Round one to Sarkozy

The French Parliament has approved the final text of the country’s controversial pension reform bill which is expected to be signed into law by President Nicolas Sarkozy by mid-­November.

The raising of the retirement age from 60 to 62, the main thrust of the reform, was bitterly resisted by the opposition Socialist Party and trade unions, which organised mass protests and national strikes at a daily cost to the economy of €400 million.

Now that the reform has passed through Parliament, however, the opposition has lost momentum and the protests have lessened. trade union leaders – who are divided on how to proceed at this point – are now asking Sarkozy not to sign the pension reform bill into law, but there is no chance of this happening.

This is the first time since Sarkozy’s election in 2007 that the President has managed to get a major piece of reform legislation through the National Assembly, and it is a major victory for him. Sarkozy was, after all, elected on a platform of reform, which was the major theme of the electoral campaign.

In his biography, published before he was elected President, Sarkozy had hinted on the way he would govern France, describing his predecessors, François ­Mitterand and Jacques Chirac as statesmen who focused more on ­history and French traditions than on reforming France. “My focus as President,” he wrote, “will be on what I want to build.”

Mitterand and Chirac, however, were presidents who listened to the streets and who didn’t think twice about performing U-turns on major policies if this boosted their popularity. Both in, fact, were re-elected to the presidency.

Sarkozy, however, has not budged an inch on his pension reform proposals, which although boosting his popularity among his natural supporters has cost him dearly in the opinion polls. A BVA Orange L’Express poll last week, for example, showed 71 per cent of the population were unhappy with his policies.

The President is now expected to start rebuilding his image and to focus on the presidential election in 2012 when he can go the country as the reformer he promised to be. Sarkozy will be hoping that despite his present poll ratings the country will appreciate his ability to take difficult decisions in the nation’s long-term interest.

“What Nicholas Sarkozy has shown is that this is a country where reform is possible. That is important for our European ­partners and for the image of France across the world. More important for the battle for ­public opinion is the battle for the credibility of France as a country that can reform. That battle had to be won,” said Franck Louvrier, Sarkozy’s press adviser.

Pension reform is bound to be an important issue in the country’s presidential election in two years’ time, with the Socialists promising to reverse much of what Sarkozy has done and proposing to tax capital instead, a policy the President is bound to exploit as lacking credibility.

Opinion polls have shown that supporters of the President’s UMP party have backed him all the way on pension reform, which is certainly good news for Sarkozy, because if he does not have the support of his own electorate he will not go beyond the first round of the presidential election.

“If his objective is to win with his own side, he has won. UMP supporters have backed him all the way. They wanted him to show determination and he has,” remarked François Miquet-Marty of opinion pollsters Viavoice.

The President is now widely expected to start afresh and bring about a major Cabinet reshuffle – perhaps even changing his Prime Minister François Fillon. Furthermore, it is likely that Sarkozy will respond to voters’ perception of him as being too friendly with the rich by abandoning the cap on tax paid by France’s wealthy elite, known as the wealth tax.

The cap was not introduced by Sarkozy, but was made more generous by him when he was elected, in the hope of luring back French investors who had taken up residence elsewhere. François Baroin, the Budget Minister, recently admitted that this cap has become a “symbol of injustice” in France.

So while Sarkozy has stood firm on pension reform – and rightly so – he has decided to give in on the wealth tax shield, to show his commitment to social justice. Former Prime Minister Jean-Pierre Rafarin, a conservative who is close to the President, said recently: “Social cohesion is a priority. The new government’s mission must be a social revival and trying to rebuild that perspective with the trade unions.”

Sarkozy will also be hoping that France’s presidency of the G20, which starts in January, will give him an international stage to push issues that are popular with French voters, such as regulating financial markets and combating climate change and fluctuating energy prices.

Sarkozy has been successful on the world stage and he presided over a successful EU presidency two years ago. His reaction to the global financial crisis, for example, earned him much praise both at home and abroad, and domestically he will need to boost his popularity as much as possible as the 2012 election approaches.