Down and out: the French flee a nation in despair

The failing economy and harsh taxes of François Hollande's beleaguered nation are sending thousands packing - to Britain's friendlier shores, says Anne-Elisabeth Moutet

 

By 2014, France's public expenditure will become the world's highest, at 57 per cent of GDP Photo: Howard McWilliam

By Anne-Elisabeth Moutet

7:00AM BST 20 Oct 2013

A poll on the front page of last Tuesday’s Le Monde, that bible of the French Left-leaning Establishment (think a simultaneously boring and hectoring Guardian), translated into stark figures the winter of François Hollande’s discontent.

More than 70 per cent of the French feel taxes are “excessive”, and 80 per cent believe the president’s economic policy is “misguided” and “inefficient”. This goes far beyond the tax exiles such as Gérard Depardieu, members of the Peugeot family or Chanel’s owners. 

Worse, after decades of living in one of the most redistributive systems in western Europe, 54 per cent of the French believe that taxes – of which there have been 84 new ones in the past two years, rising from 42 per cent of GDP in 2009 to 46.3 per cent this year – now widen social inequalities instead of reducing them.

This is a noteworthy departure, in a country where the much-vaunted value of “equality” has historically been tinged with envy and resentment of the more fortunate. Less than two years ago, the most toxic accusation levied at Nicolas Sarkozy was of being “le président des riches”, favouring his yacht-sailing CEO buddies with tax breaks and sweet deals. By contrast, Hollande, the bling-free candidate, was elected on a platform of increasing state spending by promising to create 60,000 teachers’ jobs, as well as 150,000 subsidised entry-level public-service jobs for the long-time unemployed and the young – without providing for significant savings elsewhere.

By 2014, France’s public expenditure will overtake Denmark’s to become the world’s highest: 57 per cent of GDP. In effect, just to keep in the same place, like a hamster on a wheel, and ensure that the European Central Bank in Frankfurt isn’t too unhappy with us, Hollande now needs cash. Technocrats, MPs and ministers have been instructed to find every euro they can rake in – in deferred benefits, cancelled tax credits, extra levies. As they ignore the notion of making some serious cuts (mooted at regular intervals by the IMF, the OECD and even France’s own Cour des Comptes), the result can be messy.

On the one hand, the lacklustre economy and finance minister Pierre Moscovici recently admitted that he “understood” the French’s “exasperation” with their heavy tax burden. This earned him a sharp rap on the fingers from the president and his beleaguered PM, Jean-Marc Ayrault. On the other, new taxes keep being announced, in chaotic fashion, nearly every week. “Announced” doesn’t mean “implemented”: the Hollande crowd have developed a unique Wile E Coyote-style of leaks, technical glitches, last-minute tweaks and horse-market bargaining whereby almost nobody knows, at any given time, who will be targeted by the taxman, and how. Unsurprisingly, this is liked by no one except us reptiles of the press, eager to report on the longest series of own goals in the history of government communications.

Take last year’s famous 75 per cent supertax, on individuals earning over one million euros a month. This has still not been implemented. First, it got struck down by France’s Constitutional Council on a technicality. Leaks suggested the rate would fall to 66 per cent. They were confirmed, then denied. Hollande eventually vowed that the tax would be paid by the targeted individuals’ employers, for daring to offer such “obscenely” high salaries. This has just been approved by the National Assembly, and must still pass the Senate. So far, it is only supposed to apply to 2013 and 2014 income, but no one knows if the bill will be prolonged, killed or transformed.

What we do know is that this non-existent (so far) tax has been the clincher that sent hundreds, possibly thousands of French citizens abroad: not just “the rich”, whom Hollande, during his victorious campaign, said he personally “disliked”, and who now are pushing up house prices in South Kensington and fighting bitterly over the Lycée Charles de Gaulle’s 1,200 new places; but also the ambitious young, who feel that their own country will turn on them the minute they achieve any measure of personal success.

In the heart of Paris’s Right Bank, where I live, only foreigners seem to buy flats, at prices entirely disconnected from reality. In my street, I have spotted three new Maseratis. Even before seeing their Qatari plates, I knew they couldn’t belong to local owners: they’re an ostentatious admission of wealth no one wants to make in Hollande’s France. (A luxury car is one of the “outward signs of wealth” your tax inspector has been specifically trained to query. The lesson has been learnt: last year, Rolls-Royce sold no cars in France.) On the Left Bank, elegant Americans buy bijoux apartments on place de Furstenberg, at 30,000 euros per square metre, and venture into the fine Café de Flore for elevenses.

“It’s not only that people don’t like to be treated like criminals just because they’re successful,” says a French banker friend who has recently moved to London. “But this uncertainty in every aspect of the tax system means it is impossible to do business: you don’t know what your future costs are, or your customer’s. You can’t buy, you can’t sell, you can’t hire, you can’t fire.”

While I’m still happy in Paris, I envy him his surroundings, the vibrancy of London, the feeling that anything is possible, the sense of fun I remember from the years I lived there in the Eighties and Nineties, and that I gladly find again every time I zoom in on the Eurostar. Paris, my city of birth, is an elegant museum – where any new idea, in any context, seems to be fated to be shot down by a combination of old, structural conformism and blasé disenchantment.

Today, one out of four French university graduates wants to emigrate, “and this rises to 80 per cent or 90 per cent in the case of marketable degrees”, says economics professor Jacques Régniez, who teaches at both the Sorbonne and the University of New York in Prague. “In one of my finance seminars, every single French student intends to go abroad.”

“The French workforce is now two-speed,” explains a headhunter who shuttles between Paris and London. “Among the young, perhaps a third speak English, are willing to relocate, and want to work. For one thing, their dream employers are the more prosperous of the large French multinationals, almost all those in the CAC40 index, who make over half of their profits abroad, sometimes over 90 per cent – companies like, say, L’Oréal, Schneider or Danone. This is why French universities have shocked the Académie française and now teach many courses in English.

