Return of Sovereign France

By Dan Steinbock

In France, President Hollande’s utter failure to foster broad consensus for structural reforms has paved the way for a contested election. While public debate focuses on Emmanuel Macron as the saviour of France, the real story is that Marine Le Pen’s agenda has shifted the French political landscape.

Before TV debates, the French presidential election featured 3-4 viable candidates, which together accounted for 85-90 percent of the total vote. Until recently, the leader of the Front National, Marine Le Pen, and the centrist Emmanuel Macron, have garnered about 25 percent in the polls, followed by the centre-right François Fillon (20%), and the socialist Benoît Hamon (15%).

After merciless campaigns, scandals and mud-slinging, Macron has a very slight lead among first-round voters (27%), ahead of Marine Le Pen (26%) and Fillon (17%), while socialist Hamon has lost ground for far-left Jean-Luc Melenchon (12% each). French voters go the polls on April 23 and May 7 in the two-round election. Since no candidate can garner absolute majority in the first round, it is the second round that really matters. And in that race, Macron (64%) seems to have an overwhelming lead against Le Pen (36%).

Even if Le Pen would win the first round, she would face great odds in the second. Yet, in one sense, she has already won. In France, the political future belongs to her agenda (see Box: ÉLYSÉE PALACE’S NEW AGENDA ).

Macron’s Stance – and Funders

Emmanuel Macron’s (40) current tie with or slight lead against Le Pen in polls is not based on his perceived success. His stint in Hollande’s government as a business-friendly economy minister alienated most socialists while failing to win over most conservatives, not to speak of the French majority. However, as Fillon has been swept by an embezzlement debacle and socialists have failed to put up a fight, Macron is pretty much all that’s left from the old French centre-right elite.

Politically, Macron is a proponent of a “third way”. To him, political right and political left have less importance in the contemporary world. What matters is economic pragmatism. Like his heroes, Tony Blair in the UK and Bill and Hillary Clinton in the US, Macron advocates whatever is expedient, from Rotschild’s neoliberal profits to Hollande’s bureaucratic socialism. Over time, he may share the ultimate fate of Blair and the Clintons: initial excitement followed by disillusion and resentment.

In reality, Macron is a typical product of the elitist École nationale d’administration (ENA). After a stint as an investment banker at Rotschild & Cie Banque, he served in Hollande’s socialist governments, where he advocated business-friendly reforms that undermined Hollande’s support among the government’s socialist constituencies, while fostering Macron’s clout among the socialist opposition and big business.

Married with his 24 year older high school teacher he first met at 15, Macron’s personal life and policy stances remain equally ambiguous. Last November, he declared that he would launch a social liberal bid under the banner of his new movement En Marche!. By design, the name of the party shares Macron’s initials. He likes to portray it as a “social liberal party” to attract the centre-right movement, and a “progressive movement” to court Le Pen’s supporters and socialist dissidents.

In reality, En Marche! is a one-man façade. It is registered at the address of Laurent Bigorgne, director of Institut Montaigne director. It was launched with people representing corporate giants, such as the commercial real estate titan Unibail-Rodamco, the international banking behemoth BNP Paribas, and the aerospace mammoth Safran. The Paris-based Institut Montaigne promotes competitiveness and social cohesion. It was founded by millionaire Claude Bébéar, former CEO of AXA, the French multinational insurance, investment and financial colossus, which is funded by the likes of Allianz, Bank of America Merrill Lynch, BNP Paribas, Capgemini, IBM France, McKinsey & Company, Microsoft France, and, of course, Macron’s former employer, Rothschild & Cie Banque.

Macron needed a new platform because he had alienated socialists while failing to gain enough support among conservatives. He is the ultimate Europhile and federalist. He supports integration and structural reforms. In controversies about immigration, secularism, security and terrorism, Macron has favoured a balancing act – one that is well-aligned with the ideological position of Institut Montaigne.

His real political success has been the ability to pick up endorsements from both center-right and – left, including from François Bayrou of the Democratic Movement, EU parliament member Daniel Cohn-Bendit, the leftist ecologist candidate François de Rugy, and Socialist parliament member Richard Ferrand.

