Sunday, 6 August 2017

There is no such thing as a free lunch. Part 3: health care

The French have a reputation for hypochondria that is not entirely undeserved. Molière’s famous comedy “Le Malade Imaginaire” (usually translated into English as “The Imaginary Invalid”) still resonates strongly with audiences, nearly 350 years after its first performance. They watch with glee as the hero, Argan, groans and grumbles about his imaginary ailments, follow the many and various remedies proposed to alleviate them and perhaps too, secretly identify with his deepest desire to have his daughter marry a doctor.  In everyday conversations, health issues are never far below the surface and there are many who take their cue from the everyday greeting “how are you?” to tell you exactly how they are, in every possible detail.

This predilection of the French for their own health is surely one of the reasons why they have chosen to give themselves one of the best and most generous health care systems in the world, in terms of quality, availability, medical technology and cost to patients. But it is also, in its way, the ultimate free lunch inasmuch as the vast majority of patients are oblivious to its true costs. Latest developments are likely to conceal them even more.

Health care is under the authority of a large administration that also manages pensions and family allowances. It raises revenue from compulsory earnings-based contributions from employees and employers, the latter paying the larger share. Employees can, if they so wish, trace on their pay slips the amount paid by themselves and their employers, but most don’t bother, being primarily interested, naturally enough, in their take-home pay. They therefore tend to discount, not to say take for granted, the real cost of their health care and pension entitlements. The self-employed, also subject to compulsory contributions, are a little more conscious of what they pay, but full tax deductibility goes some way to deadening the pain. In 1991, in view of the increasing deficit of the entire social security system, a new tax, called the contribution sociale généralisée (CSG) based on all sources of revenue was introduced and a little later a special and “temporary” levy designed to pay off the system’s mounting debt. The rate at which the CSG is levied has steadily increased, from an initial 1.1% to the current 7.5% and the temporary levy is still in force. Although the government initially maintained that the CSG was a tax based on all revenue and therefore not specifically a "social contribution", the European Court of Justice found otherwise and ruled, in 2015, that non-resident recipients of dividend and other income from French assets were not obliged to pay CSG because they don’t benefit from health care in France.  It is also clear that increasing life expectancy and the fact that most people require more health care as they grow older can only increase the system’s annual deficit and lead to further escalation of its accumulated debt. Governments sometimes manage to contain the deficit and declare triumphantly that it has been reduced from, say 11 billion euros to 3 billion, always failing to add that the debt remains and grows bigger every year.

The way the system works makes it easier to understand how the deficits and debt continue to grow. Patients may consult the doctor of their choice, within limits, pay the doctor directly for the treatment they receive and are refunded almost the entire cost by the health care system. Doctors, for their part, do not only make a diagnosis and prescribe the appropriate treatment but are also keen to give their patients “value for money” because they are also their clients! It is here that the essential difference between the French system and those of many other countries can be found – and it goes a long way to explaining why French public expenditure and national debt is so huge. In the U.K for instance, governments allocate fixed budgets to the health trusts that administer the National Health Service and they have to make the difficult choices about how to spend it. In the U.S, for those not on Medicare or Medicaid, insurance companies call the shots. In France, difficult choices are avoided inasmuch as health care costs are generated by medical professionals, refunded to patients with few questions asked and the total amount of expenditure is recorded at the end of the year. Unsurprisingly, it invariably turns out to be higher than revenue.

It is the kind of system that encourages people to spend more or less what they like on their healthcare and doctors have little reason not to give them what they want. Two examples suffice to prove the point. When CT and MRI scanning machines were introduced some years ago, there was brave talk of limiting their use only to the most serious cases. Under pressure from patients and doctors, these types of investigation are now widely available and used routinely in establishing a diagnosis, regardless of the cost. In terms of drugs prescribed, the top ten most costly drugs for ailments like rheumatoid polyarthritis, diabetes, high blood cholesterol levels and some forms of cancer cost over €23 billion in 2014. The third most costly drug was the lowly Paracetamol, at just over I euro for 16 tablets.  Mainly under pressure from patients, steeped in the generalised “refund culture”, doctors added €321 million worth of this mild, over-the-counter painkiller to their prescriptions in the same year. The system is also generous in terms of surgery. In the U.K, patients over the age of 80 cannot normally expect to have hip or knee replacement operations on the NHS. Nasty words like discrimination and rationing are avoided but that is what it amounts to. In France, patients between 80 and 90, all other things being equal, can have their hips or knees replaced, fully refunded by the health care system. Any whiff of health care rationing on the basis of age, or any other criteria, is anathema.  Quite rightly so, most in France would argue.

