Editor’s Note: This piece originally appeared in The Financialist
Not since Charles De Gaulle has a French president confronted an economic and international situation as tumultuous as the one faced by François Hollande. Hollande, who took over the presidency from Nicolas Sarkozy last month, is facing an unemployment rate in the double digits and a national debt that stands at 90% of GDP. In addition to his domestic challenges, Hollande finds himself at the center of a deepening European crisis, with Greece on the brink of collapse and most euro-zone countries in a recession. While the challenges facing the new president are enormous, there seems to be little consensus on how he will govern. This is largely because Hollande managed to capture France’s highest office while remaining a relatively unknown commodity. Even though he is now the most powerful man in French politics, many still wonder – who is François Hollande?
The new French leader’s electoral campaign does provide a few clues about the man and his politics. Throughout his campaign, Hollande wooed his left-wing electorate, while at the same time putting himself in a position to deliver on his promise to keep deficits under control. Take his rollback of Sarkozy’s pension reforms, which would allow French workers to retire at 60. This policy proposal is actually more of a modest tweak than a fundamental revamp, as it only impacts the few workers who have worked continuously for 41 years. Hollande also promised to hire 60,000 new teachers, a pledge that has deficit hawks concerned. However, the new president plans to pay for these new teachers through an equal reduction in the number of civil servants elsewhere in France’s sprawling bureaucracy. Finally, his famous campaign promise to institute a 75% tax bracket on the rich may include many exemptions and be temporary. Hollande’s platform shows that he campaigned as a Socialist, while making sure he could govern as a moderate.
Unlike his predecessor, Hollande is able to consistently stay on message. President Sarkozy would launch several new ideas and initiatives on any given week, to the point where people lost track of his core positions. By contrast, Hollande, even when his poll numbers dropped dangerously low and advisers urged him to change tack, stuck to his strategy of offering a “normal,” predictable presidency with just a few flagship reforms.
This consistency continued after the election, especially in his approach to the European crisis. Upon arriving in Berlin, only hours after his inauguration, for meetings with German Chancellor Angela Merkel, he spoke in favour of Eurobonds and a package of growth measures designed to pull Europe out of its economic rut. Days later, while attending the G8 meetings at Camp David, Hollande reiterated his stance for more spending. He did so again in Brussels during the first European Union summit.
His main proposals during the campaign led The Economist to label Hollande a “rather dangerous man” who would never implement the structural reforms advocated by a number of free-market analysts. However, a glance at his stable of economic advisers shows that they are not “dangerous leftists.” One example is Harvard economist Philippe Aghion, a known supply-sider keen on spurring long-term growth through innovation and ambitious R&D policies. Another example is Jean Pisani-Ferry, a former advisor to Dominique Strauss-Kahn, who is attuned to the need for France to restore its competitiveness. Of course, whether these advisors will be able to influence the president on ambitious structural reforms remains to be seen.
On European policy, Hollande has maximized his freedom of action. His choice to head up French diplomacy is former Prime Minister Laurent Fabius, who famously came out against the European constitutional treaty back in 2005. However, as foreign minister, Fabius will have little say over European policy and negotiations with Berlin, which will be directed from the Elysée and executed by pro-Europe figures such as Prime Minister Jean-Marc Ayrault and Economy and Finance Minister Pierre Moscovici.
These choices seem to confirm the personal image of Hollande as a strong believer in European integration. Hollande is known to be a disciple of Jacques Delors, the legendary head of the European Commission (1985-1995) who presided over a jump in integration with the creation of the European Common Market. Delors was also the Minister of the Economy and Finance who crucially urged President Mitterrand to take the necessary austerity measures so that France could stay within the European Monetary System in 1983.
Hollande’s deep support of the European integration project might answer the most existential question France will have to face in the coming years. Specifically, is France ready to accept European federalism as a solution to the euro-zone crisis? Berlin will not acquiesce to increased fiscal solidarity and common debt liability unless there is accompanying progress on integrated political structures – and Merkel is ready to fight for these structures. With Hollande, France – traditionally more protective of its sovereignty – might be more likely to play ball.