Who’s Afraid of Marine Le Pen

Marine Le Pen (49) is the youngest daughter of the veteran FN leader Jean-Marie Le Pen, a French far-right politician who supported euro-skepticism, opposed immigration and pushed for law and order, traditional culture and values. As long as he led the FN, it was a marginal far-right, anti-Semitic party with politically incorrect neo-Nazi associations. In the past decade, Marine Le Pen has successfully “mainstreamed” FN away from the margins and extremism. Nevertheless, since major French banks oppose her political platform, she has had difficulties funding her campaign.

In her campaign, Le Pen has supported traditional values, law and order, while opposing immigration and the EU. As her campaign kicked off, she reaffirmed the FN’s anti-immigration, protectionist and anti-EU stance. “The divide is not between the left and right anymore, but between patriots and globalists,” she said. “Financial globalisation and Islamist globalisation are supporting each other. Those two ideologies want to bring France to its knees.”

Le Pen wants to pull out of the Euro and a return to French franc, a referendum on EU membership within 6 months, and taxes on imports and the employment of foreigners in France. Building on Gaullist legacies, she is a critic of and wants to pull France out of the NATO. She would like to revise French relations with the US and has denounced French bandwagoning toward Washington. Her France would be more independent in the international arena. She would rely on neo-gaullist geopolitics in the new multipolar world.

In the coming weeks, Macron will portray her as a threat to France, and chaos to the European Union, with support by centre-right and conservative media in France and US-based international business media. Indirectly, this portrayal will be fostered by Hamon and Melenchon who will paint her in far darker colours since socialists and far-left share blue-collar worker constituencies with the Front National.

The Other Anti-Pen Musketeers

Born into privilege, François Fillon (63) became nationally known as President Sarkozy’s Prime Minister. He represents conservative Republicans (Sarkozy’s former Union for a Popular Movement, UPM). Years ago – a long time before Macron’s failed attempts – Fillon undertook controversial reforms of the labour code and the retirement system.

Unlike the “Europhile” Macron, Fillon is the ultimate “Anglophile”, a French Thatcherite who would like to balance the budget and abolish the wealth tax. He would raise retirement age to 65 and reduce the public sector by cutting half a million civil-service jobs. He is the man the socialists love to hate and that is too sincere for Macron’s financiers. They need somebody who shares Fillon’s economic policy tenets but could implement them without public opposition and street fights.

In foreign affairs, Fillon is tough about immigration, Islamic radicalism and terrorism. But like Thatcher, he is also a great believer in realpolitik and has called for dialogue with al-Assad’s Syria and Putin. While Fillon stands for the West, he sees the expansion of NATO to Russia’s borders in the 1990s as a provocation that was bound to alienate Moscow and foster redundant friction. These stances have made him unpopular in neoconservative Washington.

Last fall, Fillon still appealed to the conservative “silent majority” but that was before a widening investigation following charges that he had paid his wife and children almost 1 million euros from the public payroll for no work. While he attributed blame to a “political assassination”, magistrates recently found him under formal investigation for embezzling state funds. As a result, his polls are fizzling.

Until recently, the third viable candidate was Benoît Hamon (49), a French socialist (PS) who defeated the centrist and business-friendly Manuel Valls in the party primaries. While Harmon is portrayed as a new figure, a sort of “Youtube Guevara”, he is actually a veteran party bureaucrat and has served in the European Parliament (2004-9), and as Hollande’s Junior Minister for the Social Economy (2012-4) and Minister of National Education (2014). He supports a basic income to all French citizens, a 35-hour workweek, legalisation of cannabis and euthanasia, and huge investments in renewable energy.

Hamon is critical of neoliberal economic policies and the NATO. He represents the left wing of the PS and is an admirer of US Democrat Bernie Sanders. That’s not enough for the French old left, which sees him as too malleable. The far-left Jean-Luc Mélenchon, who heads the new “Unsubmissive France”, would like France to leave both the euro and NATO. As Hamon’s ratings have slightly eroded, those of Mélenchon have slightly increased.