Conscious of escalating liabilities, successive governments have not been unsuccessful in streamlining the system and cutting its costs. The old paper based refund system has been largely replaced by a state-of-the-art card-based data transmission network; uncomplicated surgery is performed increasingly on an out-patient basis and doctors have been encouraged to prescribe a greater proportions of generic drugs, although of course the most recently developed, and therefore most effective and also most costly drugs are still under patent protection. There is always talk of making patients more “responsible” but there are huge built-in incentives not to be. On top of the half-concealed payroll costs, the previous government introduced legislation to oblige companies to provide top-up health care insurance for all employees, as a way of transferring more costs to the insurance companies. In addition, generalised third party payments have been introduced for everything. Most patients now just have to produce their health care entitlement card when they consult a doctor, pick up drugs at a pharmacy or undergo surgery in a hospital or clinic.

Is there any way of slowing the inexorable upward path of health care costs in the French system and bringing them eventually back into balance? The omens are not good. The system itself, because of the way it works and because its real costs are so well concealed from patients, is highly biased towards more expenditure Not only is there a very strong culture of seeking medical treatment at will and simply passing the bill on to the system, but in addition, the recently introduced third party payment, and the top-up insurance paid for by employers are powerful disincentives for patients to economise on their health care or pay for more of it out of their own pockets. Emmanuel Macron’s electoral promise to replace employee health care and unemployment insurance contributions by an increase in the CSG is in the same vein. The political advantage of such a move is obvious: employees will see an increase in their take home pay (pensioners of course will see the opposite effect). However, tilting the burden of funding towards the CSG, which is largely deducted at source, will make the costs of health care even more opaque. As one commentator pointed out the other day, the overall effect of this measure will be to increase the amount of tax (VAT and CSG) deducted at source and therefore, supposedly,  “painless”, while income tax, for instance, paid by an ever smaller proportion of households, will account for an ever smaller proportion of overall tax revenue.

The conclusion that can be drawn from all this is that one of the major components of public spending, that the current government is committed to cutting, is more than likely to continue growing, unless restrictions are introduced to oblige French patients to pay more of their health care costs out of their own pockets and therefore become less spendthrift. Such moves would undoubtedly cause a huge outcry and will probably never be seriously considered. Overall therefore, it doesn’t look as if this particular free lunch will be made less nourishing any time soon.

Monday, 31 July 2017

There is no such thing as a free lunch - Part 2: the motorways

As every foreign motorist familiar with France will know, intercity motorways are certainly no free lunch. In this respect, they are a notable exception (water services being another) to the rule that public services are always provided by the state. The vast majority of the country’s intercity motorways are toll roads, conceded by the state to private companies. Given the general distrust in France of capitalism in general and private companies in particular, the relationship between the French motoring public and the companies is not always a happy one – and politicians do little to make it happier - on the contrary.

The economic case for toll motorways is fairly clear-cut. The infrastructure can either be paid for by the state out of general taxation or it can be paid for by users, or by a mixture of the two. Both models exist in Europe. In France, the toll model seems amply justified inasmuch as not all French taxpayers use the motorways but many foreigners who flock to France’s beaches and ski slopes throughout the year, and who are not French taxpayers, do. Initially, when most of the motorway network was built, the state charged the tolls but between 2002 and 2006, the government of the day decided to privatise the networks in order to raise much needed revenue and recoup its initial costs. After a European-wide call for tenders, the concessions were awarded to a number of companies who purchased the infrastructure for a period of 30, 40 or 50 years, funded it with debt, undertook by contract to maintain and develop it and, in return, collect the tolls. Unlike the SNCF (see my previous post) the concession holders are private companies who have to make enough revenue to pay off their debt, cover their own operating costs and keep their shareholders happy by paying regular dividends.

