Manuel Valls and the Gordian Knot of economic reform in France

Manuel Valls and the Gordian Knot of economic reform in France
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A GRI Power Brokers feature on French Prime Minister Manuel Valls.

Manuel Valls is not a typical French socialist politician. The Prime Minister of France is a tough-talking security hawk attempting to force through liberal reforms and he “loves business”.

These tunes are unusual to hear from a member of the same party – the Socialist Party (PS) – whose President campaigned on a platform that included a 75% tax on the super-rich in elections in 2012. Despite being under pressure from both left and right, leading a fragile government and facing nationwide strikes against his labour market reforms, Valls is driving the agenda in French politics.

france protests 2

Valls’ proposed labour market reforms have caused strikes and demonstrations.

Valls is facing a titanic task of reforming the French economy

France appears devilishly difficult to reform. Particularly stubborn norms include the 35-hour working week and a generous pension system. Consequently, the country has been left behind in terms of economic growth by several other Euro countries, not least Germany.

To make matters worse, France is a serial Eurozone deficit offender, has a stubbornly high unemployment and a persistent electoral threat from the populist party Front National (FN). François Hollande was elected President in 2012 on a conventional tax-and-spend left-wing manifesto. Hollande’s programme spluttered along for two years without discernible economic results. Enter Manuel Valls, who recognises the dire need for reform. Valls recently told unions, when threatened with chaos in an attempt to face down his government’s labour decree, “enough is enough”. Most economists and observers agree with him.

unemployment france

Source: Eurostat

Valls, who served as interior minister from 2012 to 2014, moved the government in a drastically new direction. An admirer of ‘Third Way’ politicians such as Tony Blair and Bill Clinton, Valls is a protégé of former French Prime Minister Michel Rocard, who was in power from 1988 to 1991. A long-standing member of the PS, Valls’ policies are straight from the ‘Third Way’ playbook. He is a tough-talker on crime and accepts liberal economic reform as a precursor to more orthodox left-wing redistribution policies. He has been compared with Italian Prime Minister Matteo Renzi.

Right hand Macron was a bold choice

The hyperactive Valls has battled to aid the ailing French economy and implement his programme. An initial bold move was to install a former investment banker, the youthful Emmanuel Macron, as finance minister. The two men have attempted a number of brave liberal reforms for which few other mainstream French politicians have shown enthusiasm.

Valls had previously said that “the left needs optimism” but as his tenure as Prime Minister has progressed, he has worn an increasingly determined grimace. He has controversially forced a number a laws through parliament without a vote, using the so-called ‘49/3’ constitutional mechanism. This was the case last year with the ‘Macron Law’ that deregulated some professions, and the recent labour market reforms, intended to introduce flexibility to France’s moribund jobs market. The legislation has met with fierce opposition, but is sorely needed. This year the ‘Nuit debout’ youth movement has taken to the streets against the proposed changes and a summer of industrial action is brewing.

Emmanuel Macron has started to eclipse Valls as the most popular politician on the French left and recently launched his own liberal movement, En Marche! Talks abound of a potential challenge for the Presidency in 2017.

This has clearly irked the Prime Minister who has fought back by taking ownership of other liberal reforms and embarking on a tour of world capitals. This year, Valls has visited a number of African countries, visited Australia after France won a defence contract there, mischievously debated Russian Prime Minister Dimitry Medvedev in Munich, and also presented Benjamin Netanyahu with a peace plan to resolve the Arab-Israeli conflict. With Hollande seemingly fatally weakened, Valls is beginning to resemble an acting President.

Valls for president?

In addition, Valls has set out his own position in PS and national politics, very much in keeping with the conservative law and order stance of other ‘Third Way’ politicians. He advocates an aggressive secularism that includes a proposed ban on Muslim headscarves at French universities, suggested that a majority of French people think Islam is incompatible with the country’s values and has been sceptical about accepting migrants and refugees. The ‘identity’ issues that Valls asserts make many in the PS uncomfortable.

The Prime Minister has also been central in extending the state of emergency imposed after the Paris terror attacks in November 2015. The approach, however, may be designed to prevent an exodus of PS and floating voters to the FN next year. A number of polls warn that, as Socialist candidate, Hollande will not make the presidential run-off. Instead, the polls suggest it will be FN leader Marine Le Pen.

Le Pen’s narrative describes a corrupt establishment that colludes in pursuing consensus policies against the wishes and interests of the majority. This is patently not true of Valls, however, who along with Macron has energetically tried to chip away at some the vested interests that keep the economy static. The consensus from outsiders and international institutions, meanwhile, state that the current reforms to do not go far enough.

Nevertheless, Valls and his government are coming under increasing pressure and have had to face a number of votes of no-confidence in parliament. It remains to be seen whether his reforms will take effect or whether the partnership with Macron will survive. Valls has been damaged by his association with France’s disliked President, and as a result his own popularity has dropped. It is safe to assume that Valls eyes a future Presidential run, but in comparison Michel Rocard lost influence in the 1990’s to those left of him in the PS. If the party reaches similar conclusions during and after the 2017 campaign, history may repeat itself.

Valls’ efforts demonstrate the difficulty in trying to reform the French economy. Paradoxically, it could be the next President, probably from the centre-right Republican Party, who reaps the benefits of Valls’ whirlwind incumbency.

GRI Power Brokers features high-level individuals having a positive impact on political risk environments. Through interviews, in-depth analysis and insider profiles, GRI explores how power brokers are affecting the distribution of political or economic power, offering unique insight into those individuals that are shaping market trends in all corners of the world. 

Categories: Europe, Politics, Power Brokers

About Author

Robert Ledger

Robert Ledger is an analyst on European affairs, with a particular focus on the Balkan and Caucasus regions. He has an MA in International Relations from Brunel University and a PhD in political science from Queen Mary University London.