“But I’ve also seen determined young people take jobs in places like Vietnam, with local contracts and nothing like the level of protection afforded by French labour law, in order to gain a proper first experience of business in a competitive environment. And then you have a large group whose ambition is simply to stay outside the economy.”

This means a trade-off with which anyone in France is familiar: young people, and many of their parents, dream of getting any kind of state or local administration post, usually badly paid, very often frustrating, but which ensures complete job security, unrelated to the economic situation, the market, or their own performance.

More than a quarter of the French workforce is employed by some public body or other: schools, hospitals, local and regional councils, the police, the civil service proper – or those new subsidised public-service jobs the Hollande government is so keen on.

While the young French generations were aspiring to cocoon themselves away from the realities of the world, our nearest neighbours were following the opposite trend. In 2000, under a socialist chancellor, Gerhard Schroeder, German businesses paid an astonishing 51.6 per cent company tax – largely to pay for the previous decade’s reunification. Today, this is down to 29.8 per cent, when the French equivalent, the highest in Europe, is 38 per cent. By 2003, Schroeder had embarked on a widespread reform programme, lowering taxes and drastically slashing benefits, curtailing the influence of the unions, and eventually reducing German unemployment from 10 per cent to 7 per cent (it’s 11 per cent in France).

There are many reasons why this wouldn’t work in France, not least because the French Socialists happen to have noticed that Schroeder and his party reformed themselves out of a job. Another is that French unions represent very little: less than 8 per cent of the French workforce overall is unionised, a figure that falls to between 3 per cent and 5 per cent in the private sector. Unions do, however, play a mandated part in a number of negotiation and welfare net structures, the unemployment benefits system, retraining schemes and the national health and pensions co-administration. This, not members’ contributions, keeps them afloat. The law also provides for legal labour dispute fines to be paid to the unions.

French unions see as their main goal the preservation of the status quo: from overprotective labour laws that make it so hard to fire employees that French bosses will do almost anything to avoid hiring new staff (who cost them a whopping 70 per cent in payroll taxes), to perpetuating antiquated regulations dating back to Vichy France, banning Sunday trading and evening shifts.

Recent union legal actions have forced businesses to close on evenings and Sundays, from the cosmetics chain Sephora – where employees protested that they wanted to keep working their late hours – to the British-owned DIY chain Castorama, which belongs to Kingfisher: no wonder Ian Cheshire, Kingfisher’s chief executive, complained last Friday that this harmed the French economy as well as his stores. “The president has said that recovery is in sight: I’m not sure where he’s looking at the moment. The mood is improving in the UK, not in France.”

It wasn’t fated to happen. “By 2000,” says Jacques Régniez, “French multinationals had achieved a very high level of competitiveness. Having committed to the strong franc, in the run-up to the euro they were forced to become lean and efficient. They rationalised production, and French workers became some of the most productive in the world.” French utilities, insurers, aerospace makers and luxury-goods conglomerates were up there with the best. If you wanted the best nuclear plant, crocodile handbag, commercial aircraft, high-speed train, you bought French.

What went wrong, says Régniez, was a bill passed by the then socialist Lionel Jospin government reducing the working week to 35 hours. “Where our competitors, especially the Germans, saw the need to keep prices and costs down, France spent money she couldn’t afford.” The entire system, he explains, tilted fatally to the side of salary hikes, perks and a lowering of retirement age, in the face of every observable demographic trend. Investment slowed down in the private sector, and almost stopped in the public one. “Each year, France has missed out on four GDP points of capital investment. By now, after a decade-and-a-half, we are not only lagging behind, it’s not certain we can make up for it. It would cost a 4.5 per cent hike in VAT, and other significant hikes in payroll taxes. That, quite simply, is not realistic.”

Even France’s vaunted infrastructures – those trains, roads, telecoms cables, the once ultra-performing electrical grid, the nuclear plants, the delayed 4G network – have taken a severe hit.

A French businessman who moved to London last year and asked not to be quoted by name, “because my tax audit would be even more retaliatory than what I’m currently being subjected to”, compares July’s Brétigny train crash, France’s worst rail disaster in a quarter of a century that killed six and injured 100, to the Paddington and Potters Bar derailments. “The rolling stock is ageing, the tracks are in a constant state of disrepair, even the TGVs now have regular delays because of catenary failure.”

Despite disputing allegations of negligence, SNCF have said they will reinforce maintenance “without waiting for the conclusions of the inquiry”. Criticisms have also been made that vast sums went on salaries, benefits and pensions.

But most analysts share the blame between Left- and Right-wing French governments in the past two decades. An investment banker, who has also moved to London recently, dates the wrong choices from the first Jacques Chirac presidency, in 1995. Chirac and his PM Alain Juppé, both Gaullists, decided to reform the huge French public sector’s pension system, to align civil servants’ pay-as-you-go pensions, which were (and still are) much more favourable, with those of the private sector.

There followed three weeks of hard strikes, shutting down the entire country, from schools to public transport to utilities and the post office. Juppé was ready to stick it out, but Chirac blinked. The reform was shelved, and for the next 12 years he stayed in office, Chirac never, ever tried to clash with vested interests again.

Sarkozy had great plans after his 2007 election. He believed in business, and good pay for hard work, and was devastatingly frank about it. It might – perhaps – have passed in prosperous times: one year on, the financial crisis hit, and his brusque style and love of bling clashed with both the times and age-old French preferences. (France is an old Catholic country that, for over a century, was influenced by unapologetic Marxism. It is atavistically hostile to money.) The reforms Sarko managed to pass, much milder than necessary, still ensured his unpopularity. He bet on French realism, and lost.

Realism – actual, real-life realism – is not an accusation you can levy at Hollande. Like Chirac – who supported him both because of a deep personal dislike for Sarkozy, and because they are in many ways very similar – France’s unlikely seventh president of the Fifth Republic is a professional politician, a graduate of the top government school ENA, and has never held a job in the private sector. Both Chirac and Hollande come from Corrèze, in central France, a region that has regularly provided French politics with a certain type of wily opportunist. Both appear easy-going and friendly, and both are complete cynics, with very little in the way of ideals, and an infinite capacity to scheme in order to stay in power.

