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posted on 20 April 2016

The French Conundrum

from STRATFOR

-- this post authored by Adriano Bosoni

France is in the midst of political change. After years of economic decline and shaken by a spate of terrorist attacks at home and elsewhere in Europe, many French voters are disenchanted with traditional political parties, dubious of the country's economic prospects, and uncertain of its role in Europe and the world. During the next presidential election, set for April 2017, voters will reveal the extent of change in France, setting the course of the country's future and that of the European Union as a whole.

In the aftermath of World War II, France built its national strategy on three pillars. The first was to develop a strong alliance with Germany, securing peace on the Continent. Conditions were ripe for accomplishing this goal. Germany was occupied and divided. Meanwhile, Britain was exhausted by its war efforts, and the United States was pumping money into Europe and pushing for greater political and economic cooperation among its nations. Although France had its own postwar reconstruction and a crumbling colonial empire to contend with, Paris found itself in a unique position to lead European integration. What resulted were the European Communities, forerunners to the European Union.

France's second priority was to protect the independence of its foreign policy. As the political realities of the Cold War congealed, President Charles de Gaulle wanted to secure the most leeway possible for Paris. Following this premise, France sought to forge its own relationship with Russia, build its own nuclear arsenal, and protect its interests in the Arab world and its former colonies. At the same time, de Gaulle mistrusted international organizations. Under his rule, France left NATO's military command and opposed British membership in the European Economic Community.

Finally, France aimed to build a strong republic with a solid central power. For almost a century, fragile coalitions, weak executive power and short-lived governments characterized the French parliamentary system. In 1958, as decolonization in Africa and Asia strained the French political system, de Gaulle pushed for reform, introducing a semi-presidential system in which strong presidents were elected for seven-year terms (the term was eventually reduced to five years). The resulting structure featured a two-round voting system whose main goals were to ensure that the president had robust democratic legitimacy and to prevent fringe political parties from attaining power. The system also relied on infinite layers of public administration, a constant attribute of the French state, and on inflation-fueled employment thanks to a fluctuating franc.

Throughout the postwar years France has guarded its national sovereignty jealously. Despite the European Economic Community's progress between the late 1950s and the early 1960s, when barriers to trade were lifted and an internal market was created, French leaders remained skeptical of initiatives that could weaken France's autonomy on noneconomic issues. For instance, in 1954, the French Parliament rejected (and thus halted) a plan to create a European Defense Community. In 1966, France temporarily withdrew its representatives from the European Commission to protest plans to reduce the participating governments' role in administering the bloc's agricultural policy.

Strategy Under Strain

But over the past two decades, France's economy has been flagging. Average gross domestic product growth fell from 2.2 percent for the 1995-2004 period to just 0.7 percent for the 2005-2014 period, and unemployment has been above the EU average most years in the past decade. France's elaborate bureaucratic system still provides around a quarter of all jobs, but at the cost of high taxes and public debt levels. The country's complex labor regulations and generous employment benefits often inhibit job creation. Furthermore, eurozone membership prevents Paris from devaluing its currency to boost competitiveness, and France's share of world exports has contracted since the start of the century.

As a result, France's postwar strategy has come under strain. To start, the terms of the country's alliance with Germany have changed. Unlike during the Cold War, when French governments worried about the instability of a divided Germany, Paris in the 21st century is concerned about the political influence that its neighbor's economic power has yielded. As the eurozone crisis has made clear, Europe's political beacon these days is not France, but Germany. But this could threaten France's sacrosanct independence, especially if Berlin tries to implement its own vision of how the European Union should work. Germany, like France, is dissatisfied with the European Union's operations but for separate reasons: Officials in Berlin balk at their southern neighbors' resistance to reform and at the European Central Bank's expansionary monetary policies. So it is that the Continental bloc's two largest powers are at once unhappy with the union and at odds on how to reform it.

Moreover, while the French economy continues to languish, a growing number of people are losing faith in the republic's leaders. Given the tradition of strong French statesmen from Napoleon to de Gaulle, people are frustrated that their modern leaders lack the talent and charisma of their predecessors. This explains why the political cycles in France are becoming shorter. Socialist President Francois Mitterrand enjoyed two terms in office from 1981 to 1995, as did his conservative successor, Jacques Chirac, from 1995-2007. By contrast, center-right leader Nicolas Sarkozy served only one term, ending in 2012, and if opinion polls prove correct, so will the incumbent center-left president, Francois Hollande. Approval for Sarkozy and Hollande dropped soon after they assumed the presidency, which shows that the French are tiring of their leaders faster than before. Both the hyperactive Sarkozy and the meditative Hollande failed to deliver on their promise to restore economic growth. Consequently, voters grew disenchanted with them quickly.

