Key Challenges

Radical new possibilities
The challenges that France has to face are not new but the collapse of the 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 reforms’ success; more social dialogue necessary
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 is the main obstacle that the 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 could resurge in opposition to the pension reform. Moreover, the widespread and violent Yellow Vest riots provoked by unorganized protesters serve as a harbinger of possible future scenarios. Macron has to modify his method of reform, foster more real social dialogue and include willing social partners in his decision-making processes. The pension reform, originally scheduled for 2019, but delayed until 2020, might be the crucial test.
Looking ahead, France has to tackle five major challenges.
Party system must be reconstructed
The first 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. For the time being, all factors are pointing toward polarization between Macron and Le Pen’s respective movements. The other parties are still in a state of limbo.
Urgent need to tackle debt and deficits; structural reforms are next step
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 outside the area of employment. The structural deficit has barely decreased, and budget deficits over the next four years will be higher, driven by increased public expenditure (in part due to the social measures taken in response to the Yellow Vest protests) and lower economic growth. Public debt levels have increased further following the government’s decision to take over the huge debt of the public railway company and its decision to cut taxes. These decisions, among others, have pushed total debt to 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, little more in the way of savings can be expected if structural reforms are not adopted and implemented. Education, professional training and industrial reconstruction are some of the many sectors currently being restructured in order to achieve more substantial benefits, but the time factor is crucial. Some reforms are already in place, but the perceived lack of results by the public might fuel discontent and skepticism.
Broad range of reform needs in public sector; ambitions curtailed after protests
The third challenge is related to the overall structure of the bureaucracy and public sector. The past approach to addressing unemployment by increasing public sector jobs (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 fully accepted the reduction of their resources through various means (e.g., the reduction of a local tax on landlords and tenants). On the one hand, local administrative systems are too costly, too complex and need 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 investment. After the Yellow Vest uprising, most ambitions in this area were put aside, and the modest objective set during the campaign (a cut of 150,000 positions in the public sector) has been reduced to a mere 15,000.
Integration model has lost effectiveness; political and social cohesion at stake
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, education and job training, with a primary focus on employment opportunities for the most marginalized citizens. The first measures taken by the government in 2017 emphasized the issues of education and employability, focusing less on financial measures that might mitigate poverty. However, the government failed to pursue this new policy fully, and to give a clear perspective for urban development in the socially marginalized zones. What is at stake is the country’s political and social cohesion, along with common national values and rules. The present situation is characterized by an identity crisis, an ethnic divide, the exclusion of migrants and political frustrations, a mix that has benefited extremist political candidates and parties.
No easy answers on climate change
A fifth challenge has also come to the fore in the form of climate change. The situation in this area is paradoxical; on the one hand there is growing pressure in favor of drastic public action addressing climate change, while on the other, the primary governmental measure used to address the issue (the increase of taxes on fossil-fuel-based energy in order to limit consumption) triggered the Yellow Vest revolt. Seen as socially discriminatory, this measure was quickly put aside, exacerbating the budget deficit and depriving the government of the most efficient policy instrument for meeting the climate change challenge.
Policy courage needed
France needs courageous policies that include clear (even if unpopular) choices, frankness when explaining the challenges, more social dialogue, and a more streamlined and coordinated style of governance. The good news is that Macron as president is fully and explicitly committed to this reform agenda. The bad news is that his top-down method, together with his more or less open contempt for political parties, trade unions and business organizations, has proved a key obstacle in generating the necessary public support.

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
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 (REM), built upon the idea of overcoming the sterile left-right polarization for the benefit of more consensual progressive policymaking, has not (yet) proven that it has the capacity to change the game.
polarization a risk
Macron’s strategy has increased polarization between his movement and Le Pen’s movement, marginalizing all other parties and forcing moderates to rally around his flag. This might help to win the next presidential election, but risks increasing the representativeness gap between the political class in power and the population. (Score: 7)
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