Chirac, like Hollande, knew how to cultivate an array of political allies: in the case of Hollande, this means keeping the Left of his party as well as his Green allies happy with a number of symbolic measures, from the supertax to the recent anti-fracking bill.

Uninterested in the impact of morale and image on politics and the economy, Hollande believes that the economic cycle is bound to turn (he has said several times already that the recession is behind us), and that all he’s got to do is stay in power until things get better – thanks to the Chinese, the Americans, it hardly matters which. He doesn’t even worry about Marine Le Pen’s inroads in local elections: a junior aide in the Mitterrand Élysée 25 years ago, he believes the National Front, conjured up by his old boss, is a convenient accessory designed to split the Right and help him win a second term in 2017.

Professor Régniez believes this is very dangerous. “Sarkozy narrowly lost in 2012 for personal reasons – his style annoyed voters who could have agreed on his policies, but who wanted to punish him: 18 per cent of them voted for Marine Le Pen, against only 5 per cent for her father in 2007.

“This should be a warning to other countries, like Britain – it’s all very well punishing a conservative politician you’re dissatisfied with by voting for a maverick, Le Pen here, Farage there. But it gets the likes of Hollande elected. Think well: is ours the kind of future you want for your country?”

© Telegraph Media Group & Anne-Elisabeth Moutet, 2013

France prefers subsidy to égalité

Competition is a dirty word in France. It threatens the privileges of state employees, says Anne-Elisabeth Moutet

Do French unions have too much power? Anne-Elisabeth Moutet debates on F24.

By Anne-Elisabeth Moutet

1:40PM BST 15 Jun 2013

217 Comments

As the French rail strike followed the French air traffic controllers’ work stoppages last week, and tens of thousands of passengers and commuters saw their plans disrupted, it became a point of perverse pride for French commentators to deny that anything was very much amiss. The government, we were told, wasn’t really unhappy with the popular message being sent to Brussels, whether on the Single Sky Initiative, or the (very slow) opening of the French railways to free competition. In fact, it was felt at the Élysée that François Hollande, a man who doesn’t come equipped with a handbag, would only find his negotiating stance against too-fast reforms strengthened by this visible expression of national hostility.

British public opinion sees the EU as a source of Byzantine regulations hampering free trade. A large cross-section of the French are incensed by what they see as the European Commission’s Anglo-Saxon-tainted liberal economists and free-marketeers attacking the myriad privileges and protections that make the life of those happy enough to benefit from them so comfortable.

Competition is often a dirty word in France: never more than when it threatens to disrupt “avantages acquis” (acquired advantages), the gold-plated benefits a group of (usually) public employees has managed to have enshrined in contractual agreements. For years, among the various bonuses that can double an SNCF railwayman’s salary, was a “prime de charbon” (coal allowance), finally cancelled long after the last steam engine was retired. Pension age starts at 50 (soon 52) for train drivers and 55 for most other personnel.

Similarly, the 300,000 employees of EDF, the nominally privatised national electricity utility (the French State still owns 85 per cent of its equity) enjoy subsidised meals, holidays, cultural events, housing, as well as huge discounts on their power bills, lifetime employment, and early retirement provided for by a pension fund separate from the cash-strapped national system. Most of these perks are managed in-house by a committee dominated by CGT, the Communist union, on a €500 million budget funded by a statutory 1 per cent contribution of the company’s turnover. As a result, EDF, a multinational corporation of recognised excellence, turns only nominal profits compared with its competitors.

It hurts to lose these benefits, which explains why the French public sector strikes so often and so fiercely. The paradox is that apart from the quarter of the French workforce employed by the bloated French state, almost no one else in France belongs to a union – only 7 per cent of the 22.3 million-strong workforce do. Yet because the role of the unions is enshrined in French labour laws, the country’s main union representatives are party to all government negotiations on social reform – with predictably intransigent results.

Since 1979, when Giscard d’Estaing’s then PM, Raymond Barre, a no-nonsense professor of economics, tried to go blood, sweat and tears on the French after the second oil crunch, and lost, the mantra in Paris has been negotiation, negotiation, negotiation. Less than two years later, Ronald Reagan broke a lockdown with striking American air-traffic controllers by firing every one of them, and replacing them by requisitioning their military counterparts. The French still haven’t recovered from such a terrifying spectacle. The only prime minister to try to hold firm against a public service general strike, Alain Juppé, had to cave in ignominiously after two months in 1995, and his boss Jacques Chirac lost a general election just 18 months later. In short, courage doesn’t pay in France.

Needless to say, François Hollande doesn’t want to consider such extremes. For one thing, all this week’s strikers are his natural constituents: the last group of socialist voters in France are government employees. Teachers will, in all likelihood, stay with him, but train or air-traffic workers could succumb to Marine Le Pen and her populist, anti-Brussels, anti-“international finance” stance –or the increasingly similar-sounding Jean-Luc Mélenchon, the extreme-Left leader.

France’s socialists have had no New Labour conversion in which they officially renounced Marxist ideology. Hollande declares himself to be a social democrat in private, or abroad; but denies it frantically in public. As a result, a strange parody of class war will continue here for the foreseeable future, defending privileges instead of fighting them, led by unions representing little more than their own apparatchiks.

© Telegraph Media Group & Anne-Elisabeth Moutet, 2013

Jacques Chirac's trial holds little fear for the ultimate bon vivant

Jacques Chirac's long-awaited corruption trial will begin in Paris this week. But, as Anne-Elisabeth Moutet writes, he can go to court on Tuesday with serenity.

Jacques Chirac - Photo: GETTY

By Anne-Elisabeth Moutet, Paris 7:00AM GMT 06 Mar 2011

When Jacques Chirac finally shows up for his corruption trial, on Tuesday, in the Première Chambre Civile of the Paris Law Courts – the same where Queen Marie-Antoinette was once judged – he will sit on a special upholstered chair instead of the usual wooden bench in the dock.

There will be an extra lectern for the former French President's notes and documents, requested by his barristers; and a secured room within the historic Law Courts building will be made available to him to rest any time he "feels tired."

