Key Challenges

Radical new possibilities
The challenges that France has to face are not new, but there are both positive and negative factors in addressing them that have emerged from the new political landscape. The collapse of the traditional party system following the 2017 presidential election and the political earthquake triggered by Macron’s election has opened radically new perspectives. The challenges now are not so much “what to do?” but rather “will the president and his majority be capable of fulfilling the promises they have made?”
Influence contingent
on reform success
Macron knows that only a strong and successful French reform agenda will give him the credibility to convince his EU partners and to recover influence on the global scene. The president enjoys a strong majority in the National Assembly and the institutions of the Fifth Republic offer effective instruments for achieving deep reform. The problems lie elsewhere: how to convince a reluctant and volatile public that the new government will make the right policy choices? Given the absence of a strong political opposition, social protest will be the main obstacle that the new government is likely to face over the coming years. Social mobilization led by trade unions or political parties in protest to the new government has been rather feeble, but the widespread and violent “yellow vests” riots provoked by unorganized protesters should alert the president. He will have to modify his method of reform, and foster more real social dialogue and include willing social partners in decision-making. The pensions reform scheduled for 2019 might be the crucial test.
France has to tackle four major challenges.
Party system must
be reconstructed
The first one is political. The entire party system has to be reconstructed after the 2017 political earthquake. While this destructive phase has permitted Macron to sweep away the old political forces to the advantage of his new movement, it has also contributed to the weakening of the traditional mediatory institutions which will have to be rebuilt. This is also true for the president’s movement, La République en Marche, which will have to transform itself into a party capable of fulfilling a mediatory role. The time horizon is short. The renewal of political forces has to be achieved before the next presidential election in 2022 and there is no indication in sight that change is under way.
Urgent need to tackle
debt and deficits;
disconnect between
short and long term
The second challenge is financial, budgetary and economic. The diagnosis is well-known: public deficits and debt must be drastically reduced, fiscal pressure lowered and unemployment addressed with drastic policy changes. The task is daunting and no real progress has yet been achieved, except with respect to employment. The structural deficit has barely decreased while the budget deficit in 2019 will be higher, driven by increased public expenditure (social measures in response to the yellow vests protests) and lower economic growth. The public debt has increased further following the government’s decision to take over the huge debt of the public railway company. At the time of writing, public debt had reached 100% of GDP. However, Macron remains committed to an ambitious reform agenda. The key issue will be the government’s capacity to pursue its courageous policy choices in the years to come. The disconnection between the (short-term) political agenda and the (medium- to long-term) economic agenda is a crucial component of the equation. Indeed, there are not many more savings to be expected if structural reforms are not adopted and implemented. Education, professional training and industrial reconstruction are some of the many sectors that need to be restructured in order to achieve more substantial benefits. Some reforms are already in place but the lack of perceived results by the public might fuel discontent and skepticism.
Public sector remains inefficient; fierce resistance from local authorities
The third challenge is related to the overall structure of the bureaucracy and public sector. Both are comparatively inflated and inefficient. The approach to tackling unemployment by increasing public sector employment (in particular at the local level) has failed, and has considerably lowered the effectiveness and efficiency of public service provision. The introduction of a more competitive framework for public transportation, which had repeatedly been postponed, has finally been adopted after nearly four months of strikes in the national railway company. Trimming redundant or inefficient administrations, revising policies that benefit vested interests, and simplifying the complex multilayered territorial system (“millefeuille”) are necessary reforms. However, these reforms have encountered fierce resistance from local authorities, which have not digested the reduction of their resources through various means (e.g., reducing a local tax on landlords and tenants). On the one hand, the local system is costly, too complex and needs ambitious reforms whose effects might be felt only in the long term. On the other hand, the central administration needs the support of local governments, which are responsible for two-thirds of public investments. After 18 months in power, it is not yet clear what measures might be adopted by the government in order to trim a sector that employs more than 5 million people.
Integration model has
lost effectiveness
A fourth major challenge concerns the intertwined issues of security, immigration and integration. The traditional French model, based on an open policy toward immigrants acquiring French nationality and on the principle of equality of all citizens regardless of ethnic origin or religion, has lost its integrative power over the last 30 years. The established instruments of the integration process (education, work, religion, political parties and trade unions) are no longer effective and have been negatively affected by recent terrorist attacks. This challenge requires multifaceted policy solutions in areas including security, urban development, and education and job training, with a primary focus on employment opportunities for the most marginalized citizens. The first measures taken by the government put the emphasis on education and employability, and less on financial measures that would mitigate poverty. What is at stake is the country’s political and social cohesion, and common national values and rules. Unfortunately, the present situation is characterized by an identity crisis, an ethnic divide, the exclusion of migrants and political frustrations, which have benefited extremist political candidates and parties.
Policy courage needed
France needs courageous policies that include clear (even if unpopular) choices, frankness when explaining the challenges, more social dialog, and a more streamlined and coordinated style of governance. The good news is that the newly elected president is fully and explicitly committed to this reform agenda.

Party Polarization

Long tradition of polarization; political divisions an obstacle to policymaking
The French party system has a long tradition of polarization. From the French revolution on, the divide between left and right has been a constant feature of French politics, and has been fueled and accentuated by the major political and social events of the past two centuries. Revolutions, revolts, social movements, wars, the relationship between state and church, and tensions between the center and periphery have contributed to the rather polarized and antagonistic political and social structure of the country. Attempts to develop centripetal forces that collaborate rather than fight one another have sometimes succeeded, but on the whole consensual collaboration has been the exception rather than the rule. Consensus-building has occurred in some particular circumstances (e.g., during wars) or on rare occasions, although even in these instances, behind the scenes, more collaboration could often have taken place. The Fifth Republic has further accentuated the phenomenon since the institutions, the electoral system and the rules of the game were designed with the aim of accentuating polarization. This polarization has been a major obstacle to policymaking, as no political trans-partisan “reform coalition” or consensus concerning structural reforms could be formed.
Macron draws from center-left and center-right
Things have changed following the last presidential election, since the new president has managed to form a coalition with elements from the center-right and center-left, pushing the remaining parties to the extremes of the political spectrum. It remains to be seen if this is a short-term accident or the beginning of a new cycle based on a different set of cleavages (e.g., “people vs. elites,” or “European openness vs. national regression”). For the time being, the president’s movement, La République en Marche (LREM), built upon the idea of overcoming the sterile left-right polarization for the benefit of more consensual progressive policymaking, has not (yet) proven its capacity to change the game.
In past, adopted reforms rejected by civil service
In policymaking terms, the strength of the Fifth Republic’s institutions is their ability to overcome political polarization by giving full power to the ruling majority. The best illustration of this was the capacity of the Hollande administration to adopt some reforms in spite of its political weakness. However, related to the acceptance and implementation of reform, the risk of this approach is that reforms are rejected by those in charge of their implementation, a frequent occurrence in France. (Score: 7)
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