Given fairly strict regulation of the tolls the companies can charge and the rate at which they can increase them, it is perhaps surprising that the issue has generated so much controversy. Motorists regularly complain about price increases and politicians are often quick to jump to their defence, accusing the concession holders of gouging consumers, conveniently forgetting that they cannot increase tolls more than their regulatory obligations allow. The peak of such demagogy was reached when the former Minister for the Environment, Ségolène Royal, always quick to spot an issue from which to make political capital on the cheap, demanded that motorways should be free of charge at weekends. Various reports, in particular one from the very serious national court of auditors, have concluded that, given the profits made by the concession holders since privatisation, the state sold its motorways at much too low a price. Some politicians have even suggested that they should be taken back into public ownership. In the regular battles of figures that hit the media headlines, nobody, it seems, has ever raised more fundamental issues like whether the state would not be better advised to stick to those tasks that only it can properly fulfil, like security, defence and justice, nor whether the concession holders have not quite simply done a far better job of managing the assets they purchased than the state would ever have done or been able to do.

To any regular user of the motorways between Paris and western France like myself, it is clear that there has been no lack of investment since privatisation. Long stretches of motorway have been upgraded from two to three-lane highways, the roadways are regularly resurfaced and rest areas have been remodelled to make them far more consumer-friendly than they were. Toll technology has been modernised too: badges are now widely available, making it increasingly possible not to stop and queue at tollgates.

And the vehicles have kept coming.  Motorways are the routes of choice for the vast majority when they embark on a long car journey, not to speak of commercial haulage firms. During weekends at holiday time, 24-hour radio stations open their news bulletins with congestion warnings and report regularly on the length of tailbacks.  Despite the additional cost involved, many families eat lunch, dinner or snacks at motorway restaurants and cafés. The attractive picnic areas are always full at meal times. 

Users, it would seem, continue to complain all the way to the tollgates!

Wednesday, 26 July 2017

There is no such thing as a free lunch - Part 1: the SNCF

This is a typical expression in English for which I have never found a satisfactory equivalent in French – maybe French-speaking readers of this blog can make some suggestions!  I heard it frequently in conferences, often in the mouths of the wry and pragmatic Dutch or Danish delegates. What it means of course is that the true costs of a public service are far from covered by prices charged to users, who may think they are getting a “free lunch” but end up paying for it in other ways, usually well concealed. At a time when there is a lot of talk in France about cutting public expenditure and ending “our addiction to public spending” as the Prime Minister put it the other day, it seems appropriate to delve into three areas of everyday life in which a majority of the French either take a free lunch for granted or complain about it being too expensive when they have to pay for it out of their own pockets. And as the summer holidays are upon us, let us start with an example of France’s infrastructure, the railway system and its monopoly operator, the SNCF, wholly owned by the French state.

President Macron recently inaugurated a new high-speed rail line between Paris and Rennes on the same day as another was being inaugurated between Paris and Bordeaux.  Since 1981, when the first high-speed line was put into service between Paris and Lyon, billions of Euros have been poured into other high–speed lines and the sleek trains that run on them, putting Marseille just three hours from Paris, Bordeaux and Strasburg just over two hours, Rennes, Le Mans, Tours and Lille a little over an hour. The popular Eurostar service between Paris and London is an offshoot of these efforts, leading to the first high-speed line to be built in the U.K between the Channel Tunnel and London, as well as the Thalys service between Paris, Brussels and Amsterdam. For those of us old enough to remember the long haul between Paris and Brussels on the grandly named “Trans Europe Express”, being whisked to Brussels in under 90 minutes is a luxury indeed, although for passengers travelling on to Amsterdam, the effect is spoilt by the long and a tortuous pull through Belgium and the lack of a high-speed track for the rest of the trip.

However, the ease and convenience of escaping traffic jams and the drudgery of airport security controls by travelling by high-speed train do not come cheap. The TGV operator, the SNCF has an endemic operating deficit and although it sometimes makes an annual profit (much of which is creamed off in dividends by the state) its outstanding debt of between 40 and 50 billion Euros, is of course part of the French public debt. Some of this will eventually have to be written off, in other words, charged to taxpayers, who also have to pay the cost of the debt. Only a company wholly owned by the state can enjoy such a luxury. Which goes a long way to explaining why the French state and the SNCF want to keep it a quasi-monopoly provider for as long as possible and have fiercely resisted all attempts by the European Commission to prise open the French rail market for passenger services. By 2019, we are told, regional authorities, that now have the authority to organise rail services within their regions, will be able to open up their calls for tender to alternative operators. It also explains why the SNCF has never been able to sell a high-speed train link to other countries: by normal accounting standards, it would never be profitable, or the subsidy required to make it pay deemed too high