The court will already have sat for a full day; but Chirac, who is now aged 78 and in questionable health, has exceptionally been allowed to show up only on specific dates, the ones on which he is scheduled to be questioned by the judges.

Otherwise, we are asked to believe, the former president, now "a private citizen" after enjoying immunity from prosecution during his two consecutive terms from 1995 to 2007, will be tried like any other French politician accused of confusing official and party funds.

The case goes back to the early 1990s, when Chirac was Mayor of Paris.

On the city payroll were, it turned out, dozens of full-time employees who never did a stitch of work for the city. They were instead detailed to the right-wing RPR Gaullist party, there to help Mr Chirac's eventual, and successful, 1995 bid for the presidency.

The facts are not in dispute: other Chirac associates have already been sentenced for them, most notably former PM (and current Foreign Minister) Alain Juppé, who at the time was – conveniently – both Secretary General of the RPR and Paris Deputy Mayor for Finances.

Finally tried in 2004, Juppé was given a 12-month suspended jail sentence, and was declared ineligible for office for one year: he had to take a visiting professor's job in Canada for two years, before he could resume his political career.

The question is whether Chirac knew of his party's financial arrangements.

Although he denies it, he signed last year an out-of-court agreement with the capital's authorities whereby he and his party would refund them to the tune of €2.2 million. In exchange, the City relinquished its suit – to see it taken up by a group of Parisian taxpayers, outraged at what they see as a sweet deal for "less than half the true outlay".

As the case stands, Chirac, while theoretically facing up to 10 years in jail, a €150,000 fine and a five-year voting ban, wouldn't seem to be in really hot water.

For one thing, the state prosecution office – which operates under the direct authority of the justice ministry – has already said it was pushing for a dismissal, "because there isn't enough proof."

Only cynics, perhaps, will observe that we stand barely a year from the next presidential election, and Nicolas Sarkozy will need the entirety of the Gaullist party, nostalgic Chiraquiens and all, squarely behind him in what will be a tight race.

For another, the 6'3" beer-drinking, calf's head scoffing, larger-than-life bon vivant the French always had a soft spot for is suddenly rumoured to be "frail", "ailing", and suffering from Alzheimer's – rumours which Chirac and his high-profile wife, Bernadette, have carefully denied in targeted public statements. (That's officially what the special chair and lectern and side room near the courthouse are all about.)

This should be enough to ensure, in the worst-case scenario, a suspended sentence.

Never mind that only two weeks ago Chirac couldn't bear to miss the Paris yearly Agricultural Show, which he has faithfully visited on opening day for the past four decades, whether in office or out.

There he was mobbed by the crowds, basking in the admiration and love of tens of thousands of his favourite constituents, French farmers, who feel nobody has or will ever fight their corner as fiercely again. Nicolas Sarkozy is usually booed at the Salon de l'Agriculture.

It is ironic that the trial should take place barely one week after one of Chirac's protégés, Michèle Alliot-Marie, was sacked from her job as foreign minister merely for having accepted free flights from a relative of Tunisia's just-deposed strongman, Zine el-Abidine Ben Ali. (It is even more amusing that she should be replaced by none other than Alain Juppé, who at the time of his sentencing, for the same facts Jacques Chirac is now being tried for, was said to be bitter at having to carry the can for persons unnamed.)

In the last a couple of years, the climate in France has become starkly intolerant of corruption, extra perks, dodgy political financing and the like.

The public used not bat an eyelid at secret second families housed and guarded at the Republic's expense (François Mitterrand's), lavish holidays paid by exotic tycoons in five-star palaces (Mitterrand, Chirac), gifts of diamonds by megalomaniac African tyrants (Valéry Giscard d'Estaing), secret state funds re-routed to political campaigns (everyone's, even staid, Calvinist Socialist PM Lionel Jospin), not to mention a comfortable blurring of the private and public use of what must surely be the loveliest official real estate in the world, all the aristocratic palaces of France's nobility, complete with their furniture and artworks, turned into ministerial offices and grace-and-favour homes.

No longer.

A combination of the economic crisis, Nicolas Sarkozy's perceived love of bling, and the globalisation of political sensitivities has made French politicians' life less comfortable of late.

One minister was recently sacked because he charged his office for €12,000 worth of Cuban cigars. (And he had to pay for the cigars.)

Another was a victim of an early reshuffle because she'd lent her grace-and-favour flat to her unemployed brother for one month. Yet another lost his job after favouring private planes over scheduled flights.

Besides the ousting of various strongmen, the Arab spring claims as collateral damage the reputation of a number of French politicos, as week after week their holidays with this or that tyrant are being made public.

What is perhaps surprising is the Teflon-like popularity of Jacques Chirac even today.

The French are largely aware that in or out of office, Chirac never paid for a luxury holiday in his life (in Morocco, in Oman, at the luxurious Hôtel du Cap-Eden Roc on the Riviera, as guest of the luxury tycoon and Gucci owner François Pinault in his St Tropez compound.)

They know Chirac was proven to have spent some €4,000 a day in "entertaining and food expenses" when he was Paris Mayor. They know the Chiracs have been living rent-free since they left the Elysée palace in 2007 in a luxurious 4,300 square foot Paris flat on the Seine, 3 Quai Voltaire, just opposite the Louvre, "loaned" by the family of Lebanon's slain PM, Rafik Hariri. But apparently, they don't care.

However strange it may seen, Chirac, who is the scion of a provincial industrialist, married to the aristocratic daughter of an early De Gaulle supporter, and whose constituency home is a 17th century château he had listed in the early 70s to make its maintenance tax-deductible, is seen as having the common touch, being one of the people.

His second term as president was marked by strikes and rising unpopularity, but now that Nicolas Sarkozy's poll numbers have sunk even lower than his ever did, he is considered fondly by Right and Left alike.

The former regret his more consensual style. The latter give him credit for opposing the Iraq war from the start.

All things considered, he can go to court on Tuesday with serenity – nothing, not even a judicial rap on the fingers, can seemingly change his reputation.

