Just four months after taking office, Prime Minister Manuel Valls resigned to everyone's surprise and dissolved the government. The President of France Francois Hollande immediately authorized him to form a new government as soon as possible, "in accordance with the guidelines that he has unequivocally determined", that is, "in solidarity, both in action and in performance".
The immediate reason for the unexpectedly sharp reaction of the prime minister was the outburst of Economy Minister Arnaud Montbourg - a charismatic tribune and leader of the left wing of the ruling Socialist Party (PS) - who declared on Sunday at a traditional holiday rally in his constituency that "he will ask the president for a strong turnaround in the economic the politics of the country". He was joined by the Minister of Education, Benoit Ammon, who said that the proclaimed "solidarity (within the government) does not mean submission." Montbourg is otherwise known for his criticism of both the economic and European policies of the government to which he belongs. Recently, in an extensive interview with "Mondo", he stated that the "German dogma that is being imposed on the whole of Europe" about limiting the budget deficit should be rejected and directed a number of harsh criticisms against the economic policy of the German chancellor.
Thus, in the midst of a deep economic crisis (followed by a crisis of competitiveness and employment), France found itself in a political crisis, and many officials and the media are wondering whether a crisis of the regime has not occurred, considering the parliamentary majority increasingly resembling shagreen skin and support for President Hollande, which has fallen to historical low of 17 percent.
CONFLICT WITHIN THE SOCIALISTS: The causes of this political crisis lie in the conflict within the ruling PS regarding the understanding and implementation of the country's economic policy. It is a conflict between two factions, the left - the classic socialist approach, and the right - the social democratic, i.e. social liberal, interpretation of the mechanisms for encouraging stagnant economic growth. In short, it is a conflict between supporters of stimulating demand - the left, minority bloc, and current social liberal reformers who want to stimulate supply through a series of tax breaks for businesses.
The split within the already narrow parliamentary majority (the PS has a majority of only one mandate) occurred at the very beginning of Valls' mandate, when he presented a "responsibility pact" of 41 billion euros in tax breaks for companies. After harsh criticism from the left camp of his party, and the open abstention from voting on the support of the prime minister's exposรฉ by a certain number of socialist deputies, President Hollande had to supplement the planned program with a "solidarity pact" of 5 billion euros in relief and incentives for the most vulnerable sections of the population, already severely affected by the record unemployment.
Both schools of thought refer to the same, very bad economic indicators and gloomy predictions - zero economic growth, budget deficit over 4 percent of GDP, record unemployment rate (3,4 million unemployed, i.e. 9,7 percent in the third quarter of 2014), the risk of deflation. The liberal current of President Hollande and Prime Minister Valls disputes the stimulation of demand, which, in addition to the increase in public debt, based on experience, leads to an increase in imports (therefore also foreign debt), which paradoxically subsidizes the economic recovery of neighboring countries. Montbourg and others (not only left-leaning politicians and economists) are opponents of belt-tightening and unconditional austerity policies and refer to the government's official statement that reducing the deficit to European "dogmatic" frameworks cannot be expected even next year. They refer to unfavorable official forecasts regarding economic growth and unemployment reduction, while warning of a justified risk of deflation - which, if you look at the wider European context, Portugal has fallen into this summer, while the situation in Italy, Spain, Ireland and Greece is very worrying.
CRISIS OF AUTHORITY: The intensity of this political crisis preoccupies the French and European public far more than the current media speculations about the composition of the new government. The political line of President Hollande is unequivocal - there are no deviations from the defined guidelines in the domain of economic policy. The government's room for maneuver is increasingly narrowing, and the question is whether it will secure the necessary parliamentary support or whether it will be forced to resort to rule by decree, which is enabled by the controversial Article 49.3 of the French constitution. Another risk of losing the parliamentary majority is certainly the potential dissolution of the assembly and the calling of early parliamentary elections, where, according to all predictions, the current ruling majority would go to the opposition, in general disarray and for a long time. Vals's resignation is a warning to PS not to gamble with the parliamentary majority, but also an appeal for a broader consensus in the parliament. It remains to be seen what will be the next steps of Arnaud Montbourg, a critic free from the political constraints of the official mandate, with his eyes fixed on the 2017 presidential elections.
And the opposition? The French opposition, right-wing Union for the Popular Movement (UMP) has been rocked for a long time by numerous, primarily corruption scandals, both those within the party and those related to the former president Sarkozy - whose return to politics is constantly delayed. That is why the current crisis is being answered with the usual harsh criticism of the split at the top of the executive power and disagreements in the ranks of the ruling majority, pointing to a serious crisis of institutions. However, at the moment, the UMP is more occupied with the internal election campaign for the president of the party, and regrouping in the perspective of the presidential elections in 2017. In addition, the UMP is further discredited by the hasty statements of certain officials who, even in the case of a hypothetical victory in the potential early elections, would not enter at any price into cohabitation with Hollande - which would be a regime crisis for which the French public is certainly not in the mood.
And Marine Le Pen? Chronically suffering from flimsy economic arguments, the far-right National Front (FN) is appealing to President Hollande to dissolve parliament and "recall the people for a declaration". However, he addresses his harshest criticisms to Brussels, proverbially calling for the rejection of the dictates and dogmas of the unpopular technocrats of the European administration.
The current upheavals in France do not cause visible anxiety on the wider European stage, as evidenced by the extremely measured statement of Chancellor Merkel, who only reiterated her support for the reform path that France has embarked on. There is also a school of thought according to which, paradoxically, this internal political crisis can in a certain way strengthen France's position in the EU. Namely, it is known that German opinion above all values โโthe capacity and consistency of politicians in the implementation of the measures taken - sometimes ignoring the fact that these measures, individually considered, lead many countries to deflation. Not giving up on the outlined economic guidelines, Hollande then (just one day before the European Council summit) is persisting on his political line. At the same time, it creates a space of trust, which is necessary for Germany to somewhat loosen its stance regarding additional demand stimulation, at least within the framework of the Eurozone.
Will Hollande complete his - according to many belated - Bad Godesberg (a social liberal turn modeled after the transformation of the German SPD under the leadership of Gerhard Schroeder) and thereby not only save his government and move his country towards a way out of the crisis, but also, according to many, save his threatened presidential mandate, for now it is more than ungrateful to forecast.