In pursuing such a policy, the French state is of course staying true to its long-standing mercantilist tradition, which it also continues to practise with other providers like EDF and Aéroports de Paris, in both of which it is by far the majority shareholder: protect your home market as best you can while selling as much as you can to other markets. The SNCF generates 20% of its revenue from 120 countries but foreign operators have no more than a toehold in France. Sweden and Germany, among other countries where competition in passenger services has been more warmly embraced, are generally happy with the outcome. The big advantage of the French position of course is that it has given France a standard of rail infrastructure in terms of quality, safety and coverage on a par only with that of Japan. Nobody would dispute that it is a great asset to the country and cannot therefore be measured in purely accounting terms, but must also take in more intangible and unquantifiable benefits.

This being said, it is now clear, regardless of the pressure exerted by the European authorities and foreign train operators, that the limits of this essentially protectionist model have been reached. The most recent, and most expensive, high-speed lines will undoubtedly be the last for a very long time, as President Macron pointed out after inaugurating the line from Le Mans to Rennes. His message was clear. There is a limit even to the capacity of the state’s deep pockets to continue to accommodate such high levels of debt while the SNCF spends most of its budget on high-speed rail to the detriment of basic maintenance on suburban lines in and around France’s major cities, particularly Paris. The consequences are not always as dramatic as the tragic accident at Bretigny-sur-Orge in 2013 (7 dead and 70 injured) due to a lack of long overdue points maintenance. Passengers who rely on suburban services at rush hours frequently spend as long on overcrowded, delayed and slow-moving suburban train as they would to travel from Paris to Tours, Lille or Le Mans on a high-speed TGV. The SNCF’s huge pension deficit gets larger every year as an increasing number of train driver take much earlier retirement than employees in other industries. Working conditions for staff are highly favourable and have led to the SNCF’s freight business, already open to greater competition, becoming totally uncompetitive with new entrants making inroads into the market by operating more efficiently and with fewer and more productive staff.

The railways workers’ unions, powerful, divided and militant, have done their best in the past and will undoubtedly do the same in the future, to resist changes to their working conditions or pension arrangements, despite advances in technology and longer life expectancy. And they know only too well that if they want to, they can bring the country to standstill, as they did to great effect in 1995. Paradoxically though, they are not entirely devoid of a public service ethic: trains run 20 hours a day and every day of the year. Try taking a train to London, or anywhere within the UK for that matter, on Christmas Day or Boxing Day and you will be told that there are no services at all. But if you live in Paris and wish to celebrate Christmas with your maiden aunt in Lille, it is possible to get there and back by train on Christmas Day!

Such are the deeply entrenched paradoxes that the SNCF and the French government will have to confront in the next few years: maintain, or restore, a high quality service to the general public, from office workers relying on suburban trains to businessmen and women fitting in a return journey to Lyon or Marseille within a day, while maintaining high levels of safety and punctuality and making staff work longer hours and longer years so that overall costs can be covered mainly from revenue and the SNCF can cease to rely on substantial subsidies from the taxpayer. It will take more than a few lunches, free or otherwise, to get there!

Sunday, 16 July 2017

Hail to the Chief!

Wikipedia tells us that Hail to the Chief is the official Presidential anthem of the United States “ that accompanies his appearance at many public events”. I did not watch enough of the traditional July 14 military parade this morning to know whether it was played to herald the arrival of Donald Trump as President Macron's guest of honour. Judging by the events of the last few days however, the anthem could be considered equally appropriate for Macron, who has chosen to put particular emphasis on acting like a Chief.

I wrote in my last post (The times they are a’changing - July 6) that the French Prime Minister’s first policy speech to parliament contained little detail and that its main thrust appeared to signal the postponement or watering down of most of the commitments in Emmanuel Macron’s presidential programme. Whether the President has had second thoughts since or whether he and the Prime Minister agreed beforehand on this particular strategy, Macron has now made it abundantly clear that he intends to implement all of his programme within more or less the original timetable, a change of tack that, if nothing else, makes him look decisive and not about to take the slippery slope that his predecessor, François Hollande slid down at an alarming rate after coming to power in 2012 and that largely handicapped his subsequent years in office.