© Copyright Telegraph Media Group & Anne-Elisabeth Moutet 2011

How Sarko Got His Groove Back

A triumphant 36 hours in Britain.

Paris With Nicolas Sarkozy's precipitous slide in the polls finally reversed thanks to a carefully calibrated spin campaign and an unexpectedly successful state visit to Britain, there are long faces to be seen on the left--but even longer ones inside the president's own party. Call the French inconsistent. They objected to their new president's perceived flaunting of his private life. But give him a picture-perfect trip to England, complete with horse-drawn carriage ride into Windsor next to Her Majesty Queen Elizabeth II, gala evenings, a speech before the Houses of Parliament, and a new commitment to a French-British alliance equal to the French-German "axis" that for the past half-century has kept France in the leadership of Europe--and what do the French pick up on but the accolades bestowed by the British press on Sarkozy's new wife. "London falls for Carla--Carlamania seizes Britain!" goes the headline in Le Monde. "Carla steals the show," trumpets Libération. And that's only the supposedly "serious" (and usually anti-Sarkozy) left-wing press. It took a 36-hour visit, one night at Windsor Castle, and nine dress changes (all in demure but très chic Dior) for Sarko's poll numbers, which had dropped 30 points in three months, to finally inch back up, from 35 percent to 40 percent favorable, leaving him a bit of elbow-room to announce a series of cuts in welfare spending last Friday. The week before last, everyone in France was dismissing Sarkozy as last year's wonder, a four-year lame-duck president who'd managed to squander a clear victory in record time. Worse, he'd managed to lose half a dozen large cities to the left in local elections on March 9 and 19--almost without help from the opposition Socialists. As France moves more and more into a two-party system (Sarkozy has destroyed Jean-Marie Le Pen's far-right National Front in a neat mirror-image of François Mitterrand's shrinking trick with the Communist party a quarter century ago), the Socialists still don't have a leader or a platform. Deciding on these--at their next national conference in November--promises a lively free-for-all, as former presidential candidate Ségolène Royal slugs it out with her archenemy, Paris mayor Bertrand Delanoë. Unlike their German Social Democratic or British Labour counterparts, the French Socialists still haven't formally abandoned Marxism. If they do, they fear losing the votes of France's three (count 'em!) small Trotskyite parties preaching class struggle and antiglobalization. As a result, the Socialists' message is often distorted by the tension between ideology and realism. Meanwhile, they look less modern, less diverse, and older than Sarkozy's troops, which helps explain his victory last year. (It took Sarko to appoint blacks and Muslims to major cabinet positions and to insist on strict equality between the sexes in appointments ranging from cabinet jobs to the Legion of Honor.) As Sarkozy seemed intent on an own-goal ignominious free fall, his real enemies started coming out of his own party's woodwork. They are the self-proclaimed Gaullists, to whom the new president's pro-Americanism is anathema, and the keenest of them all is a lanky figure well-known in Washington, Dominique de Villepin, the former foreign minister and prime minister of anti-Iraq war fame. Villepin and Sarkozy hate each other's guts. It's political--they have different views of the world, and Sarkozy despises in Villepin the career bureaucrat who never ran for elective office--but also personal. Villepin, who for a good while toyed with the idea of running for president himself in 2007, has been indicted in the Clearstream scandal, a smear campaign in which Sarkozy's name (and others') were faked on a computer list purporting to show holders of illegal Luxembourg bank accounts. Around 2004-05, Villepin and, in all likelihood, President Jacques Chirac, allegedly hired through intermediaries a computer expert to produce the list, in a dirty-tricks bid to prevent Sarkozy from running for president. The chief intermediary was an officer in the French intelligence service, General Philippe Rondot, who found the task distasteful enough that he kept detailed notes in his office safe, to be produced if any of this leaked. It did. It should probably be noted here that even if Villepin is found guilty and sentenced (in all likelihood to a fine and a suspended prison sentence), this will be no hindrance to his pursuing a political career. The bright line in France is personal pecuniary gain. Another former prime minister, Bordeaux mayor Alain Juppé, was three years ago sentenced to a 14-month suspended prison term for financing the Gaullist party through City of Paris coffers. Since he did not help himself to a centime, he was reelected in Bordeaux in March with an even higher majority. While Villepin is incensed that Sarko didn't lift a finger to slow down the judicial process against him (French judges are civil servants; it is not uncommon to convince them to slow a proceeding to a crawl), his official reason for opposing Sarkozy is that the president is betraying the "Gaullist legacy." One sure sign that Villepin intends to pursue an active political career, probably even run for president in 2012, is that he's recently registered with the Paris bar. He doesn't need the work--he is already getting both his prime minister's pension and an ambassador-at-large's salary from his civil service career--but as a lawyer, he can receive large fees from clients without having to disclose them. It is a known dodge in French political finance. Sarkozy himself was a barrister. So are Socialist chief François Hollande and his former partner Ségolène Royal, even though they're both (like Villepin, Chirac, and many more--but not Sarko) graduates of the illustrious Ecole Nationale d'Administration and therefore civil servants for life. Until last week, Villepin and his bevy of anti-American, anti-EU, largely pro-Arab "historic Gaullists" were licking their chops at Sarko's fall from grace, punctuating the president's descent in the polls with snide attacks. "Europe has never had borders.  .  .  . Europe made concrete commitments vis-à-vis Turkey some decades ago and [those commitments] need to be honored," Villepin told students (and the local great and good) at Galatasaray University in Istanbul, in open criticism of Sarkozy's well-known refusal to let Turkey into the EU. "France has no call to reintegrate NATO," he thundered in an interview with the radio station Europe 1, just as Sarkozy prepared to announce exactly that at the Bucharest NATO summit. "I might very well run for election in France," he confided to La Tribune de Genève. "The government's message isn't clear enough," he sniped on public radio France-Info. Even when selling his collection of Napoleon memorabilia and papers (tellingly, through the auction house owned by a longtime Mitterrand acolyte, Pierre Bergé), Villepin seized the occasion to express his grave doubts about France sending more troops to Afghanistan "in the absence of clearly defined goals by the United States and NATO." Sarkozy's reaction was typical: Just as, after winning the election last year, he brought half a dozen leftwingers into his cabinet, throwing the defeated Socialists into further disarray, last week he had two Villepin associates appointed to leadership posts within the UMP, the Gaullist party, one of them as vice secretary in charge of defense. Sarko believes that while Villepin stays out in the cold, he can whittle some of his troops away from him. It's a daring strategy, undertaken even before the poll numbers started to improve, but Sarkozy, who at 53 is two years younger than Villepin, has been in politics for twenty years longer. Villepin has written several admiring books about his hero, Napoleon, but it's Sarkozy who's got the true Bonaparte style. © Copyright The Weekly Standard & Anne-Elisabeth Moutet 2008