Together, the two could battle either Macron or Le Pen, or both. But that would require a unified left and viable appeal in centre-right.

Economic Erosion Prevails

The nerve-racking French election is the direct result of half a decade of policy failures, which climaxed last summer in a failed effort to reform the French labour code. It was not the first time. Years ago, huge strikes forced President Chirac to back down from proposed changes in the pension system. Similar strikes led to fierce union opposition when President Sarkozy raised the retirement age. But under Hollande, a socialist government was pitted against unions and the far-left, which fostered apprehension, disappointment and fragmentation in the left.

When Hollande replaced the conservative Sarkozy as the French president in May 2012, his popularity hovered at around 58 percent. By late 2016, Hollande’s ratings had plunged to less than 5 percent. While France cannot avoid the overhaul of its labour legislation in the future, a socialist president cannot drive a neoliberal labour agenda. That’s the lesson of Hollande’s fall.

After half a decade of near-stagnation, French economy has been benefiting from a cyclical rebound, thanks to a more accommodative external environment, especially lower oil prices, a depreciated euro, record low interest rates and the European Central Bank’s quantitative easing. However, these shifts cannot compensate for France’s longstanding internal rigidities, which overshadow the economy’s medium-term potential.

In the 1980s and 90s, French growth still exceeded 2.2 percent; in the 2000s, it hovered around 1.8 percent; now it is around 1.1 percent and likely to decelerate to less than 1 percent by early 2020s. In the past decade, French competitiveness, as reflected by the country’s share in world export markets, has declined significantly as well. What’s worse, French real wage growth has been solid, despite declining productivity growth. The equation is unsustainable. The implication is that the French economy is penalising future generations for its current distortions.

If the external environment grows still more adverse, while reform progress is hardly evident, French banks, given their size and interconnectedness, could generate adverse effects not just domestically but through spillovers, especially in Italy and emerging Europe.

France remains the world’s sixth largest economy. If it begins to shake, Italy cannot avoid a quake and ailing Eastern European economies could take multiple hits. That, in turn, would have adverse implications across the Eurozone and globally.


By Dan Steinbock

In order to win the election and sustain the victory, the next French president must coopt Le Pen’s agenda.

After Prime Minister Mark Rutte was able to deter the surge of radical-right Geert Wilders in the recent Dutch elections, the EU leaders sighed for relief. In international media, the centre-right Rutte’s win was reported as triumph for “democracy”. In reality, it was boosted by his appeal to Dutch ethnocentrism. After months behind Wilders in polls, Rutte stated that he shared feelings of those who thought that people who “refuse to adapt and criticise our values should “behave normally, or go away”. The pre-election clash between the Netherlands and Turkey allowed Rutte also to play the same card internationally. The tacit signal was: Why would you want to vote for Wildeers, if I can deliver the same goods?

The real story of the French election is not whether the winner is Macron, but that the winning agenda has been re-defined by the rise of Marine Le Pen.

Less Integrated Europe, Ah Oui!

Domestically, the new president will struggle to push for (subdued) structural reforms with or without the consent of the unions, while taking a stricter view of immigration and a tougher stance against Islamic fundamentalism.

France will have a more critical stance toward further EU integration, and the euro, which the French voters now share from centre-right to centre-left. In practice, that means a “multi-speed Europe”, in which one size will not fit all, while uneven development will increase. Integration will make room for fragmentation, which will be called “differentiation” because the latter sounds better.

As Hollande himself recently acknowledged: “For a long time, the idea of a differentiated Europe, with different speeds and distinct paces to progress, has provoked a lot of resistance. But today this idea is necessary. Otherwise, Europe will explode.”

In Brussels, Macron is seen as a potential saviour of France and the EU. The greatest fear of the EU leaders involves Le Pen’s quest to unilaterally take France out of the Euro in 6 months, which would be followed by the effective redenomination of €1.7 trillion of French public debt into francs. Since 80 percent of this debt is not under international law, FN would have the right to change the currency.