The immediate effect of this show of decisiveness is to put public spending cuts back on the agenda for 2017 so that France can hit the fiscal deficit target of 3% by the end of the year and start cutting taxes next year. The theme of France’s economic and financial credibility is therefore once again in the front line, underscored by an interview given by the President to a French regional newspaper but also, significantly, to a number of German papers, on the eve of a Franco-German cabinet meeting and another discussion with Chancellor Merkl about the future of Europe.

Among the spending cuts decided is a reduction of €850 million in this year's  defence budget. This had not gone down well with the Chief of the General Staff, who complained bitterly about it to a parliamentary committee, drawing an immediate and very public rebuke from the President in a speech to top brass on the eve of the July 14 parade. “I am your Chief “, he said “and I have made a number of commitments to the French people that I intend to keep.” He went on to sugar the pill by promising an increase in the overall military budget next year and thereafter a steady increase, but the immediate impression, once again, was that the President was making a point of stamping his authority on the military just as he has on the Prime Minister and his government.

Many years ago, a British General whose name I no longer remember, offered the view in a TV programme that the French are a rebellious people who need a strong guiding hand to get things done. “And it usually ends up being a soldier”, he added. He was probably thinking of General de Gaulle, or further back, of Napoleon Bonaparte, both of whom had a decisive influence on the country and its history.  Emmanuel Macron has never been a solider and was born too late for compulsory military service. But he too seems to have concluded that the French need their Chief to show the kind of authority that neither of his two predecessors have displayed. Hollande never had much in the first place and Sarkozy wasted what little he had.

One commentator said this morning that there is a military theme running through many of Macron’s acts and policies so far, from naming his political party En Marche, usually translated as “On the Move” but could also be  “On the March”, to riding up the Champs Elysées in a military vehicle on his inauguration day, to taking a brief trip beneath the waves on a nuclear armed submarine, not to speak of his latest statements.  

If this is indeed the case, then we are likely to witness more, metaphorical, firework displays than were on offer on the evening of July 14, as protests and demonstrations in the autumn come up against Macron’s iron will to push through his reforms with the aid of his large parliamentary majority. This time next year we may be hailing the Chief once again, but I predict a bumpy ride between now and then!

Thursday, 6 July 2017

The times they are a' changing

In his speech to parliament on Tuesday, laying out his legislative programme for the next five years, the French Prime Minister, Edouard Philippe, quoted “the winner of the Nobel Prize for Literature 2017” when he said “ …how many times can a man turn his head, pretending he just doesn’t see”. I’m not sure whether Bob Dylan would approve of two lines of his 1960s anthem “Blowin’ in the Wind” being used to illustrate a point about the French national debt, but be that as it may, France’s new two-headed executive has not been shy of displaying its literary references in the last few days.

In his much commented official portrait, a determined looking President Macron grips the edge of his desk and looks directly into the camera against the background of an open window. As we have been told at length in a “making of” published on the President’s Twitter account, but certainly wouldn’t have noticed otherwise, he chose to be photographed with one carriage clock, two smartphones and three books arranged artfully behind him: Stendahl’s novel “Le Rouge et le Noir”, De Gaulle’s “Memoires de Guerre” and André Gide’s “Nourritures Terrestres”, a hymn to hedonism and nature, written in a somewhat inaccessible style that is apparently one of his favourite books. We are invited to reflect on the fairly obvious symbolism of these choices.

On the same day, the French Court of Auditors released its “official” figures about the state of the French budget deficit and national debt. They reveal that the outgoing administration has left a hole of 8 billion Euros in this year’s budget, the equivalent, as the Prime Minister chose to put it, of the annual budget of the Ministry of Culture. It is nothing new of course for an incoming government to blame its predecessor for a much worse situation than originally thought. It burnishes its credentials for honesty and transparency and serves as a justification for more painful measures than those promised during the election campaign. This time however, the stratagem lacks credibility, as the 2017 budget was prepared in the middle of last year by a government in which Emmanuel Macron was the Minister for Economic Affairs until his resignation in July 2016. Just in time to escape carrying the can but too late not to know that the 2017 budget was being built on very shaky foundations.

