{"id":105198,"date":"2017-04-24T08:54:51","date_gmt":"2017-04-24T12:54:51","guid":{"rendered":"http:\/\/countingpips.com\/?p=105198"},"modified":"2017-04-24T08:54:51","modified_gmt":"2017-04-24T12:54:51","slug":"the-rise-of-new-french-gaullism","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/04\/the-rise-of-new-french-gaullism\/","title":{"rendered":"The Rise of New French Gaullism"},"content":{"rendered":"
April 24, 2017<\/div>
\r\n<\/div><\/div>

By\u00a0Dan Steinbock<\/strong><\/p>\n

After the first round of the French presidential election, \u201ccenter-right\u201d Macron and \u201cradical right\u201d Le Pen are positioned for a face-off. However, the real story\u00a0of the election\u00a0is that Le Pen’s agenda has shifted the political landscape toward new French Gaullism.\u00a0<\/strong><\/p>\n

At the eve of the French election, A gunman opened fire on the Champs-\u00c9lys\u00e9es, killing a police officer and wounding others, while the Islamic State claimed responsibility. Meanwhile, US observers explain the rise of Le Pen on the basis of the French industrial decline, while German observers see France sandwiched between extremists on the Left and the Right.<\/p>\n

What both ignore is French frustration with the failed policies of both the pro-EU conservatives and socialists – and with US efforts to shape their electoral outcomes.<\/p>\n

Before the vote, the leader of the Front National Marine Le Pen and the centrist Emmanuel Macron garnered about 23-25%\u00a0in the polls. The two were followed by the center-right Fran\u00e7ois Fillon (19%), whose ratings have been penalized by a funding scandal, and the radical left Jean-Luc M\u00e9lenchon (19%), whose ratings soared leaving behind socialist Beno\u00eet Hamon (9%), who failed to unite the left.<\/p>\n

Since no candidate garnered\u00a0absolute majority in the first round, the second round is critical. \u00a0With 75% of polling stations results in, Macron was leading (24%) with Le Pen (22%) close behind. Conservative Fillon was penalized by his public scandal; socialist Hamon\u00a0by President Hollande\u2019s socialists\u2019 failures; and the left\u2019s M\u00e9lenchon by the absence of institutional support.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

Public facades versus financial interests in French election<\/strong><\/p>\n

Emmanuel Macron\u2019s (40) stint in President Hollande\u2019s socialist government as a business-friendly economy minister alienated most socialists while failing to win over most conservatives. As I have argued through the spring, French right, the business and conservatives can tolerate him as a unifying figure; media will portray him as a \u201ccentrist\u201d; and Washington wants him in Elysee Palace. But in reality, he does not represent \u201ccenter-right.\u201d<\/p>\n

Macron advocates a Clintonesque, Blairian \u201cThird Way.\u201d Yet, his platform movement En Marche!\u00a0is a one-man\u2019s fa\u00e7ade, which is guided by Institut Montaigne\u2019s corporate giants, including commercial real estate titan Unibail-Rodamco, banking behemoth BNP Paribas, and aerospace mammoth Safran. En Marche! is funded mainly by conservative interests.<\/p>\n

Macron is the ultimate Europhile and federalist. He supports integration and structural reforms. In controversies about immigration, secularism, security and terrorism, he favors balancing acts.<\/p>\n

In the past decade, Marine Le Pen (49) has \u201cmainstreamed\u201d FN away from the extremism. She supports\u00a0traditional values, law and order, while opposing immigration and the EU. She\u00a0wants to\u00a0leave\u00a0the Euro and a return to French franc. Despite her increasing middle-class and blue-collar support, she is typically portrayed as \u201cfar-right.\u201d That does characterize her anti-immigration stance, but not her economic, social and foreign policies.<\/p>\n

Born into privilege, Fran\u00e7ois Fillon (63)\u00a0represents conservative Republicans. As President Sarkozy\u2019s premier, he\u00a0undertook controversial labor and retirement reforms. He is a French Thatcherite. In foreign affairs, Fillon is tough about immigration\u00a0and\u00a0Islamic radicalism\u00a0but sees the NATO expansion to Russia\u2019s borders as a provocation.<\/p>\n

Until recently, the third viable candidate was Beno\u00eet Hamon (49), a French socialist (PS), a youthful party bureaucrat\u00a0with stints in the European Parliament and Hollande\u2019s administration. He supports a basic income to all French citizens,\u00a0and\u00a0a 35-hour workweek.\u00a0As the organized left saw too much socialism lite in Hamon, unions turned to the far-left Jean-Luc M\u00e9lenchon, along with a great number of independents. The latter would like France to leave both the euro and NATO.<\/p>\n

