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| Steering France’s Economy, and Attacked From All Sides | Steering France’s Economy, and Attacked From All Sides |
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| PARIS — Pierre Moscovici protects his iPhone with a cover featuring a portrait of Léon Blum, a hero of France’s Socialist Party and three times prime minister, the last after emerging from Buchenwald and Dachau. Mr. Moscovici, France’s minister for finance and the economy, needs a good dose of Mr. Blum’s courage these days, under attack not just from the right but from within his own party. | PARIS — Pierre Moscovici protects his iPhone with a cover featuring a portrait of Léon Blum, a hero of France’s Socialist Party and three times prime minister, the last after emerging from Buchenwald and Dachau. Mr. Moscovici, France’s minister for finance and the economy, needs a good dose of Mr. Blum’s courage these days, under attack not just from the right but from within his own party. |
| “France has too much debt,” Mr. Moscovici said bluntly in an interview. “We must reduce deficits to keep our sovereignty and our credibility.” | “France has too much debt,” Mr. Moscovici said bluntly in an interview. “We must reduce deficits to keep our sovereignty and our credibility.” |
| He is attacked from the right for not being firm enough in cutting public spending and for not digging hard enough to uncover the tax fraud of the disgraced former budget minister, Jérôme Cahuzac. He is attacked from the left for being too moderate, too pragmatic and too willing to cut public spending in a period of stagnation. In other words, for being insufficiently socialist. | He is attacked from the right for not being firm enough in cutting public spending and for not digging hard enough to uncover the tax fraud of the disgraced former budget minister, Jérôme Cahuzac. He is attacked from the left for being too moderate, too pragmatic and too willing to cut public spending in a period of stagnation. In other words, for being insufficiently socialist. |
| Mr. Moscovici, 55, rejects both sets of criticism, but as the man in charge of the economy he is clearly an easy target for political sniping and ideological anger. Asked why the French are so angry and depressed, he said: “As I sometimes say, I’m not a psychoanalyst; my mother is.” | Mr. Moscovici, 55, rejects both sets of criticism, but as the man in charge of the economy he is clearly an easy target for political sniping and ideological anger. Asked why the French are so angry and depressed, he said: “As I sometimes say, I’m not a psychoanalyst; my mother is.” |
| The president he serves, François Hollande, is the first Socialist president in 18 years, elected in May on promises of economic growth and job creation. But Mr. Hollande is already the most unpopular president in the Fifth Republic, and a main reason is the parlous state of the economy that Mr. Moscovici oversees. | |
| Growth is almost nil, and unemployment is at record levels, with the number of people looking for work higher now than at any time in France’s postwar history; youth unemployment is at 24.4 percent, with 80 percent of new jobs actually temporary contracts. | Growth is almost nil, and unemployment is at record levels, with the number of people looking for work higher now than at any time in France’s postwar history; youth unemployment is at 24.4 percent, with 80 percent of new jobs actually temporary contracts. |
| At the same time, France is committed to budget deficit targets as a member of the euro zone, and even if the targets are stretched, Mr. Hollande and Mr. Moscovici know they may have to make significant cuts in spending to remain credible with European partners and the markets. In the ambiguous land between “no austerity” and spending cuts, there is much room for metaphor and euphemism. | |
| Even as France is asking Brussels and main partner Germany for more time and space to meet its commitments, Mr. Moscovici likes to talk of a “serious budget” and “structural reforms.” He speaks of the political risks of austerity and the need for politicians to gauge the tolerance of their voters, their political allies — and, in France’s case, its small but powerful unions. | Even as France is asking Brussels and main partner Germany for more time and space to meet its commitments, Mr. Moscovici likes to talk of a “serious budget” and “structural reforms.” He speaks of the political risks of austerity and the need for politicians to gauge the tolerance of their voters, their political allies — and, in France’s case, its small but powerful unions. |
| The argument against austerity, pressed by Mr. Hollande with the support of the troubled southern rim of the euro zone, is gaining ground, especially as Germany faces an election and Chancellor Angela Merkel’s conservatives face a renewed challenge from the Social Democratic Party. Even Wolfgang Schäuble, the German finance minister and one of austerity’s leading champions, speaks with understanding of the French dilemma. | |
| “Of course, France must continue on the path of structural reforms,” he said on Thursday. “You cannot make changes overnight — that must happen step by step, then it will be credible. Then you can indeed be flexible on the question of in what year you have a deficit.” | “Of course, France must continue on the path of structural reforms,” he said on Thursday. “You cannot make changes overnight — that must happen step by step, then it will be credible. Then you can indeed be flexible on the question of in what year you have a deficit.” |
| Of course the centrality of France to the euro zone means that it will always get more leeway than a smaller country — especially given its overall strengths in demography, infrastructure and innovation. As Mr. Moscovici is fond of pointing out, France is the world’s fifth-largest economy and ranks fourth in attracting foreign investment. While it has problems with labor costs and declining competitiveness, “we are not the sick man of Europe,” he said angrily, accusing much of the Anglo-Saxon and German press of “French-bashing.” | Of course the centrality of France to the euro zone means that it will always get more leeway than a smaller country — especially given its overall strengths in demography, infrastructure and innovation. As Mr. Moscovici is fond of pointing out, France is the world’s fifth-largest economy and ranks fourth in attracting foreign investment. While it has problems with labor costs and declining competitiveness, “we are not the sick man of Europe,” he said angrily, accusing much of the Anglo-Saxon and German press of “French-bashing.” |
