Judy Asks: Can Hollande Finally Save France?

The recent policy shift announced by French President François Hollande is remarkable given France’s traditionally high state intervention in the economic sector and expansive welfare state—even more so considering the president’s Socialist Party affiliation. Fighting increasing unemployment and low growth rates by disburdening French businesses and therefore strengthening the supply side of the economy sends the right message to France’s European partners and the markets. A strong and competitive European single market requires political innovation and consistent reform efforts in every EU member state, not least in the EU’s second-largest national economy.

However, it is too early to assess the reforms’ chances of success. Everything now depends on the timely and systematic implementation of Hollande’s promised “responsibility pact.” France faces several challenges. Unlike Germany in the early 2000s, when Berlin successfully launched similar reforms, France is in a weak eurozone surrounded by several countries suffering from the same problems of slow growth and undergoing the same far-reaching reforms. Moreover, French trade unions are less representative than their German counterparts, impeding the reconciliation efforts that will contribute to the success of labor market reforms.

François Hollande’s record depends on whom you ask. While the rest of Europe may be sneering at him, in Poland he has effected a surprising turnaround in French fortunes. Following years of being told by French presidents that they didn’t really belong in the EU, Poles have responded warmly to Hollande’s more conciliatory approach.

Take foreign policy. Germans joke that Hollande is active on the world stage only to substitute for his economic impotence. But for Warsaw, Paris is that rare thing: an active international partner. There is a growing sense in both capitals that the EU’s broader neighborhood is the key theater of action, and that the pair must overcome old tensions to secure the region’s political primacy. France supported NATO’s recent Steadfast Jazz exercises in the East; Poland, reacting to the end of French ambitions to monopolize Europe’s relations with Africa, is getting involved in the South.

As for economics, the British joke that Franco-Polish relations will hold up only as long as large French businesses demand it by continuing to flee their country’s punitive tax regime in favor of Eastern Europe. But that doesn’t explain why Poland supports France’s own shift toward greater economic liberalism, nor why it is tentatively siding with France on interventionist EU social and economic rules. That is due to a subtle shift in relations between the EU’s large powers, with the UK, not France, left out in the cold.

François Hollande’s reform agenda will take time to yield results, and things will probably get worse before they get better.

Hollande assumed the French presidency during a tough period. Due to low growth and excessive public spending, France’s public debt and deficit exceeded EU limits. The president entered office with a left-leaning electoral program, but his room for maneuver quickly became constrained.

In other words, Hollande has been trying to steer a country without having full control of the wheels. Despite the poor economic situation, he has implemented some reforms that would have provoked a lot more furor had he not been a Socialist president with a strong parliamentary majority. Yet he has acknowledged that he underestimated the depth of the crisis.

Hollande’s strongest advantage is that he can count on an absolute majority at all levels of government, which will mitigate some revolts. That might just be what he needs to avoid widespread political disruption and gain some precious time for his reforms to kick in.

But France is not isolated: its performance is linked to that of its neighbors. The faster the rest of Europe emerges from the crisis, the better France will weather the abating storm.

Does France want to be saved? And from what? France is a rich country, its quality of life is excellent, and its healthcare and education are top-notch—in short, it is a joy to be French.

But the Fifth Republic is unsustainable. In its banlieues, many citizens are excluded from the country’s privileges, and resentment and populism loom large. The Louvre is wonderful, but it is not Silicon Valley.

François Hollande could follow former German chancellor Gerhard Schröder’s example and try to reform the economy by slashing public spending and taxes, cutting debt, promoting innovation, and chasing lobbyists out of town. But would he be praised or frog-marched to the guillotine by the media?

Hollande’s predecessor, Nicolas Sarkozy, tried to be a U.S.-style president and failed. Can Hollande, a Socialist apparatchik, morph into the Wolf of Wall Street? Unlikely. It is up to France, for centuries Europe’s mother of innovation, to whet her appetite for the future.

Whether François Hollande can save France is a question that demands a definition of what that entails. Saving France means reestablishing innovative capacity and competitiveness to improve growth and employment perspectives; but it also means reducing the country’s suffocating public debt. Both measures are required to maintain financial market credibility in the medium and long term. And it means coming up with a vision of modernizing the French social and economic system that does not surrender to the neoliberal paradigm. Hollande’s recent U-turn toward more supply-side policies is the right choice, but it needs to be part of a broader vision.

On foreign policy, saving France may mean securing resources so that France can remain internationally engaged, both militarily and diplomatically. That is crucial to counterbalance Germany’s economic weight, both in the bilateral relationship and in Europe.

However, saving France cannot mean protecting the country’s society, political elite, education system, and corporate sector from change. Together with its European partners, France faces a situation in which old methods no longer produce intended outcomes. Preserving what is great about France requires substantial change. And that, Hollande will not be able to achieve alone.

François Hollande still has time to save his country. He is at about the same point in his presidency as François Mitterrand was in his when he made a major shift in economic policy by prioritizing efforts to reduce inflation and turned the French economy around.

Granted, Hollande’s personal problems are complicating things. But France is still a presidential system, and if Hollande continues on his new course, he can still revive both the French economy and his presidency.