Chirac’s Last Stand?

Saturday, July 30, 2005
this is an image

The massive rejection of the European Union’s constitution by French and Dutch voters on May 29 and June 1, respectively, has had the effect of a political tsunami in Europe. For the first time in the history of European integration, two of its founders and leading advocates refused to ratify a major treaty. Now France and Germany, having chosen different ratification procedures, end up on opposite sides of an important European project. The Germans, like the Italians and the Spaniards, feel that the French let them down.

this is an image

Losing a constitution, even one that had been four years in the making and was unanimously adopted by the governments of all 25 member-states, is not the most serious fallout. After all, the constitution did not innovate in major ways and was essentially a compilation of past treaties. The provisions of the Nice treaty of 2000, imperfect as they are, will allow the E.U. to function for a few more years. In the not so distant future, however, the rules governing E.U. decision-making will need to be streamlined, as the constitution tried to do, to take into account 25 instead of 15 member-states.

The major blow was psychological and will have lingering political consequences. First, Euroskeptics of all stripes may try to capitalize on the most dramatic illustration so far of the E.U.’s growing unpopularity. Europe might be entering an era not just of a stalemate but of a gradual sapping and dismantling of some of its key policies. Reflecting the urge of many populist politicians, the leader of the regionalist Northern League in Italy has already called for Italy’s withdrawal from the euro, the common currency.

Second, the self-inflicted weakening of France’s position in Europe is likely to accelerate the ongoing shift in the European balance of power. French voters and politicians have done to France what its worst enemies could not have achieved: stalling European integration and weakening France’s influence in Europe and the Franco-German alliance. The momentum in the E.U. is now behind the British—provided Tony Blair can seize it during his six-month tenure as president of the European Council of Ministers—and their Central and Eastern European allies.

Third, the debate about future enlargements—to include Romania, Bulgaria, Croatia, and Turkey—has been reopened, thus likely slowing down the process. Since the failed referenda, Turkey had to make new concessions to the French, Dutch, Germans, Austrians, and Cypriots to avoid postponing the start of adhesion negotiations, previously agreed on for October 3 of this year. The French and Dutch votes were largely motivated by the financial cost and the economic and religious fears associated with current and future enlargements. Like other citizens of “old Europe,” the French and Dutch resented not having had a chance to vote on enlargement to include 10 new countries; in a way, the recent referenda were delayed votes on enlargement. What has arguably been the E.U.’s most successful policy is also its most unpopular in several Western European countries.

Fourth, the referenda have raised new questions and uncertainties about future structural economic reforms, making them at once more urgent and more difficult. With the constitution soon out of the way, the E.U.’s reform agenda—backed by Britain and most East European countries as well as by the market-oriented European Commission (the E.U.’s executive)—was back on the front burner. The inconclusive outcome of the September 18 German elections are a serious blow to the camp of economic reforms in Europe, which had anticipated a new impetus following a clear victory by CDU’s leader Angela Merkel and her free-market FDP allies. In addition, further integration, in areas such as tax harmonization and the Common Foreign and Security Policy, will take a backseat. France and Germany have long considered forming an “avant-garde” group among those member-states most eager to accelerate economic and foreign policy integration. The recent referendum setbacks, however, make a major pro-integrationist initiative difficult to sell to an increasingly skeptical public opinion; a “core Europe” would also be perceived by the non-participating member-states as divisive. As a result of the French and Dutch referenda and the German elections, the European Union is likely to remain on standby at least until the 2007 French presidential election. By that time, the German political situation may have clarified. But the looming French election and the confusing situation in Germany means that the two former engines of Europe will be inward looking, as will the E.U.

Finally, there will be major political consequences in France and the Netherlands, with the upcoming campaigns, especially the French presidential campaign, perhaps proving to be more consequential than the referendum defeat.

Just as the E.U. constitution was not the main casualty of the referenda, neither was it the centerpiece of the campaigns, except for ideological caricatures of its provisions. Rather, voters in France and the Netherlands used the opportunity to sanction unpopular political leaders and poor economic performances, as well as to express their anxiety about the new shape and direction of the E.U.

In the Netherlands, the prospect of Turkey’s joining the E.U. could not be isolated from the fear, following several high-visibility assassinations in recent years, that Muslim immigration and difficult assimilation could prove incompatible with the country’s traditions of secularism and tolerance. The Dutch also questioned the place of a small country in an enlarged E.U., as well as the paradox of a constitution that gave less political weight to the top (per capita) contributor to the E.U. budget.


France and Its Place in Europe

The dominant theme of the French campaign centered on the European—and French—socioeconomic model—a theme that found an echo in the German election campaign, which pitted economic reforms against the traditional German model. In France, for example, the E.U. was criticized for embracing an excessive market orientation. One common argument in the French campaign was that Eastern Europe’s cheap labor is contributing to the loss of jobs through plant closures and outsourcing, whereas immigrant workers (from Poland, for example) are putting downward pressures on wages and standards by taking other people’s jobs. The free-market orientation of Eastern European countries and of the recently appointed European Commission were widely perceived to compound these trends, if not encourage them. This kind of Europe was not the one the French had wanted or helped build. Most important, this changing European socioeconomic model was accused by the left as well as by Chirac himself of endangering the so-called French socioeconomic model. These powerful political forces argued that the French model needs to be defended, preserved, and, if possible, exported to the rest of Europe.

Such a vision and discourse did not belong solely to the left or to the advocates of a no vote (the far-right and far-left fringes and half the mainstream left) but were shared by Chirac and his center-right government. The main difference between yes and no advocates was that, for the yes voters, the constitution provided the needed safeguards to preserve the French and European social models; for the no voters, the constitution was yet another illustration of the liberalizing drift of the European Union.