Unsurprisingly, the international ratings agencies, which are headquartered in the US and the (about to Brexit) UK, have already warned that the net effect would be the largest sovereign default on record, nearly 10 times larger than the €200bn Greek debt restructuring in 2012.

Like biblical prophets, Le Pen’s adversaries have warned that her victory would mean a French Armageddon, the plunge of euro, and chaos in the world financial system. In contrast, Le Pen’s economic advisers argue that reintroducing a national currency would allow French franc to fall in value against the euro. That, in turn, would lower France’s total debt burden and permit Paris to begin competitive devaluation.

After all, Le Pen might say, isn’t that something Americans have excelled for decades? The franc served the French well for centuries, while the euro has caused the French and many other European economies one nightmare after another after just one decade, she might add, If Le Pen wins, Paris will also start a process that could ultimately result in a “Frexit”. That’s something that would be unthinkable to the Europhile Macron.

More Independence in Foreign Policy

Like her supporters in right and left, Le Pen believes in French patriotism that relies on a sovereign state that is not reliant on conservative capital, socialist class struggle or Washington’s neoconservative tutelage. That’s classic Gaullism, which stresses national sovereignty and unity. Macron would not use the same terms, but he does emphasise French national interest, along with EU federalism.

Neither De Gaulle nor the Gaullists supported Europe as a supranational entity. However, they favoured European integration as a confederation of sovereign states engaged in common policy, and autonomous from the superpowers, such as the United States and the bygone Soviet Union. That project failed as other European powers chose to remain closely allied to Washington. While all French candidates see France among the West, none advocate Sarkozy-like reliance on Washington any more.

In foreign policy, the new president will be more cooperative with Russia and President Putin, from the Middle East to Ukraine and energy issues. While France may actually invest more in defense spending, Gaullism is predicated on greater skepticism toward the NATO and harder push for French national priorities.

In foreign policy, Macron is closest to Washington and his team has suggested that Russia may be intervening in the French election. Other candidates do not share his view and France is not as vulnerable to Russophobia as the United States. Furthermore, recent Wikileaks disclosures suggest that it is not so much Moscow that Paris should be concerned about – but Washington.

US Efforts to Shape French elections

In the 2012 French presidential election – as classified CIA “tasking orders” indicate – the agency engaged in a spying campaign ahead of the election. The documents reveal that all major French political parties were targeted for infiltration by the CIA’s human and electronic spies in the seven months leading up to France’s 2012 presidential election. According to the most recent WikiLeaks documents, televisions, smartphones and even anti-virus software are all vulnerable to CIA hacking, which makes any effort to shape the outcome of the impending elections and referendums in Europe relatively easy.

There is no reason to presume that these practices have changed. Washington and Pentagon favour pro-NATO candidates and will walk the talk. However, the two also tend to like candidates, who portray themselves as “beyond left and right”, as Macron has done, but who understand the US interests. That’s what he proved already in 2012 when he joined the pro-US French-American Foundation (FAF). It is a think-tank that was launched by the US-based Council on Foreign Affairs in the 1970s to counter anti-French sentiment in the US and anti-Americanism among the French elite.

As a FAF “Young Leader”, Macron is walking in the footprints of Bill and Hillary Clinton in the US, and president Hollande and former prime minister Alain Juppé in France. Unlike Le Pen who wants more independence, or Fillon who believes in realpolitik, not to speak of anti-NATO socialists, only Macron is seen as a proven quantity in Washington.

Featured Image: French far-right presidential candidate Marine Le Pen gives a campaign speech in Lyon on February 5, 2017 © Jeff Pachoud, AFP

About the Author


Dr. Dan Steinbock is an internationally recognised expert of the nascent multipolar world. In 2010, he predicted that Brussels opted for misguided policies to overcome the European sovereign debt crisis, which would prolong rather than resolve the challenges. In spring 2016, he forecast the UK Brexit and the outcome of the Italian referendum.

Dr. Steinbock is the founder of DifferenceGroup. He has served as Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.