inability to shape the institutions of the international economy as effectively as Washington, are all hallmarks of France’s impotence in the face of American dominance.
Nor can France use European integration as a means of escaping its domestic difficulties. In 1983, Mitterrand managed to turn his humiliating macroeconomic volte-face – rejecting ‘Keynesianism’ in favour of German-style anti-inflationary orthodoxy – into a victory achieved in the name of Europe and the ERM. Similarly, two years later, the French saw the launch of the Single European Market as a means of both defending a ‘European Social Model’ and creating trans-European, publicly sponsored, industrial champions capable of competing effectively with their American and Japanese counterparts. The policies currently pursued by the EU exacerbate the problems confronting the political leadership. The Single Market has come to be a liberalised, deregulated affair, far from the highly regulated breeding ground for European champions that Mitterrand foresaw. Worse still, the European Commission and the Court of Justice have used the powers conferred on them in the sphere of competition policy to put pressure on traditional models of French economic management. Although EU law does not rule out the public management of industry, it does remove a large part of its rationale by limiting the amount of state aid governments can plough into the industries they control. The European Court of Justice recently raised concerns about the money being poured into the black hole known as Air France, casting doubt on the state’s ability to go on supporting it.
At the same time as it increases the pressure on governments to divest themselves of public enterprises, the EU also reduces the scope for fiscal intervention to alleviate the worst social and employment effects that these measures could be expected to produce. The convergence criteria for EMU set strict limits on the scale of public debt, constraining the ability of government to spend its way out of recession. By adhering to the German-inspired rules of the game and placing strict controls on fiscal policy once the Euro has come into being, the French have limited their own ability to produce the ambitious state-sponsored initiatives for which they were once well known.
Even those areas from which France has traditionally benefited are now under threat. Reform of the infamous Common Agricultural Policy – which has done so much to protect France from the worst effects of urbanisation and rural poverty – will be necessary because of the eastward enlargement of the EU, a policy which France has never been keen on but has been forced to accept. Indeed, French political leaders can no longer even use the EU as a way of avoiding responsibility for necessary decisions that are unpopular at home. After the uncomfortably close outcome of the 1992 referendum on the Maastricht Treaty, political leaders are especially wary of using the EU as a whipping boy for fear of turning public opinion against an integration process that has been a centrepiece of government policy since the war.
The real difficulty for the French Government is not the scale of the country’s current problems, but the apparent lack of alternatives for dealing with them before they become far more serious. One possibility is that France will simply become more like everyone else. The state may withdraw from the economy, deregulation may be adopted as a necessary means of fostering the market, and policymakers may embrace fiscal stringency at the cost of a role for the state in redressing social ills. These things are possible, but for the moment political leaders, on both left and right, appear intent on finding a way of making marginal adjustments to the state’s role within the economy, while maintaining its distinctive policy ambitions and style. Typically, the problems of unemployment and fears of ‘la fracture sociale’ have elicited a statist response: job creation is being addressed largely through a scheme to reduce the working week; the Government is also anxious to introduce plans to combat poverty. The omens aren’t all bad: there are predictions of impressive economic growth and continued trade surpluses and recent months have seen a drop in the unemployment figures for the first time in many years. The feel-good factor which followed the World Cup has raised the popularity of both Chirac and Jospin to unprecedented levels, while also assisting in the fight against Le Pen. It is just possible that the French are about to confound their critics by moving successfully into the 21st century while retaining their distinctive unwillingness to bow completely to the market.