Anyone who discounts Nicolas Sarkozy as a lame-duck president is missing the point

Entente cordiale: Nicolas Sarkozy and his new wife, Carla Bruni, will be entertained at Windsor Castle

"Sarkozy sinks even further!" was the headline in Le Canard Enchaîné, France's Left-wing answer to Private Eye, as the French president launched a new nuclear submarine at Cherbourg last week.

Nicolas Sarkozy, who is beginning a two-day state visit to Britain on Wednesday - three months before France assumes the European Union's rotating presidency - will arrive weighed down by a controversial image and baggage as heavy as the gold Rolex watch which he has only recently been persuaded to give up.

Fellow European leaders consider, with feelings ranging from fascination to dismay, his precipitous slide in the opinion polls of more than 30 points in less than three months; his party's poor performance in last week's local elections, and the cloud of high-octane gossip that has surrounded his very public divorce and his new marriage, to the model and singer Carla Bruni.

All those marital complications may sound horribly familiar to the Queen, of course, as the mother of three children who have divorced.

She will do the French president and the new Mrs Sarkozy what Élysée aides called the "rare honour" of accommodating them at Windsor Castle - not Buckingham Palace - on Wednesday. Mrs Sarkozy has rehearsed her curtsy, ready to "follow proper British protocol", French diplomatic advisers confirmed.

The Sarkozy visit is not just designed to make him look as lofty and presidential as polls at home suggest the French would like him to be. It is also aimed at producing some substantial diplomacy, drawing Britain into a more decisive role in Europe and as a supporter of France's return to Nato, four decades after General de Gaulle walked away from the Atlantic Alliance in a huff. If it happens to miff the German chancellor, Angela Merkel, after Berlin pulled the rug from under Mr Sarkozy's projected Mediterranean Union by voting against EU subsidies, so much the better.

For, almost obscured by the publicity and paparazzi pictures, is the fact that Mr Sarkozy has a long-matured plan of what he aims to achieve in France and abroad. "I've had 30 years to think of what I'm going to do," he told an interviewer shortly after his election last year.

He may have been surprised, and infuriated, by his loss of popularity; he thought he had been elected with a clear mandate to modernise France, and that the French wouldn't mind a younger look and style to go with it. (They did, terribly; they wanted a traditional figure who would adopt a grand bedside manner while applying the forceps.)

But anyone discounting Mr Sarkozy as a four-year lame-duck president, facing opprobrium at home and abroad just like America's George W Bush, is missing the point. Mr Sarkozy is no family heir comfortably groomed for power, no École Nationale d'Administration upper civil servant gone into politics with a safety net and a network of supercilious grad school friends.

His own father, a Hungarian refugee from communism, told him, before leaving the household for a peripatetic life full of pretty women, that "with a name like yours, you'll never make it in French politics".

Mr Sarkozy got his start at the grassroots, handing out leaflets and organising young Gaullists. He snatched the city hall at Neuilly aged 28, when his political mentor had to undergo a routine operation. He has always made enemies, and has often been unpopular.

In 1995, he briefly considered quitting politics, after he left Jacques Chirac's side to support his Right-wing rival Edouard Balladur's bid for the presidency, only to see Mr Balladur trounced by the more experienced Mr Chirac. At the time, newspaper cartoons showed Mr Sarkozy as a diminutive, cartoonish traitor, and it seemed his reputation could not recover. But it did, as he forged alliances, seized the Gaullist party from Mr Chirac's remote stewardship, and eventually defeated rivals to stand alone as the Right's presidential hopeful in the polls.

After the 2005 riots, when he was interior minister, the Left, attempting to whip up an "Anyone But Sarkozy" front, painted him as a quasi-fascist and racist. This doesn't work so well today, now that he has appointed six former Left-wingers to the most diverse cabinet in French history. Mr Sarkozy is no Margaret Thatcher. He is a man of conviction, but more of a pragmatist than an ideologue. Head-on conflict doesn't work with the French, so he would rather avoid it when possible.

He believes France will suffer fatally in the global competition stakes without reforms. But he wants to slide these past the unions by agreeing to any number of temporary sweeteners, so long as his real goals - structural reform of France's too-generous social and welfare net and of the health and state school services, plus lower tax on businesses and services - remain intact.

This strategy succeeded last November, when Mr Sarkozy defused a threatened transport strike while reaching an agreement on a common retirement age for public- and private-sector workers. And even as his party was dealt a resounding slap in last Sunday's local elections, an opinion poll found that two-thirds of voters want reforms to be implemented faster. Seated in their collective dentist's chair, the French seemed to beg for the drill - and for the whole thing to be over with already.

Mr Sarkozy has now announced that he will increase the pace of reforms, to derisive comments from the Left. He can, however, brush these aside because at national level he has only a divided opposition with which to contend.

The recent "bling-bling" anti-Sarkozy campaign was waged on style, not substance, precisely because the Socialist party is still split between two leadership contenders (Ségolène Royal, whom Mr Sarkozy beat to become president, and Bertrand Delanoë, the mayor of Paris), has no platform, and can't manage to make peace with the Greens and three small Trotskyite parties whose votes it crucially needs.

The president's real opponents are within his own party, where the old anti-Atlanticist Gaullists, horrified by what they see as a betrayal of France's non-aligned tradition, are hoping that a challenger will emerge to stand against him for the Gaullist candidacy in the 2012 presidential election.

