The main challenges facing Francois Hollande
How can President Hollande succeed, where the pugnacious Nicolas Sarkozy failed, and persuade Chancellor Angela Merkel that her all-austerity approach to saving the Euro is destructive? Questions of procedure – to re-open or not to re-open the EU budgetary discipline pact signed in March – can be solved. The real battle will be over Mr Hollande’s plan – widely liked save in Berlin – for a multi-billion euros programme of EU infrastructure schemes, funded essentially by printing Euros.
How can President Hollande keep his promise to bring the French budget below 3 per cent of GDP next year – and to zero by 2017 – without angering left-wing supporters? Or how can he backslide without spooking the markets? No French budget has been balanced since 1974. Mr Hollande has several pet spending programmes, such as 60,000 new school posts over five years. He has plans to raise more money by taxing the rich. At some point, he will have to start cutting into the sprawling French state apparatus, which absorbs 56 per cent of GDP.
How can President Hollande keep his promise to reverse the upward trend in unemployment – now 9.4 per cent – without massive state spending? He has proposals which might make a marginal difference, like a scheme to reduce the burden of payroll taxes on any employer who hires a young trainee without firing an older worker. To truly succeed he needs to make France more competitive internationally and reduce the record €70bn annual trade deficit. But how can he do that while French employers are burdened by high pay roll taxes to fund the welfare state?
Who should President Hollande choose as his Prime Minister? He has promised to be a “normal” semi-detached President and not sprawl over all the levers of government as Nicolas Sarkozy did. The favourite is Jean-Marc Ayrault, 62, Socialist leader in the National Assembly. Mr Ayrault, like Mr Hollande, is a quiet, courteous, consensual man who lacks government experience. He has one useful skill: he is a former German teacher who speaks fluent German and knows Germany well.
How can President Hollande overturn the centre right majority in the National Assembly (343 out of 577 seats) to give his centre-left government a chance to govern? Actually this one is fairly easy. The centre-left is expected to do well in parliamentary elections on 7 and 17 June. The right is split between the centre-right and Marine Le Pen’s National Front. The left should win a majority without trouble.
How can President Hollande persuade Barack Obama that he is a reliable ally and still pull French troops out of Afghanistan by the end of the year? This will be one of the new president’s first tasks when he goes to Washington and onto the Nato summit in Chicago later this month. The Afghan decision is non-negotiable. But Mr Hollande will not challenge – beyond a few details – President Sarkozy’s decision to restore France to the integrated military command of Nato.
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