This being said, the Prime Minister has pledged to bring the deficit, at least, back into line - under 3% of GDP - by the end of this year and go further in subsequent years. Just how he will do it remains unclear and his speech was not bursting with detail, to put it mildly. Most of the tax changes promised by Macron during his campaign have been postponed until the middle of 2018 and actual cuts until 2019. More money has been promised to boost low pensions, provide fast broadband services to the whole country and generally increase spending on strategic investments, but there is no timetable attached either. Even if the more tangible measures announced by the President in his strategy speech the previous day, like reducing the number of parliamentarians by a third and seriously pruning the useless but costly Economic, Social and Environmental Council, are implemented in the next two or three years, they too will have no immediate impact on spending. The Prime Minister simply stated that the civil service wage bill, almost 23% of public spending, will be reduced and that no budget nor type of expenditure will be taboo. Two possible interpretations of this dirth of detail: either this is the usual post election retreat and we shall see in five years time that little has been done and and that not much has changed, or Macron and his Prime Minister really mean business and will simply do what needs to be done without talking much about it, using their huge and pliant parliamentary majority to ride out any protest.

One of the significant areas that has been given no more than a passing mention by both the President and the Prime Minister, and that nobody seems to have picked up on so far, is pension reform. This is interesting as the candidate Macron presented some fairly radical proposals for merging France’s numerous pension schemes, effectively putting an end to the privileged pension provision enjoyed by civil servants compared to those working in the private sector. He gave voters to understand that this was an essential milestone on the road to meaningful reform. One commentator has timidly suggested that Macron might have come to a secret understanding with the unions in which they would not stand in the way of root and branch reform of the private sector labour market, in which their representation is minimal, in exchange for a pledge that he would not go too far too fast in shaking up the public sector, in which they are far stronger. Whether this is true or not, pension reform is no longer, apparently, an urgent priority It is true that many people still remember the unfortunate experience of Alain Juppé, of whom Edouard Philippe has been a close ally in the past. In 1995, the newly appointed Prime Minister promised, to a standing ovation in the Assemblée Nationale, a complete overhaul of public sector pensions, only to climb down ignominiously six weeks later as unions brought the country to a standstill. Maybe President Macron has concluded that the country can only stomach reform in small doses and that he should start with the labour market and see how that goes first.

With the elegant carriage clock in the official portrait supposedly indicating that he is the master of time, Macron may have another two lines of a Bob Dylan song, The Times they are a’ changing, going through his head as he contemplates the hard and painful choices that he cannot put off for much longer: “ ….don’t speak too soon for the wheel’s still in spin”.

Sunday, 2 July 2017

Simone Veil

Simone Veil, who died last Friday, will mostly be remembered in France for her courageous and successful ministerial stewardship of legislation to legalise abortion in 1974. But she was also a committed European who fought tirelessly throughout her political career for reconciliation between France and Germany and the construction of the European Union. A commitment all the more remarkable for someone who, at the age of 16, was deported from France by the Nazis with her entire family, was interned in Auschwitz and Bergen-Belsen, lost her father, mother, brother and one sister in the Holocaust and survived together with two other sisters, to return to France, study, marry, start her own family, become a magistrate and eventually a politician. She was the first President of the newly elected European Parliament from 1979 to 1982. Her passing throws into relief a book I have just finished reading and triggers a personal memory.

The book is the memoirs of Paul Schmidt, better known as Hitler’s interpreter, entitled Statist auf diplomatischer Bühne“, translated into English as “Hitler’s Interpreter – the memoirs of Paul Schmidt” (The History Press, 2016). It covers the whole of Schmidt’s career between 1923, when he joined the German Foreign Office and 1945 when he was arrested by the Americans, interrogated and appeared both as an interpreter and a witness during the Nuremberg trials. What one learns from the book is that the efforts to pool the French and German iron and steel industries under the 1950 Schuman plan, the foundation of what has since become the European Union, did not come like a bolt out of the blue but harked back to intense economic and political co-operation between France, Germany and other countries between the Versailles Treaty of 1919 and the military occupation of the Rhineland by Hitler’s troops in 1936. Schmidt narrates the numerous bilateral and multilateral meetings and conferences between leading French, German and other European and American politicians, including plenary and committee meetings of The League of Nations, as well as high-level conferences on economic co-operation, disarmament and other matters. He chronicles the consequences for the whole of Europe of Hitler’s rise to power and the last desperate diplomatic efforts to avert war between 1937 and 1939, all of which he witnessed at first hand. In the foreword to his book, Schmidt, who comes across throughout as a competent and honourable servant of his calling, is at pains to point out that during all these years he always stuck strictly to the neutrality required of a linguistic mediator. But he adds a little later: “ On one point I am not neutral: on the struggle between fanatics of whatever race and nationality and “les hommes de bonne volonté” (In French in the original) of whom I met so many during my eventful career. My aim in this book is to place myself, as a good German, fairly and squarely, on the side of “les hommes de bonne volonté” because I am convinced, on the strength of everything I have experienced, and particularly the history of the Third Reich, that the real enemies of mankind are the fanatics, wherever they come from” .[1]

