Thursday, April 24, 2014



An IFOP poll conducted shortly after the municipal elections in late March gave new Prime Minister Manuel Valls a 58% approval rating while President François Hollande sank to an all-time low of 18%. All hopes are now pinned on Valls, as it appears that most voters have given up on Hollande. Could Hollande's foisting so many of his old ministers on Valls's new cabinet be his revenge on the ambitious young prime minister? It leaves Valls rather hamstrung, with little room to maneuver. Nevertheless, if Valls can maintain the voters' confidence while implementing the tough reforms and cutbacks planned over the next three years, he could present a serious threat to Hollande in the 2017 presidential elections.

Less than three weeks after his appointment, a plain-speaking Prime Minister Valls declared that public spending in France represents 57% of its national wealth and that the country can no longer live beyond its means. One of the areas he targeted for savings is the politically sensitive welfare system, where he announced plans for an immediate freeze on benefits and pensions until October 2015, and keeping in place the current freeze on civil servants' base salaries.

Manuel Valls and François Hollande
He also announced plans to reduce the number of administrative regions in France by half by 2021, eliminating duplication and a good many public-service jobs in the process.

Trade unions were predictably unhappy and some Socialist lawmakers had philosophical issues with welfare cutbacks. The government will submit its three-year finance plan to Parliament next week.

Look to May 1 Labor Day for mass demonstrations in the streets.


Another new appointee, Environment Minister Ségolène Royal, started off with a bang when she made the startling announcement that she wants to lift the controversial Ecotax on French heavy goods vehicles (HGV) and shift the burden entirely to foreign trucks. It is perfectly legitimate, she reasoned, that foreign trucks that cross France help pay for the maintenance of the roads they use, especially since they generally avoid our toll roads and our gas statons, filling up in Belgium before crossing France. French truckers already pay various taxes, including the TIPP (taxe intérieure sur produits pétroliers), she said.

She envisions collecting the Ecotax via a vignette required to cross the borders into France, and would oblige foreign trucks to use French toll roads instead of the secondary roads they favor. Her proposal is expected to spark a heated debate in the Parliament which is largely in favor of the Ecotax on all heavy trucks in France where pollution is a growing problem, and it is unlikely to be approved by the EU Commission in Brussels given its discriminatory aspects. For now, Ms. Royal has everybody's attention but little backing.

The Ecotax, based on the "polluter pays" principle and applied only to vehicles of over 3.5 tons, is primarily an anti-pollution tax which is already in effect in seven European Union countries. Its annual revenues in France, estimated at €1.2 billion, would serve to finance the development and promotion of alternative freight transportation via rail and waterways, and to improve public transport in cities by extending tram, bus and metro lines. Many such development plans are now on hold, awaiting the outcome of discussions in Parliament and in Brussels.

Known as a savvy politician, Ms. Royal was brought back into the government by her former partner François Hollande, who after violent protests in Brittany in October 2013 decided to postpone the twice-delayed Ecotax once again, this time until January 2015. It is now incumbent on Ms. Royal to bring this thorny issue to a conclusion. Stay tuned...


The Choc de Simplification that President Hollande announced last summer as one of the ways to make French businesses more competitive is beginning to take shape. Socialist Deputy Thierry Mandon and businessman Guillaume Poitrinal have submitted a proposal containing 50 initial changes to simplify a French employee's paycheck, which today has up to 30 lines before arriving at the net salary figure, compared to just a few lines on a typical German or Dutch paycheck. This very complex payroll calculation costs French companies an estimated €60 billion per year (€50-150 per employee per month), according to the OECD, and involves numerous government agencies.

The plan is to group all the payroll deductions and adjustments into four major categories, bringing the number of lines on a French paycheck down to no more than five or six, and to reduce the number of collection agencies accordingly.

The huge task of overhauling the unwieldy payroll administration will not be completed until 2016, but this is an important first step in the process of bringing the French way of doing business in line with the more efficient methods used elsewhere.

Now if they could just decide to open shops on Sunday we would really be making headway. The issue has resurfaced and Laurent Fabius, Minister of Foreign Affairs who in the recent government reshuffle was given the added job of International Development (including tourism), had said that he is in favor of Open Sundays and would "take care of it". He sees Open Sundays as good for tourism, and tourism as essential to France. Previous governments, always fearful of the trade unions, have never been decisive on the issue, allowing certain business to open and others not, in certain areas only and not in others, for certain months only or until a new directive could be issued... ad nauseam. Fabius's dealings with Syria, Mali, the Central African Republic, Ukraine, etc. should be good preparation for his confrontation with the French trade unions.


Newly famous Sacred Family Foundation

Young Berlusconi
The Milan court that sentenced Silvio Berlusconi last year to a reduced one-year prison term, converted immediately to house arrest or community service in view of his age, has now ruled that Berlusconi has to perform one year of community service in a home for the elderly near his hometown of Milan and submit to an 11 p.m. curfew. He cannot leave Lombardy but is allowed to visit his home in Rome from Tuesday to Thursday where as leader of the opposition party Forza Italia he still wields influence. The Sacred Family Foundation in Cesano Boscone, which takes care of 2000 elderly and disabled people, did not reveal what exactly Berlusconi's "service" will consist of, but since there is a theatre on the premises the former cruise-ship crooner may well find himself entertaning the residents. "Volare... ohoooo".
Success with the elderly crowd guaranteed.

