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France Unreformed
Chirac missed his moment more than a decade ago.


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John O’Sullivan

Just before Jacques Chirac launched his second attempt to become French president in 1988, an overseas visitor in Downing Street asked a senior official whether Prime Minister Margaret Thatcher would be supporting her fellow conservative. The official replied that Thatcher would say nothing to oppose the incumbent, the Socialist Francois Mitterrand, whom she liked personally and who had helped Britain during the Falklands war.

“But in her heart of hearts,” he added, “she knows that France needs a Thatcherite revolution of its own. Mitterrand will never give it that. If Chirac with his energy and willingness to stimulate enterprise by cutting taxes were to be elected, she would not be displeased.”

Chirac was not elected that year. France under Mitterrand continued to stagnate gracefully. By the time Chirac finally reached the Elysee Palace in 1995, however, the world took a Thatcherite view of him. He was the dynamic conservative leader that France needed to overhaul its creaking and over-regulated welfare economy.

Nicknamed “the bulldozer” when he was a young prime minister under the centrist president Valery Giscard d’ Estaing in the 1970s, Chirac was seen as someone who could get things done. He was also passionately ambitious. He had left Giscard’s government to found his own party–the main aim of which, as a BBC journalist remarked drily, was to get himself elected president. And newspapers stressed his pro-Americanism from his time as a soda jerk at Howard Johnson’s in the 1950s, when he spent a summer at Harvard. This affection for the U.S. was taken as a sign that he was an economic modernizer friendly to enterprise and anxious to cut taxes.

Brutal efficiency, high ambition, and Reaganite economic attitudes–this combination seemed to promise a second French revolution. In fact Chirac was always a more traditional French president than his early image suggested. As the years went on, he accumulated the usual presidential baggage:  a string of young mistresses, a forgiving wife, a financial scandal (one of political-party financing that dated from his time as mayor of Paris), and the belief that the French economic and political system was uniquely civilized and thus preferable to the market jungle of les Anglo-Saxons.

The signs were there before his election. As prime minister in a system of left-right party “cohabitation” under the presidency of Mitterrand, he had pursued modest economic reforms. But he had the excuse then that he had to work with a Socialist head of state in a system that invested a great deal of power in the presidency. His hands were tied. When he became president and, shortly afterwards, was given a conservative majority in the French Assembly by the voters, however, that excuse vanished. Chirac was now free to pursue the tax-cutting policy to reduce France’s sky-high unemployment that he had promised over several elections.

In fact he fired the economics minister, Alain Madelin, who had taken Chirac’s free market rhetoric seriously and tried to cut back on France’s bloated public-sector social benefits. “Thatcherite” or “Reaganite” economic reforms ended then and there. In the nine years that have followed, through parliamentary majorities of left and right, Chirac has defended the French “social model” in economic policy.

What blocked Chirac’s reforming instincts was France’s adoption of three fundamental state policies supported by the entire political establishment:  membership in Europe’s Exchange Realignment Mechanism (ERM), which would mutate in 2000 into the Euro single currency; the retention of the French “social model” of regulated welfare capitalism; and the construction of a federal Europe, made in France’s image, that would rival the United States as an independent superpower.

All three policies hung together quite well. They also appealed to Chirac’s economic Gaullism and sense of French “exceptionalism.” And they ensured that Chirac faced minimal opposition at home from the nation’s powerful governing elites. It is not difficult to see why he succumbed.

Unfortunately, the first two policies were incompatible with cutting taxes and bringing down unemployment. And the third, in addition to being incompatible with a pro-American foreign policy, could only be sustained on the back of a growing French economy that the first two policies effectively ruled out.

France’s membership in the ERM and later the Euro required higher interest rates than its domestic economy needed. Result: lower rates of growth and job creation. France’s “social” model of generous job security, high welfare benefits, and a 35-hour work-week meant that employers were reluctant to hire people for those jobs that were created. The result is a system in which those in jobs enjoy permanent job security while their high taxes pay for the generous social benefits of the long-term unemployed who in turn account for more than 10 percent of the country’s work force.

That would have created trouble eventually, even if the long-term unemployed were a cross-section of France’s population. In fact, as we now know, they were and are disproportionately drawn from ethnic minorities, postwar immigrants and their descendants, and young North Africans known as beurs, who rioted across France last year, burning cars and attacking police. And when the prime minister, Dominique de Villepin, sought to improve economic opportunities for these young people by creating a tier of jobs from which workers could be fired, there was a second set of riots, this time by young non-ethnic French people in work who opposed the smallest reduction in job security.

Chirac and de Villepin retreated. It begins to look as if Chirac’s failure to reform and revitalize the French economy a decade ago was a vital but missed opportunity. There is now a firm majority in France opposed to reforms and a permanent minority embittered at its economic exclusion. And because that embittered minority is Muslim, Chirac has found his foreign policy distorted too.

His main ambition to shape a Europe led by France, powered by Germany, and opposed to the United States foundered on the Iraq war. Chirac’s policy on the war–a deliberate frustration of the United States in support of Saddam Hussein–was prompted in part as a way of appeasing his Muslim minority. Though he is now widely praised in Europe because of how the intervention turned out, the real story is that most European states, especially the new democracies of Central Europe, failed to follow Chirac’s lead at the time. They made it clear that they had no wish to separate Europe from Washington, and so openly defied Paris. Since then, Germany under Angela Merkel has shown that it no longer wishes to be led by France, particularly in opposition to the U.S. She will pursue a more independent course. A larger and more diverse Europe is slipping out of the control of Paris.

In short, Chirac rejected the reforms of French society he had promised in favor of pursuing a traditional policy of statism at home and Gaullism in Europe. It has now run comprehensively into the buffers of history as he comes to the end of his presidency. A young pretender from his own party, bearing the banner of reform and pro-Americanism, now arrives on the scene in the form of Nicholas Sarkozy. But the odds against him are higher than against Chirac 12 years ago. And he faces not one, but two, defenders of the status quo–and, of course, his former patron, still president, and now determined to frustrate the hopes he once cherished.

- John O’Sullivan is a senior fellow at the Hudson Institute and editor-at-large of National Review. This article first appeared in the National Post and is reprinted with permission.



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