What France's Presidential Race Means for the U.S. and the World

Most of these proposals have been greeted with chagrin by many of France's EU's partners. Especially in the midst of the union's current political and economic fragility, unilateral French moves risk exacerbating the renationalization of political life that has been eating away at solidarity. Nonetheless, that both Sarkozy and Hollande are playing the anti-EU card illustrates the degree to which the "French street" is questioning the merits of European integration. Recent opinion surveys indicate that the far right and far left, both of which are hostile to globalization and European integration, could together garner more than 30 percent of the first-round vote.

Anti-EU campaign tactics are, however, unlikely to turn into policy. As the financial crisis continues to percolate, the next French president will need to play a leading role in breathing new life into the EU, meaning that he will have to reverse, rather than cater to, public skepticism of European integration.

The election promises to have an impact, although a modest one, on Franco-German relations--still the most important coupling within the EU. Sarkozy and German Chancellor Angela Merkel do not have a close personal relationship, but they have worked well together during the debt crisis, and Merkel has openly backed Sarkozy's reelection. Relations would initially be strained should Hollande win--but only temporarily. Cooperation between Berlin and Paris will remain the union's anchor, giving any French president little room for maneuver.

In Search of Economic Reforms

Sarkozy has made some progress in liberalizing the French economy, but has fallen well short of the "rupture" that he had promised. He raised the retirement age from sixty to sixty-two and made modest revisions to the tax code. He is currently pledging to reduce regulations on employment and reduce the non-wage costs of labor, taking a page from Germany's successful reforms during the past decade. Sarkozy has also said that he wants to cut public spending and increase revenue by capturing taxes from both fiscal exiles and large French corporations with substantial worldwide revenues.

For his part, Hollande pledges to increase spending on education and job creation--positions that play well among the Socialists' electoral base. He has called for a 75 percent tax rate on household incomes above $1.3 million and vowed to do battle with "the world of finance." Hollande has also pledged to roll back Sarkozy's increase in the retirement age.

The economic plans offered by both candidates seem aimed more at wooing voters than offering realistic solutions to France's economic challenges. France's public spending as a share of output is the highest within the eurozone. Deeper reforms than those outlined by either candidate will be necessary to get the nation's debt burden under control, restore growth, enhance competitiveness, and bring down unemployment.

In light of France's history of social unrest and disruptive strikes, politicians across the political spectrum are justifiably treading carefully when it comes to tax hikes and spending cuts. But without more ambitious structural reforms, France could be in line to trigger a new, and perhaps more grave, round of financial turmoil within the eurozone.

The recent killings in Toulouse by Mohamed Merah, a Frenchman of Algerian descent, put renewed focus on immigration and assimilation, already among France's most contentious political issues. Sarkozy is seen as tougher on immigrants than his Socialist rival. He pushed through a ban on headscarves in public schools, has made the preservation of a traditional French identity a signature issue of his presidency, and recently complained of "too many foreigners" in France, the EU member state with the largest Muslim population.

Sarkozy is to some extent positioning himself to undercut the appeal of Marine Le Pen, who is openly hostile to immigration and wants France to leave the eurozone. Meanwhile, the center-left embraces a more tolerant stance on immigrants, and claims that right-wing policies and rhetoric are exacerbating the polarization of French society.

This article originally appeared at CFR.org, an Atlantic partner site.

Presented by

Charles A. Kupchan is Professor of International Affairs at Georgetown University and Whitney Shepardson Senior Fellow at the Council on Foreign Relations.

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