Not everyone in French politics subscribes to the conventional French view that the referendum pitted an increasingly inhumane free-market European model against a virtuous French social model. That view was denounced vigorously by French free-market liberal-conservatives and their allies in and out of the main center-right party, including Nicolas Sarkozy, the head of the party and Chirac’s main rival on the center-right. During the campaign, Sarkozy did not miss an opportunity to argue against a model that has produced slow growth and 10 percent unemployment, that is “running out of steam,” and that needs to be overhauled.

He praised the constitution for guaranteeing “loyal competition,” not social protections. Far from being the problem, he argued, a more free market Europe should be part of the solution.

The anti-capitalist flavor of the campaign—that the German election campaign did not quite match—is likely to weigh on French, even European, politics as much as the rejection of the constitution itself. Chirac, although a center-right politician, has helped anchor the French vision of Europe on the left. By praising the French model and criticizing market trends in Europe, he undermined the case for reforms, whether homegrown or originating in Brussels. The campaign has also further legitimized French resistance to E.U. liberalizing initiatives, at Europe’s expense. This is why the no victory has been another blow to the case for free-market economic reforms in France and, indirectly, Europe. That vote was compounded by the indecisive outcome of the German elections, which has been interpreted as a rejection of reforms.

Why has Chirac gone out of his way to embrace a socialist view of Europe? First, out of electoral necessity. As the incumbent president in times of economic hardship, Chirac was the target of the protest vote as well as that of the left wing. This situation was reminiscent of the 1992 referendum on the Maastricht treaty, when President Mitterrand faced the anti-socialist vote of the right wing. But in Mitterrand’s time the French people did not feel as alienated from the shape and direction of the E.U. as they do today.

The Maastricht agenda of a single currency and an E.U.-wide foreign and defense policy matched the traditional French vision of Europe, which cannot be said of today’s enlarged Europe and the European Commission’s pro-market priorities. The leading challenge to Maastricht came from the defenders of national sovereignty, mostly on the right. This May, opposition to the constitution came mostly from the left, when a majority of workers, clerks, and civil servants switched from being pro-Maastricht to being against the constitution. Those people now see Europe as a threat to their jobs or, in the case of public employees, their privileges. A reinvigorated far left—made up of Communists, Trotskyites, radical labor unions, environmentalists, and anti-globalization activists—was able to connect their anti-capitalist and nihilist message to the anxieties of the middle class.

With more than 80 percent of center-right voters committed to a yes vote, the outcome of the referendum hinged on the pro-E.U. left, which is why Chirac pandered to that constituency. He was helped by the pro-yes socialist leaders, who were urging their electors not to succumb to their anti-Chirac impulse. But such tactics had limits: Socialist voters were still agonizing over having voted for Chirac in 2002 to stop far-right challenger Jean-Marie Le Pen. Moreover, they resent not having been paid back by Chirac: The left never considered Chirac’s repeated concessions on reforms as payback, but rather as political defeats for the government. Chirac’s new emphasis on the virtues of the French and European social models was perfectly tailored to assuage such an electorate, a high price to pay for rallying support for Europe. Only the Euroskeptics of the right and left were beyond Chirac’s reach—oscillating between the fantasy that a France weakened by a no vote could force a renegotiation of the constitutional treaty on French terms (which, of course, it has not and will not) and the hidden desire of the far left to marginalize France in Europe so that it could pursue their longtime chimera of “socialism in one country.”

The second explanation for Chirac’s embrace of a left-wing vision of Europe is his failure to reform France. Chirac blamed his record of market reforms as prime minister for his bruising defeat against Mitterrand in 1988. He won his first presidential election in 1995 on the left of his center-right coalition, promoting the theme of the “social fracture”: This meant that the government’s priority should be to reduce the growing social and economic inequalities that endanger France’s “social cohesion.” In 2002, he sought the votes of the left to crush Le Pen and win reelection. He has backed off from even timid reform proposals in the face of the left’s mobilization and built a record of pandering to the anti-globalization lobby.

In the meantime, the E.U. has taken a more forceful market orientation, in line with the objectives of the founding treaties. This reflects not only the inclination of the new member-states but also the need to encourage market reforms in the lagging economies of France, Germany, and Italy. The gap between recent European initiatives and Chirac’s failure to pursue an agenda of reforms at home, however, has become so wide that even Europe has been discredited as a source of internal reforms. Chirac cannot defend a liberal vision of Europe that he refuses for France. Europe, therefore, becomes a convenient scapegoat for France’s ills.

The lessons are clear: Insufficient reforms have hurt not only France but its most cherished project, European integration, and its own place in it. It is now urgent that French free-market liberal-conservatives reclaim their vision of Europe and that those on the center-right explain the virtues of reforms and actively discredit advocates of the status quo. In particular, new constituencies with a stake in change—entrepreneurs, small businesspeople, business executives, the professions, students and the younger generation, and the unemployed—must be heard. As for Chirac, he should ponder the basic law in politics—governing for the opposition never pays off; you lose your supporters without attracting your opponents. Political success requires rallying the broadest possible pool of voters to your positions, not compromising them.

The silver lining in this latest French political crisis is that the referendum campaign has set the terms of the public debate that will dominate France’s political life through the 2007 presidential election. The choice will seldom have been clearer between change and decline. Let’s hope that the French do not follow the Germans’ indecision: The French crisis is deeper and wider, going far beyond economics, and Nicolas Sarkozy is a stronger leader than Angela Merkel. Let’s also hope Sarkozy is right when he proclaims that the French do not fear reforms, they yearn for them.