One such might be Alain Juppé, mayor of Bordeaux and a former prime minister; another possibility is the former foreign secretary and prime minister, Dominique de Villepin. But Mr Sarkozy's bet is that he has more political experience, and more experience of life's reversals, than any of his rivals.

Watch him this week as he proclaims a "new fraternity" between France and Britain, in a carefully honed speech to both Houses of Parliament. He has been knocked down before, but never out.

© Copyright Telegraph Media Group & Anne-Elisabeth Moutet 2008

Elites, élan et l'Etat

The Ecole Nationale d'Administration is a launch pad for meteoric careers in the civil service, politics and industry. Anne-Elisabeth Moutet asks how its unabashed elitism will serve France in the 2000s

They are all alike. Or at least they look it. Smooth, clever, quick with an analysis, sometimes impressively efficient; often infuriatingly flippant and detached from the nuts and bolts of the organisations they run. France is the only country – apart from Japan, with omnipresent Tokyo University ('Todai') graduates – which has a seamless front linking top civil servants, government officials, business leaders, even finance wizards. The President of the Republic, Jacques Chirac, is a member of the club. So is his prime minister (and Socialist political opponent), Lionel Jospin. So are their rivals within their parties. So are the chairs of France Telecom, Renault, oil giant Elf-Aquitaine, 17 of the 20 largest French banks, water utility giant Vivendi, four out of six broadcast television channels (public and private), half the French Cabinet, two-thirds of partners at Rothschild et Cie merchant bank. And so on, and so on.

All these people are graduates of the Ecole Nationale d'Administration, known in France as ENA. It is a government school whose students enter via a gruelling competitive examination (only 120 are admitted each year) and exit with a precise ranking that will determine their careers.

The influence of ENA has been compared with Oxbridge in the UK. It is at the same time more and less meritocratic, ENA-bred technocrats will argue almost convincingly. 'In France, you succeed and are integrated into the highest levels of society only through scholarship,' says one. 'In one generation, you can become a firm member of the establishment. In the US, in one generation you can become very rich but you will not become a Wasp. What is undemocratic is that once you belong to the elite, you will never fail. There are no sanctions, except for political ones, and these are not final, because the same people come back two years later. There is a network of solidarity.'

ENA was created on October 9, 1945, by a decree signed by General Charles de Gaulle, then heading the newly liberated France's provisional government. He wanted to remove once and for all the largely Napoleonic French administration 'that sadly had shown in 1940 how obsolete it had been allowed to become'. Behind this lay an old French fear – the defeatism and failure of its elites, as shown by the large number of high-level collaborationists in the Vichy government during the Second World War. Much the same had happened in 1871, when Professor Emile Boutmy created the Ecole Libre des Sciences Politiques, later IEP (familiarly known as Sciences Po) directly after the French defeat in the Franco-Prussian War.

The school was the brainchild of a future prime minister, Michel Debré, who would later draft the Constitution of the Fifth Republic in 1958. He said he wanted to give 'young students of all conditions' access to the kind of studies until then 'the preserve of the children of the rich Parisian elite, studying at the Institut des Etudes Politiques'. Ironically, Sciences Po, which had fulfiled its promise in 1914, had failed in 1940 to vote for the government of Marshal Henri Pétain, and was nationalised in the same legislation that created ENA.

No one could have known, in the flush of liberation, quite how much influence ENA graduates, or énarques, would eventually wield in France. Yet their image – there are now around 4,500 énarques in France – evolved to evoke some of the very things ENA was created to dispel: a haughty, inbred caste of privileged young men (and about 20% women) firmly believing that their destiny is to rule the country in close association with other énarques, with little more than contempt for whoever is not cast in their mould.

The scarcely concealed real power is evident when you start listing famous ones. According to another study, only 10% of politicians are énarques, yet they hold almost all the high-profile jobs. Of all France's presidents of the Fifth Republic, only two – Valéry Giscard d'Estaing and Jacques Chirac – were young enough to attend the new institute. De Gaulle tended to pick old Resistance companions as his chief ministers, with the notable exception of Georges Pompidou (who, like his contemporary Jean-Paul Sartre, taught French literature in a lycée during the Occupation).

Pompidou's resulting inferiority complex made him pick his own best and brightest from among the énarques, rather than from the ranks of historic Gaullists, whom he felt would always remind him of his wartime attentism, or lack of political commitment. Hence the brilliant careers of politicians and industrialists such as Chirac, Raymond Barre, Michel Jobert, Jacques Calvet and Edouard Balladur. Similarly, the Left had its own énarques: Lionel Jospin, Michel Rocard, Jean-Pierre Chevènement, Laurent Fabius, Pierre Joxe, Jacques Attali, and later, Martine Aubry and Elisabeth Guigou, among others.

The former Speaker of the Assemblée Nationale, Philippe Séguin, as well as his successor, Fabius, are énarques. The governor of the Banque de France, Jean-Claude Trichet, is an énarque. Autodidact big bosses, who may harbour their own opinion of énarques, still hire a few – so that those crucial telephone calls or discreet meetings can always be arranged between 'old colleagues'. Foreign governments send a few of their best and brightest to ENA to have someone who will help them understand France: there is a special programme for foreigners at the school, the only notable differences are that they are not ranked (ensuring they have a better time among the fiercely competitive students) and spend only three months doing a practical trainee stint (le stage) in a French administration, as opposed to two stints of six months for French students. Such high-flyers as the German Joachim Bitterlich (currently tipped to become the European Union's foreign policy representative) or the Briton Matthew Kirk of the Cabinet Office attended ENA; most European nationalities are usually represented, as well as Japan, South America and Africa.

Edith Cresson, that famously crusading anti-énarque, who ordered the school's removal in 1992 to Strasbourg in a failed attempt to lessen its influence, still employed three énarques in the top jobs among her staff when she was prime minister. Probably the most accurate criticism I have heard of her was that 'she didn't know how to pick her énarques. The ones she got were absolutely the wrong ones, no charisma or organisation. They let themselves be trampled all over by everyone else's énarques during inter-ministerial staff meetings. Of course, later she gave up on énarques and hired her dentist.' Thus speaks another énarque – a chief of staff for one of Cresson's former ministers.

