The French Problem

Boris Johnson, Mayor of London, visited the French city of Bordeaux last year and treated his counterpart Alain Juppé to some British humour: "Did you know I have more Frenchmen in London than you do in Bordeaux?" There are around 350,000 Frenchmen in London. French people who want to run a business can't do that in a stagnant France. If the current trend continues, the volume of Dutch exports next year will be higher than the French. The popularity of President Hollande has fallen to 18%. The French political elite fears a beating in the European elections of 25 May by a triumphant Marine Le Pen, the standard-bearer of the Front National.

The political weight of France, the second largest economy in the Eurozone, has fallen dramatically in a short time. France and Germany used to be at the same level politically, though the French economy could never match the German. The EU could not take decisions against France. Paris always knew how to form a blocking coalition and, if necessary, they could morally blackmail the Germans. The French decline is worrying. The Dutch might be tempted to gloat, but that attitude is wrong because in the end, the French Thalys was the only company that managed to link Amsterdam and Brussels by train last year. It is also unwise. A weak and insecure France is a greater threat to Europe than the confident display of flags of 'la grande nation' which, like French women, contains a lot of charm. Chancellor Merkel and President Sarkozy were a European political couple; President Hollande seems pathetic.

The crisis of the French self-confidence is not because of one person but is much deeper. In 2006, Frits Bolkestein and former French Prime Minister Michel Rocard published a book with the telling title 'Peut-on reformer la France?' That is the key question for the French social model in the globalizing world economy. Bolkestein is pessimistic, and Rocard - more a social democrat than a socialist - is skeptical. "In France there's no negotiation; strikes are explosions of general anger". The French expect all the good of the welfare state, as the cradle of inviolable rights. This model is running against the hard wall of reality. The introduction of the 35-hour week snapped French competitiveness. The trade balance has been depreciating since 1997, labour costs are higher than productivity, the tax burden is stifling, the national debt is rising towards 100 % of gross domestic product and the French government asked the European Commission for the third time for 'more time' to reduce the budget deficit.

President Hollande recently made a U-turn and announced 50 billion euros of budget cuts, without however specifying how. The problem is that Hollande can't make choices, which also became clear in the government reshuffle. The new Prime Minister Manuel Valls, who once was a follower of Rocard, wants the Socialist Party to change name, he wants to get rid of the 35-hour week and wants a radical tax reform. But Arnaud Montebourg, the radical left-wing minister of economy, presents himself as a legitimate successor of Jean-Baptiste Colbert (1619-1683), figurehead of French protectionism. Montebourg accuses the EU of allowing 'unfair competition', compares the European Commission with the Taliban and Merkel to Bismarck. The German newspaper Die Welt complained, not without reason, that Hollande promoted a minister who constantly criticises Germany. The economic philosophy of Montebourg differs little from that of Marine Le Pen. She also denounces 'unfair competition ', but she means by China.

The French political elite, both centre-right and centre-left, is cornered and will export its problems to Europe. Laurent Fabius, Minister of Foreign Affairs, says Germany needs to spend its trade surpluses. Montebourg demands more protectionism and less fiscal discipline, a curse to the ears of Germany and the Netherlands. The French problem and German scepticism shows two clashing economic philosophies at the heart of the Eurozone. The French elite has always seen Germany as the horse it wants to ride, but the horse no longer lets that happen. Germany pays and sets the conditions. Until now, France was able to borrow at low interest rates on the financial markets, but a crise de regime in Paris makes lenders nervous. Rising interest rates put a to knife France's throat.

A triumph of Le Pen hits the raw nerve of France, and thereby the whole of Europe.