December 3, 2007

A New French Revolution
This could be the start of Europe's biggest turnaround since Thatcher revived Britain.
By Fareed Zakaria

You can measure the change in France by the use of prefixes. Ten years ago, the French railed against American "hyperpower." They played the role of world-weary critics, sitting on the sidelines and issuing ironic commentaries on American vigor, assertiveness and action. Today the French use the same prefix to describe their "hyperpresident," Nicolas Sarkozy, a man who has intrigued all of France with his vigor, assertiveness and action. He even appears to be triumphing in his most significant challenge yet, facing down the country's striking transport unions. If he succeeds, it could be the beginning of the biggest turnaround in Europe since Margaret Thatcher revived Britain in the 1980s.

Contrary to caricature, the French economy does not need a complete overhaul. It has many highly competitive aspects. Labor productivity is as high as in the United States, the health-care system is excellent and cost-effective and French infrastructure—from high-speed rail to broadband—is unparalleled. But the cancer eating away at the economy is a set of laws coddling French workers, which makes hiring and firing arduous, and pensions and benefits hugely expensive. (This is why France has a chronically high unemployment rate, currently 8.7 percent, which is 50 percent higher than the average for the industrialized nations.) If France fixed its problems with labor flexibility, it could be catapulted forward by higher growth and lower unemployment, which would make the whole system much more sustainable. Generations of French would still be able to take their long lunches and longer vacations.

Sarkozy has chosen his battle wisely. The reforms he is proposing are popular because their target–France's railway-union workers–enjoy benefits that make other French citizens roll their eyes. Retirement benefits can begin at 50. They were granted by the government in an age of steam locomotives, when life expectancy was much lower and the work–shoveling coal into engine boilers–more dangerous. Other civil servants believe that this battle is symbolic. If Sarkozy can break this particular union, it could unleash a flood of further reforms. They are right.

The unions have won several times before. People now forget but Jacques Chirac, that most old-fashioned of French politicians, came into office in 1995 determined to fix the French economy along many of the same lines that Sarkozy is proposing. Three of his prime ministers pushed forward such plans–Alain Juppe in 1995, Jean-Pierre Raffarin in 2003 and Dominique de Villepin in 2005. Each time they faced crippling strikes. Initially the government showed some backbone. "The street should express itself," Raffarin declared in 2003, "but the street does not govern." In fact it did. All three times, the reform plans were abandoned.

The street is an odd element in France's Fifth Republic, very much part of the system. Charles de Gaulle created a political order that he accurately characterized as an "elected monarchy." There are few checks on the president's power. The prime minister tends to be significantly less important than key presidential advisers, and Parliament is a joke. The only real debate, opposition and counterbalance to the president comes from the street, and so it has become part of the French way of politics, one that the public seems to understand and accept. But this time, the president is banking on the fact that the public wants change, and will, for once, side with the palace and against the street. He appears to be right. Public sympathy is not with the strikers. Timing is everything in politics, and Nicolas Sarkozy's greatest distinction might prove to be that he has arrived at just the right moment.

If he is able to win this battle, Sarkozy will be able to press forward with a series of reforms, each begetting the next. The cumulative effect of these changes could unleash a wave of optimism, which is itself hugely beneficial to a country's economy. France would embrace the new global economy rather than fretting about it.

In an essay in the current issue of The American Interest, Brookings scholar Philip Gordon writes that Sarkozy might well be able to make France a larger player in the world, "punching above its weight," the way Tony Blair did during the 1990s and early 2000s. Blair, and Thatcher before him, were able to create a new image for Britain and made the country a modern world power. But that transformation rested on the revival of the British economy, which became a symbol of success in a globalized age. France currently ranks 18th in the World Economic Forum's annual competitiveness rankings. That's not bad, but it is nowhere near commensurate with the place that the French imagine for themselves in the world.

American commentators have delighted in Sarkozy's pro-American musings and statements. But this was never the hard part. France is actually not that anti-American. It has been a staunch ally in the War on Terror. What Sarkozy is doing now is truly difficult. If he succeeds, it would mean not just a new Franco-American relationship, but a new France.

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