You can rise pretty high in France without belonging to this caste but, as the example of the late prime minister Pierre Bérégovoy shows, you are never allowed to forget that you are not quite top drawer. You will not be forgiven your mistakes. Bérégovoy – driven to suicide in the early 1990s by the disclosure of an interest-free loan he was given by a shady business friend of François Mitterrand – was the target of cruel jokes from members of his own government. Interior Minister Pierre Joxe, himself an énarque and the son of a Gaullist minister, once 'defended' Bérégovoy against criticism by remarking: 'You only have to look at Pierre Bérégovoy's socks to know he's an honest man.'

What is conveniently forgotten is how weighted the scales are in favour of those students who already know what the game is all about, usually because their families have been there first. The oral examination that ends the round of written tests to get into ENA is as much a test of social ease, a certain type of detached repartee, of social background, as it is of general knowledge. The selection committee, which in addition to professors, includes old boys and girls of every variety, tries to put the student off, with questions such as: 'What trade did [JM] Keynes' wife practise?' (One student who actually knew the correct answer – a Ballets Russes dancer who ran with the Bloomsbury crowd – was still not passed: he had committed, he recalled with bitterness 30 years later, the cardinal sin of shooting back his answer 'too earnestly, as if I were sitting in a quiz show instead of making a flippant joke of it'.) 'Who, for you, is the woman who best represents the average French female?' 'Do you prefer Athens or Sparta? Talleyrand or Fouché?' The same unlucky candidate gave Michèle Morgan as the epitome of French femininity, only to be countered languidly by a white-haired diplomat with: 'But what about Brigitte Bardot?'

The two-year course includes a practical stage in an administration, state-owned company or even a foreign country, as well as lectures in public law, economics, history and political science. Tension is kept at a high pitch; the final exam includes a ranking that effectively will decide the énarques' future career for the next 40 years. Only the top 15 students of their 120-strong year at ENA (la botte) can join the civil service grands corps (Inspection des Finances, Cour des Comptes and Conseil d'Etat). These are inter-ministerial bodies that control state finances and procedures of the state administration. Inspection des Finances is by far the strongest network – they are superénarques who believe they are a different breed from all other énarques. Most of them then go on for a stint at the French Treasury: no anti-Frankfurt advocates need apply. The rest will become préfets, diplomats, and so on, their networks never as high powered as expected; their careers and pay never quite hitting the heights.

The result of this inbreeding, critics have repeatedly warned, is to create structural weaknesses in the French economic and political fabric, a tendency to do deals with one's peers rather than let them assume the full weight of their decisions – witness the constant bailing out of ailing French companies by the government, from Dassault to Air France.

The French elite rise to the top without any business experience; they apply to every situation the strong authoritarian hierarchic mould they learnt in the civil service; they are remarkably insular and ignorant of the world outside France. For example, Jacques Attali insisted that an 'Anglo-Saxon plot' had cost him his job at the European Bank for Reconstruction & Development, not his lavish spending on the bank's headquarters. They demoralise the majority of civil servants, politicians, and businesspeople who, knowing they are not members of the club, realise that most top jobs will escape them, even if they have spent an entire career in their company or political party.

Unlike Whitehall civil servants who come from a slightly more varied academic background, even if a great many are Oxbridge, they have read an infinity of different things there, énarques have spent their formative studies swotting on narrow subjects. 'While the studies were of a very high level,' remembers one British énarque, who enjoyed his time at the school, 'I found it impossible to have real debates with my classmates. They were amazingly bright but they would never "waste time" in conversation or intellectual debate when they could be gaining the few points that meant a difference in ranking. All they always wanted was "the right answer" – it dismayed many of our lecturers.'

The danger with Oxbridge graduates can be dilettantism; but it has advantages – a sense of distance that the average énarque cruelly lacks. On the other hand, it does not much matter what your social background is when you have been to ENA; the school makes you. And in France, accent and delivery have got to do with education, not background. However, the snobbery is confined within the school. The Inspection des Finances actually prints its own annuaire (listing of past graduates of inspection), distinct from the less exalted annuaire de l'ENA. Anyone thinking that Jospin (ranked in the 80s, foreign ministry) is on the same level as Chirac (ranked tenth, Cour des Comptes) or Fabius (first, inspecteur des finance) is missing a key nuance in French politics.

Through France's mathematical and scientific tradition, and because the only other school that approaches ENA in terms of social promotion is the top engineering school Polytechnique – which your brightest énarques, from Giscard d'Estaing to author Alain Minc, have also attended, énarques are usually much better plugged into technology and business. One example is Michel Bon, chairman of France Telecom, universally acknowledged to be the best among European telecommunications chiefs. Bon, an atypical enough inspecteur des finances that he headed the hypermarket chain Carrefour for several years, really understands what industrial policy is about.

But then French culture is about top-down industrial policy all the way from Louis XIV: anything that requires massive investment and infrastructure, from the high-speed TGV trains to fibre optics, telecommunications, etc. Your average énarque, however, is blind to the 'bottom-up', that 'post-industrial revolution that takes place in the bedrooms of 14-year-olds', as the writer Adam Gopnik once put it. The Internet baffles them – they cannot comprehend that it has no centre.

And yet most members of this elite still feel they have to prove themselves in different areas, always with the detached attitude of the amateur. The solution in France? Literature, of course. Attali, Jean-Yves Haberer, Juppé, Giscard d'Estaing have all written rather bad, bloodless novels. Jean-Claude Trichet writes poems and essays on poetry. Banque Nationale de Paris' Michel Pébereau, even in the middle of the bank's current hostile takeover bid for Société Générale and Paribas, reviews science fiction books for a highbrow magazine. Having monopolised almost all positions of power in France, énarques still crave recognition from circles that they know have little power.

© Copyright The European & Anne-Elisabeth Moutet 1999