France is heading for a major political and financial crisis in the spring that could dwarf the big Italian euro scare of 2011. Next May’s quasi-simultaneous elections of a new president and parliament may well spark the conflagration.
Neither of the two main presidential candidates seem able or willing to convince the French that they need serious reforms to avoid a major financial storm. Worse, the possibility of political gridlock caused by a divided government must now be taken seriously.
The most likely election scenario, according to year-end opinion polls, is that socialist François Hollande will sweep to victory. If he does win France would then have a president with no prior cabinet experience, for the first time in more than 50 years. They would also be saddled with a president who appears ill-equipped to deal with the current global economic problems.
Hollande didn’t include a single word on the euro crisis in the electoral manifesto he published with much fanfare on Jan. 3. This is in line with the silence he has kept on the matter for several months and adds to the legitimate concerns his candidacy raises over the French left’s tax-and-spend insouciance. Not only will Hollande struggle with coming up with solutions to euro mess, but he could also add to the French economy’s problems.
If, on the other hand, Nicolas Sarkozy manages to keep his job, it is more than likely he will have to face a parliament dominated by the socialists. He would then have to appoint an opposition prime minister who would govern for all practical matters – except on foreign policy, a presidential preserve. This distinction, though long-standing, is a recipe for disaster in the context of the euro crisis, where diplomacy and finance can’t be separated.
Add to this the impact of the likely recession on France’s finances, the downgrade of the country’s credit ratings, and the fact that both the right and the left are embroiled in a string of corruption scandals. Before long, France could look and smell like Berlusconi’s Italy, without the bunga-bunga.