Remember Nicolas Sarkozy, the free marketer? Sarkozy was a successful French interior minister. His leadership was marked by his courage.
During the French local elections in March, Sarkozy argued that the right’s economic reforms had been poorly sold to the voters, concluding that the “French people are demanding that we go faster”.
On the cult French satirical television programme Les Guignols, he is even portrayed as a seedy salesman, flogging gold watches pinned to the inside of his raincoat.
But Sarkozy seems to have undergone a transformation since he succeeded Francis Mer as finance minister following the elections, which were seen as a serious setback for the right.
Now Sarkozy is singing from a different song sheet. “I don’t give a damn about Anglo-Saxon economic liberalism,” he told workers at state-owned utility EDF last month.
If Sarkozy confined his anti-markets stance to rhetorical flourishes, it would be one thing. But one month into his new job, he has just sketched out his economic and industrial policies. They are not encouraging.
Although Sarkozy’s targets for the public finances are laudable, he has not given a credible account of how he will achieve them. Moreover, his industrial policies reveal him to be an exponent of the traditional French government art of dirigisme.
Sarkozy has already waded in to Alstom. The engineering company is lurching from crisis to crisis after years of mismanagement. Sarkozy considered several options for saving it, including merging it with state-owned nuclear power firm Areva. In the end, he appears to have opted for pumping in taxpayers’ money.
He is also understood to have intervened in Sanofi Synthélabo’s hostile bid for rival French drugmaker Aventis. He apparently told the former company’s boss to raise his bid and the latter’s to accept it.
This meddling is music to the ears of voters worried about jobs. But it marks a step backwards for France. For a brief moment last year, after letting its aluminium group Pechiney fall to Alcan of Canada, the country at last seemed to be liberalizing its market for corporate control.
Scaring off the foreigners
The Aventis saga – where a foreign bidder was seen off by the state – has set back this process. This may deter foreign investment in France. And 15% of the country’s employment rests on that, as Sarkozy himself has pointed out.
So has Sarkozy really gone off the rails? Some of his early steps need to be viewed in context. President Jacques Chirac handed him a poisoned chalice after the elections. No sooner had the electorate rejected the right’s proposed economic reforms than Chirac parachuted Sarkozy – who has not disguised his own presidential ambitions – directly into the danger zone.
One theory is that Sarkozy is merely biding his time, seeking to fight on a battlefield of his own choosing. Take privatization. So far, he has only revealed plans to sell small stakes in three firms. He has kept mum on his plans for France Telecom, one of his biggest potential sources of revenue.
Furthermore, he has indicated that he will take a go-slow approach towards selling shares in the electricity and gas utilities, his other big money-spinners, and that the state will not let its stake fall below 50%.
But, say the optimists, that doesn’t mean he has gone cold on the whole idea. Flagging big share sales to the market would be a dumb strategy. He needs to reach a settlement with the unions in state-owned industries first, and they are still suspicious.
What’s more, Sarkozy hasn’t forgotten his own criticisms of the poor way in which reforms have been sold to the public. He wants to win public opinion around before embarking on tough but necessary reforms.
It would be nice to think this were indeed the case. Sarkozy is a very ambitious politician. He probably sees the economics ministry as a tiger trap.
After all, economic reforms have brought down past high-flyers, notably right-wing premier Alain Juppé.
But this thought isn’t as comforting as it might first seem. For Sarkozy’s burning ambition to become president might override all his other concerns. Whatever his reform agenda is now, he could always drop it if the electorate were to kick up a stink.
Sarkozy can only be judged on what he has done – not on what he might be planning to do. And so far the evidence doesn’t look good.
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