| Mr. Moscovici also can get annoyed when discussing the “neoliberalism” and “orthodoxy” of the technocrats of the European Commission, which sets the rules. At one point, when discussing the demands of Eurocrats to keep the annual budget deficit at or below 3 percent of gross domestic product, Mr. Moscovici burst out and said: “There is a mainstream view in the European Commission that is neoliberal, or orthodox. But I’m a socialist, a social democrat!” In France, he said, “we have elections, we have political choices, and we are defending our own way.” | Mr. Moscovici also can get annoyed when discussing the “neoliberalism” and “orthodoxy” of the technocrats of the European Commission, which sets the rules. At one point, when discussing the demands of Eurocrats to keep the annual budget deficit at or below 3 percent of gross domestic product, Mr. Moscovici burst out and said: “There is a mainstream view in the European Commission that is neoliberal, or orthodox. But I’m a socialist, a social democrat!” In France, he said, “we have elections, we have political choices, and we are defending our own way.” |
| France must be judged on results, he said, not on “the choice of means.” Of course, France broke its vow to reduce its budget deficit to 3 percent of gross domestic product this year; it will be 3.7 percent. Paris has promised to reach 3 percent in 2014, though some are skeptical, given the near recession and the growing Europe-wide emphasis on growth over austerity. | France must be judged on results, he said, not on “the choice of means.” Of course, France broke its vow to reduce its budget deficit to 3 percent of gross domestic product this year; it will be 3.7 percent. Paris has promised to reach 3 percent in 2014, though some are skeptical, given the near recession and the growing Europe-wide emphasis on growth over austerity. |
| Mr. Hollande and Mr. Moscovici argue for “balance,” between fiscal consolidation and growth, between Europe’s demands and France’s contentious politics. “We must refuse austerity, because austerity leads to revolt,” Mr. Moscovici said. “We want to reduce deficits, but do that at a rhythm compatible with growth and employment. If not, people won’t accept it,” he said, pointing to social unrest in Greece, Spain and Portugal. | Mr. Hollande and Mr. Moscovici argue for “balance,” between fiscal consolidation and growth, between Europe’s demands and France’s contentious politics. “We must refuse austerity, because austerity leads to revolt,” Mr. Moscovici said. “We want to reduce deficits, but do that at a rhythm compatible with growth and employment. If not, people won’t accept it,” he said, pointing to social unrest in Greece, Spain and Portugal. |
| The image of Europe is also suffering, he said, because of the dominant, moralistic prescription of austerity. The minister for European affairs from 1997-2002, Mr. Moscovici calls himself a “committed European,” but “we don’t want austerity in Europe, either,” he said. “If Europe is perceived — not as disciplined, that’s not a bad word — but if it’s perceived as punishment, then we have a problem.” | The image of Europe is also suffering, he said, because of the dominant, moralistic prescription of austerity. The minister for European affairs from 1997-2002, Mr. Moscovici calls himself a “committed European,” but “we don’t want austerity in Europe, either,” he said. “If Europe is perceived — not as disciplined, that’s not a bad word — but if it’s perceived as punishment, then we have a problem.” |
| But home is the problem. Mr. Hollande’s approval ratings are around 27 percent, the lowest on record, and with the government promising no new taxes on households in 2014, the burden will be on spending cuts — five billion euros in 2014, the first reduction in nominal terms in 30 years, with more to come. | |
| Mr. Moscovici’s aides say that their job now is to say “no” to every other minister; Mr. Moscovici says without specificity that France will proceed with reforms in family support, health care and the sensitive issue of pensions. Despite general unhappiness at increased corporate taxes, the Hollande government promises further flexibility in the labor market and further efforts to reduce French labor costs, trying to restore competitiveness. | Mr. Moscovici’s aides say that their job now is to say “no” to every other minister; Mr. Moscovici says without specificity that France will proceed with reforms in family support, health care and the sensitive issue of pensions. Despite general unhappiness at increased corporate taxes, the Hollande government promises further flexibility in the labor market and further efforts to reduce French labor costs, trying to restore competitiveness. |
| But with the Socialist Party itself shaken by the unpopularity of Mr. Hollande and openly debating the wisdom of even these economic cuts and reforms, there is some skepticism that the government will press ahead much further. | But with the Socialist Party itself shaken by the unpopularity of Mr. Hollande and openly debating the wisdom of even these economic cuts and reforms, there is some skepticism that the government will press ahead much further. |
| Mr. Moscovici is attacked for being a moderate and a pragmatist, but he was a member of the Revolutionary Communist League until 1984, when he was 27 and had graduated from some of France’s finest schools. Entering public service, Mr. Moscovici then joined the Socialists, calling his time in the league “a long time ago.” | Mr. Moscovici is attacked for being a moderate and a pragmatist, but he was a member of the Revolutionary Communist League until 1984, when he was 27 and had graduated from some of France’s finest schools. Entering public service, Mr. Moscovici then joined the Socialists, calling his time in the league “a long time ago.” |
| Paris-born, he is the descendant of Jewish immigrants; his father was of Romanian origin, his mother Polish, and his four grandparents, he said, were foreigners. “So for me, Europe was always hope, always a common future, always an ideal,” he said. “And if Europe is no more to be any of that, but just common rules that lead to pain, then how can people love Europe? That’s why we need to regain that part of the idea. If we don’t, then we’re in serious trouble.” | Paris-born, he is the descendant of Jewish immigrants; his father was of Romanian origin, his mother Polish, and his four grandparents, he said, were foreigners. “So for me, Europe was always hope, always a common future, always an ideal,” he said. “And if Europe is no more to be any of that, but just common rules that lead to pain, then how can people love Europe? That’s why we need to regain that part of the idea. If we don’t, then we’re in serious trouble.” |