Wednesday, April 9, 2014



The French municipal elections of 23 and 30 March ended in a resounding defeat for President Hollande's Socialist Party, caused by record abstention (38.5%) and a loss of confidence in Hollande's ability to bring down unemployment and restart the stalled economy.

A jubilant center-right UMP party took 150 cities from the socialists, and 11 cities voted for the dreaded far-right Front National party of Marine Le Pen. Newspapers called it a slap in the face for François Hollande, whose leadership and economic policies were thus rejected by a large majority of voters, including a good number of people in his own party. This protest vote called for a change at the highest levels. 

Hollande responded by firing his lackluster Prime Minister Jean-Marc Ayrault and replacing him with the more popular and dynamic Manuel Valls, his former Minister of the Interior. Spanish-born Valls, 51, became a French citizen at 19 and has long belonged to the liberal wing of the Socialist Party. He is sometimes referred to as a Blairite, or as a socialist Sarkozy.

Manuel Valls addressing Parliament

Valls immediately set to forming a new, leaner, cabinet of only 16 ministers that contained a number of surprises:

Ségolène Royal - Welcome back
1) Ségolène Royal - former partner of François Hollande and mother of his four children whom he had left for Valérie Trierweiler - was named Minister of the Environment, Renewable Development and Energy, the third-largest ministry in the government. It was a triumphant comeback for Ms. Royal after she had lost her reelection to Parliament in 2012. Her return to government was made possible by the departure in January of Ms. Trierweiler from Hollande's personal life and from the Elysée Palace.

2) Christiane Taubira, who often quarreled with Manuel Valls, was retained as Minister of Justice.
When he was Interior Minister ("top cop" of France) Valls had vehemently opposed the Taubira Law (drop set prison terms of less than five years in favor of probation; liberate all prisoners who are serving short sentences and have fulfilled three-quarters of those sentences; and teach repeat offenders working skills before their release from prison). Last August the Valls-Taubira fight became so vocal that President Hollande had to intervene (he sided with Taubira).
The re-nomination of Taubira by newly appointed Prime Minister Valls looks like a nod to President Hollande.

3)  The Ministry of Finance was split in two branches - Finance and Economy - run by trusted old hand Michel Sapin as Finance Minister and controversial Arnaud Montebourg as Minister of the Economy and Industry. 
Note: Montebourg, sometimes seen as a loose cannon, may be remembered for his anti-Germany and anti-globalization rants. In 2011 he published a booklet entitled: Votez Pour la Démondialisation!  Beloved by the trade unions, his protectionist ideas and far-left thinking make him an odd bedfellow for Manuel Valls. Was Montebourg imposed as a counter-weight to Valls's liberal leaning?

Six of the Hollande Ministers retained their old jobs and two more were reshuffled into new ministerial positions. Among the latter were former Budget Minister Bernard Cazeneuve who replaced Valls as Minister of the Interior, and Minister of Agriculture Stéphane Le Fol who retained his Ministry but was given the added job of Government Spokesman (formerly held by Najat Vallaud-Belkacem).

Finally, François Rebsamen, socialist mayor of Dijon, was named Minister of Labor. He and Ségolène Royal are the only two ministers who were not part of the earlier Hollande Cabinet.

All told, this new Cabinet is tighter but not markedly different from Hollande's earlier government and cannot be seen as the "break with the past" that many had hoped for. Moreover, Manuel Valls has orders not to deviate from the path to recovery that the president has set, which so far has produced no results but which Hollande still believes will pay off in the long run.

All eyes are now on Valls who, in the mold of young Mario Renzi in Italy, is ambitious and energetic. Will he be able to reassure the disenchanted left while giving full support to the president's difficult task of cutting public spending by €50 billion by 2017? In announcing Valls's appointment President Hollande said Valls would be heading a "fighting government" (un gouvernement de combat). The fight will be tough but take-charge Valls may be better equipped to get results than his mild predecessor was. Let's hope that the difference between Valls and Ayrault will be more than style over substance.

In his 45-minute inaugural speech to the National Assembly on April 8th Valls spoke passionately of his immigrant's dream to join this great country, France, with its admirable values. He called on the Right to cooperate and work together in solving the country's problems. Addressing today's most pressing issue, the economy, he outlined the tax cuts and stimulus program of the president's Responsibility Pact and announced savings of €39 billion to be gotten from cuts in Social Security, Healthcare and Education, which is €11 billion short of the €50 billion in cutbacks imposed by the EU Commission to bring the country's deficit down to 3% of GDP - a near impossibility unless France is granted another extension, its third, which is by no means certain. He also announced a plan to reduce France's administrative regions by half by 2017.

Following his speech Valls did obtain the needed Vote of Confidence (306 vs. 239), but he knows that nervous trade unions and an opportunistic opposition will be looking over his shoulder.

Anne Hidalgo, Mayor of Paris

Amid the gloom of the socialists' defeat in the local elections there was one bright spot. In Paris, socialist candidate Anne Hidalgo beat her UMP opponent Nathalie Kosziusko-Morizet to become the first female mayor of Paris. She had been First Deputy Mayor of Paris under Mayor Bertrand Delanoë (2001-2014). Spanish-born Hidalgo (54) came to France at age 2 and settled in Lyons with her immigrant parents. She became a member of the Socialist party in 1994 and was elected Councillor of the 15th arrondissement of Paris in 2001.

With the return of Ségolène Royal to national politics, the election of Anne Hidalgo as Mayor of Paris, and Valls's nomination of eight women to his 16-member Cabinet, women in France seem to have broken through the glass ceiling - at least in the world of politics.