Realizing that the world is changing around them, the French are unsure how to react. Many voters, from left to right, consider globalization to be more of a threat than an opportunity and therefore see protectionism as the answer to the country's global challenges. Along with fears of economic decline, the French public harbors concerns that immigration has put France's national identity - and, more recently, its national security - in jeopardy.

In response, anti-establishment sentiments are rising among an electorate whose patience with traditional parties shrinks as its fears for the future grow. This helps to explain the burgeoning popularity of the National Front, a party that promises to restore France's grandeur by leaving the eurozone, increasing public spending, and introducing tougher law and order measures. But even beyond the National Front, protests by different social groups - from Brittany's bonnets rouges (red caps) protesters to taxi drivers and students in central Paris - reveal a country that is both proud of its revolutionary tradition and conservative on matters of social and economic change.

An International Power

Nonetheless, France will stay at the center of European affairs in the decades to come. Despite its problems, France is still a fundamentally wealthy nation whose global reach knows no rival in continental Europe. Many French companies are leaders worldwide, and the country remains a significant agricultural producer. Furthermore, contemporary French governments still espouse military intervention abroad. Sarkozy and Hollande were willing to protect France's interests in the Levant and sub-Saharan Africa in ways that Britain seems increasingly reluctant to and Germany can't even dream of.

Additionally, France has some of the highest birthrates in Europe and, by midcentury, will probably have the largest population on the Continent. This means that a substantial number of young people will keep entering the workforce each year, pay work-related taxes, sustain the pensions of the elderly, and consume goods and services.

On the other hand, a growing population also means a permanent risk of social unrest if the French economy fails to absorb the future cohorts of workers. Boasting not only the strongest nationalist party but also the largest Muslim community in Western Europe, France will prove a test case for the evolution of nationalism and the role of Muslims in Europe. Though birthrates are falling in France across all segments of the population, Muslim families have higher birthrates relative to non-Muslim families, which means the Muslim community will likely play a greater political and social role in France in the coming years.

Finally, as the bridge between Northern and Southern Europe, France will continue to play an important role on the Continent. France shares ideals in common with countries such as Italy and Spain, historically tolerating protectionism and inflation in exchange for low unemployment and strong consumption. The countries also have their geopolitical interest in and colonial ties with North Africa and the Middle East in common. At the same time, France is also a Northern European nation. Lacking any clear natural borders with Germany, France has traditionally seen the North European Plain as an area both of potential expansion and of potential threat. Although the formation of the European Union has put France's geopolitical conundrum to rest, many of the premises on which the bloc was built have now fallen by the wayside. This is a fundamental issue, because there cannot be a unified Europe if France is not a part of it.

A Crucial Vote

Given France's geopolitical weight in Europe, the country's upcoming presidential election could be as influential in determining the future of the Continent - and the Continental bloc - as it is in shaping France's own future.

With regard to the European Union, France will have three options. The first is to acknowledge that France has lost control of the political process in Europe, at least temporarily. In this scenario, France would accept German leadership while trying to influence politicians in Berlin as much as possible and hope that demography and changing fortunes eventually restore it to a position of strength. But this option comes at a cost. With Berlin in charge, the eurozone would probably not introduce the kinds of policies that Paris favors. And if Germany agreed to restructure the European Union according to French views, France would have to surrender some of its national sovereignty and cede to German dominance.

Alternatively, France could become the leader of a Mediterranean bloc, splitting the eurozone in two (with a "northern euro" and a "southern euro") or reinstating separate national currencies. This scenario would not necessarily involve a formal break with Germany, but it nonetheless would reduce the prospects for cooperation between the two European heavyweights. On top of this, in assuming leadership of a Mediterranean bloc, France would also assume responsibility for a region with high levels of public debt and unemployment and relatively shaky institutions.

The third option hearkens to de Gaulle's view of Europe: Member countries would reclaim prerogatives from Brussels, and the European Union would become more or less a pact among sovereign nations. To a certain extent, this course of action would align with the United Kingdom's view of Europe. If economic decline and political disappointment continue to fuel Euroskeptic sentiments in France, this outcome will be especially likely.

For France and Europe alike, much is at stake in the 2017 presidential election. While the two-round electoral system will prevent the National Front from accessing power for now, the underlying trends that precipitated its rise to political influence will not go away. On assuming office, the next French president will have to deal with a disenchanted electorate that is increasingly skeptical of the country's leadership.

Whatever becomes of the party, the National Front embodies public frustration, and other political players - even those currently seen as moderate - can emulate its agenda. The evolution of anti-establishment sentiments in France will therefore be crucial for the future of the European Union. Next year's presidential election could be the last in France's postwar era, and the entire continent will feel its consequences.

"No Exit in China" is republished with permission of Stratfor.

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