Does Sego mean what she is saying?

By: Wolfgang Munchau

Just perish a thought. Image that Segolene Royal is not lying. I know this is an outrageous suggestion. But just imagine what would happen if she was elected president and started to implement her 100 points, one by one?

 

Both in style and content, there are some obvious similarities to Francois Mitterrand's 110 point plan during the 1981 campaign. Remember what happened then? Mitterrand actually started to implement the plan for a couple of years, until he saw that this would lead up a blind alley. He changed track, opted for a conservative Finance Minister - Jacques Delors - and an ultraconservative economic strategy in the form of a franc fort. Mitterrand did not exactly lie to his people in 1981, he merely changed his mind after some time.

 

This may happen with Royal too. I am absolutely certain that Royal, if elected, will not spend five years implementing the programme. But she may try to implement some of the points for a couple of years. She will raise the minimum wage to €1500, the economic result will be a further increase in unemployment. Her crass attempt of wealth redistribution will hurt economic growth. There will be an exodus of French companies and of wealthy individuals when Ms Royal's government will resort to increasingly desperate measures to finance the financial gaps. Johnny Halliday will find himself surrounded by a many new French neighbours in his Swiss tax exile.

 

But the effects on France will pale in comparison to the impact on the EU, which is currently in probably its deepest crisis since its beginnings in the 1950s. Just imagine what would happen if Royal made French acceptance of the European Constitution conditional on a change of the ECB's to include economic growth, employment, and inflation. It is true that Germany is at this point more open to discussion about economic governance than at any time since the Maastricht Treaty. But make no mistake: this is a proposal that Germany would veto. It is also an issue over which German politicians would publicly question the future of a monetary union with France, given the two countries fundamental differences over the importance of monetary stability. This, rather than Italy's debt or a hypothetical Spanish property market crash, is the real stuff that could endanger the future of the euro.

 

Even if she held back on the ECB's mandate change for a while, a conflict with Germany is almost pre-programmed. Since her economic plan is not financeable, France is headed for an excessive deficit at a time when Germany is headed for a balanced budget. This alone will make the Germans wonder whether the two countries still share the necessary consensus for a monetary union to prosper in the long run, especially since this monetary union does not appear to develop into a political union. Her promise to merge Gaz de France and EDF into a giant state-owned utility also runs counter to the EU's attempts to open up the energy market.

 

You may say, this is not going to happen. She is just playing to the ranks. You may say that she is turning left during the campaign for the first round of the presidential elections, that she may be turning towards the centre in the second round, and towards the right if and when elected. While I do not believe that she will implement her 100 points one by one, I do not believe that we should dismiss this plan as mere electioneering. Royal is more serious about her programme than some people think, and this is bad news for the European Union.

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