In the second-round of the presidential election, Macron has an overwhelming lead against Le Pen, even if the great number of undecided among the electorate suggests that last-minute upset is theoretically possible.<\/p>\n

The new \u00c9lysee Palace<\/strong><\/p>\n

The real story of the French election is not whether the winner is Macron, but that Marine Le Pen has re-defined the winning agenda.<\/p>\n

Domestically, the new president will struggle to push for (diluted) structural reforms with or without the consent of the unions. It will have\u00a0a stricter view of immigration and a tougher stance against Islamic fundamentalism.<\/p>\n

From center-right to center-left, France will also be\u00a0more critical toward EU integration, and the euro. In Brussels, Macron is seen as a potential savior of France and the EU.<\/p>\n

The EU federalists\u2019 greatest fear is Le Pen\u2019s quest to take France out of the Euro in 6 months, which would be followed by the redenomination of \u20ac1.7 trillion of French public debt into francs. In turn, Le Pen\u2019s economic advisers argue that reintroducing a national currency would allow French franc\u00a0to fall in value against the euro\u00a0– which\u00a0would lower France\u2019s debt burden and permit competitive devaluation.<\/p>\n

Le Pen believes in classic Gaullism, which stresses national sovereignty and unity, and Europe as autonomous from the superpowers, particularly the United States.<\/p>\n

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 invest more in defense spending, Gaullism is predicated on greater skepticism toward the NATO and French national priorities.<\/p>\n

Unlike Le Pen who wants more independence, or Fillon who believes in realpolitik, or anti-NATO M\u00e9lenchon, Macron is Washington\u2019s favorite. Indeed, recent Wikileaks disclosures show that US intelligence agencies have engaged in spying campaigns in French elections since the early 2010s. In the past, they supported Sarkozy\u2019s \u201cdemocratic victory\u201d; now they want Macron in the \u00c9lysee Palace.<\/p>\n

That\u2019s why, in the coming weeks, French conservative interests will rally behind Macron, while Le Pen will portrayed as \u201ctoo risky\u201d and \u201ctoo dangerous\u201d for \u201cFrance and Europe.\u201d<\/p>\n

Economic erosion<\/strong><\/p>\n

Last summer, Holande\u2019s socialist government was pitted against unions and the progressives, which fostered apprehension and fragmentation in the left. France cannot avoid the overhaul of its labor legislation in the future, but a socialist president cannot drive a neoliberal labor agenda. That\u2019s the lesson of Hollande\u2019s fall.<\/p>\n

After half a decade of near-stagnation, French economy has benefited\u00a0from a cyclical rebound, due to a more accommodating external environment, a depreciated euro, record low interest rates and the European Central Bank\u2019s quantitative easing. Nevertheless, these shifts cannot compensate for France\u2019s historical rigidities, which overshadow the economy\u2019s medium-term potential.<\/p>\n

In the 1980s and 90s, French growth exceeded 2.2 percent. Now it is 1.1 percent and likely to decelerate to less than 1 percent by early 2020s. Yet, French real wage growth has been solid, despite declining productivity growth. That\u2019s unsustainable. French economy is penalizing future generations for its current distortions.<\/p>\n

If the French choose Macron in the second round, he is likely to share the fate of his heroes, Tony Blair and the Clintons; initial excitement followed by disillusion and resentment.\u00a0If, on the other hand, the French will opt for a last-minute upset, multi-speed Europe – the idea that different parts of the European Union should integrate at different levels and pace – will accelerate.<\/p>\n

If the international environment turns more challenging and reforms fail to proceed domestically, French banks, given their size and interconnectedness, could generate adverse effects not just domestically but through spillovers, especially in Italy and emerging Europe.<\/p>\n

If the world\u2019s sixth largest economy begins to shake, Italy cannot avoid a quake, ailing Eastern Europe could take multiple hits\u00a0and repercussions would be global.<\/p>\n

About the Author:<\/strong><\/em><\/p>\n

Dr Dan 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 www.differencegroup.net\u00a0<\/a><\/p>\n

This is the updated version of the original commentary that was released by The Manila Times on April 24, 2017.<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By\u00a0Dan Steinbock After the first round of the French presidential election, \u201ccenter-right\u201d Macron and \u201cradical right\u201d Le Pen are positioned for a face-off. However, the real story\u00a0of the election\u00a0is that Le Pen’s agenda has shifted the political landscape toward new French Gaullism.\u00a0 At the eve of the French election, A gunman opened fire on the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-105198","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105198","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=105198"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105198\/revisions"}],"predecessor-version":[{"id":105199,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105198\/revisions\/105199"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=105198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=105198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=105198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}