It is a salutary reminder that there have always been men …and women… of good will in Europe and elsewhere, convinced, in spite of everything, that European co-operation is essential to ward off the fanatics. Simon Veil, after suffering so much at their hands, was surely one of the most effective. It is also a reminder that at times like this, we need perhaps to take a few steps back from the frequently derided daily work in Brussels and elsewhere on Directives, Regulations and other legal instruments and remind ourselves of the ultimate aim of European construction.

The personal memory is also that of an interpreter and goes back to the beginning of the 1990s when I had the privilege of working regularly for the French Minister of Finance of the time, Pierre Beregovoy. At some point during the period when the Maastricht Treaty was being negotiated and a single European currency was in the offing, Beregovoy hosted a delegation of American senior officials.  As was widely reported in the media at the time, the Americans in general were (and still are) highly sceptical of the whole idea, considering that the Euro would never be a viable currency because the mooted Euro area was not “an optimum currency area” and would in any case be dominated by Germany. Asked by this particular delegation why France was considering giving up its monetary sovereignty and bowing to the mighty Deutschmark, Beregovoy’s answer was as cryptic as it was final: “for the sake of peace….” The word “peace” was left hanging in the air for a few moments, as if to say, which he didn’t of course:  “if you don’t understand that, then you don’t understand the first thing about Europe”.

Among the numerous tributes that have been paid to Simone Veil, one other French Holocaust survivor was asked in a radio interview how the next generation could continue to keep the memory of the Holocaust alive once its last witnesses have died. She answered that Simone Veil had worked all her life to do just that and that she hoped her work would be continued. The answer was undoubtedly sincere but also, in its own way, left many things hanging in the air.

Future generations of Europeans can surely best honour their predecessors by continuing to forge that “ever closer union among the peoples of Europe” so that no warfare, economic or otherwise, can ever break out between them again.

[1] Unless otherwise stated, all translations from French and German in this blog are my own.

Sunday, 25 June 2017

Sparks begin to fly

Little did I suspect when I wrote that I hoped François Bayrou would do no harm as the Minister of Justice (“Putting his best foot forward” – May 22) that the only harm he would do would be to himself! This week, he resigned from the government, only a month after taking office, following the resignation of two other ministers and members of his party, MoDEM. We are told that he remains on good terms with President Macron. The reasons for his resignation say as much about him and his career as a party leader as it does about the shifts in public opinion.

The reason for his resignation was the opening of a preliminary judicial investigation into allegations of fiddling European Parliament allowances. Six members of his MoDEM party were elected to the Parliament in 2009. Bayrou was not one of the six but at the time he was, and still is, the leader of his party.  Each MEP is entitled to three parliamentary assistants to help with work on European affairs and each is paid about €7800 a month. With such generous allowances, it is of course tempting for any leader of a national party to use some of the money to pay party employees in the home country, in this case France, to discharge normal party duties that have little or nothing to do with European affairs. This is precisely what Bayrou’s party is accused of. One of the six MEPs, Corinne Lepage, a former minister and respected lawyer specialised in environmental matters, later resigned from the party and explained in a book (“Les Mains Propres”  - Editions Autrement, 2015) how the party had deliberately diverted EP allowances in this way and that Bayrou not only knew about it but actively encouraged it in order to inject much needed funds into the party’s coffers. Curiously, her book went more or less unnoticed at the time, by the media at least. It was only this year, with the presidential election campaign in full swing, that Marine le Pen, another former MEP who is also accused of fiddling allowances, denounced other parties in France, including MoDEM, for doing the same. The media suddenly started taking an interest. This past week, following the routine resignation of Edouard Philippe’s first government after the parliamentary elections, in the expectation that it would be immediately re-appointed, the Minister of Defence, Sylvie Goulard, former MEP and member of MoDEM, who had made a promising start to her ministerial career, surprisingly ruled herself out of the new government, stating that she wanted to be free to defend herself in the allowances investigation and claiming that she had always acted in good faith as an MEP. This was apparently a coded message to her MoDEM colleagues that she would not cover the party’s misdeeds and that if the investigation went further, she would say exactly what she had been asked, or obliged, to do by her party’s leadership. This statement clearly put pressure on Bayrou himself who, ironically, was about to present draft legislation on greater transparency and integrity in public life!  (la moralisation de la vie publique). He chose, naturally enough, to fall before he was pushed, together with his No. 2, Marielle de Sarnez, who had also been appointed a minister in the same government, and who is one of the six MEPs accused of fiddling.

Whether the preliminary investigation leads to Bayrou himself being placed under formal investigation  (mis en examen) or not, this whole episode shows that public opinion is increasingly intolerant of politicians who fiddle their expenses or otherwise abuse their privileges. I wrote in a previous post (“The slow revenge of Eva Joly” – March 22) that France is now moving slowly but surely towards more Nordic standards of public life. The latest events are likely to speed things up. As a journalist stated very aptly on the radio this morning, just a few years ago a minister would only have to resign if he was actually convicted of fiddling expenses or tax evasion. More recently, ministers placed under formal investigation have been expected to resign. Thanks probably to the attitude of François Fillon, who said that he would no longer be a candidate for the presidency if he were placed under formal investigation but then did the opposite when he was, public opinion has shifted even further. This time, three ministers have resigned only after being named as suspects in a preliminary investigation. An opinion poll taken two days after Bayrou’s resignation shows that nearly 60% of respondents consider he has done the right thing. Inasmuch as President Macron is thought to be behind it, it has not done his approval ratings any harm either.

The legislation on more transparency and integrity in public life will now be taken up by the new Minister of Justice, Nicole Belloubet, a respected legal practitioner, sometime local politician and member of the French Constitutional Council, little known outside her profession. As Emmanuel Macron continues to stoke the fires of his peaceful revolution, the sparks are beginning to fly in all directions. The labour unions will probably be the next to feel the heat…. but then that is a story that is yet to be told.

Saturday, 17 June 2017

Harder times ahead

A faithful reader of this blog has posted a number of comments about my last post ("A poisoned chalice" - June 13). I am most grateful for comments as they always give me food for thought, as well as a good peg on which to hang a few more points about the first round of the parliamentary elections, particularly the rate of abstention and the fact that most of Macron’s babes are political novices.

On the rate of abstention first. The first thing that struck me last Sunday was the fact that nobody I met, including officials at the polling station, seemed very electrified by the process. There was definitely no sense of anticipation that you sometimes feel in the air on election day, as there was, for instance, in the first round of the presidential election in 2007, when there were high hopes that Nicolas Sarkozy would be the man to put an end to 15 years of drift. This year, the big surprise was Emmanuel Macron’s score in the first round of the presidential election on April 23. Since then, mainly thanks to his highly skilled handling of unfolding events, there has almost been a sense of inevitability about them: getting the best of Marine le Pen in the TV debate, winning the presidency, the inauguration, first appearances on the international stage, the appointment of the government, the rise of his own political party and the disarray and even disintegration of the traditional ones. However difficult it was to predict all of these things at the outset, observing French politics over the last two months has almost been like watching a famous violinist playing a fiendishly difficult concerto or a pole-vaulter effortlessly clearing a two meter hurdle – they make it look so easy!  Little wonder that “The Economist “, on its cover this week, described Macron as “Europe’s saviour” and pictured him walking on water whereas Theresa May had sunk below the surface with only her shoes emerging!

One explanation for the high rate of abstention last Sunday is therefore that a lot of election-weary voters considered the parliamentary elections as more or less a formality. Many of those who bothered to turn out simply wanted to give Macron a boost and many of those who didn’t felt that there was little point in voting for an opposition destined to have little power in parliament anyway. Between the two of them, Marine Le Pen and Jean-Luc Mélenchon, who have expressed the most hostility to Macron and his policies, lost about four million votes between the presidential poll and last Sunday.

This overall impression is reinforced by my experience in my own constituency. I went to the public meetings of two candidates, one from LREM, and one from the Les Républicains, the party that, in its various guises, has held this seat in every parliamentary election since 1958. It selected a new but serious candidate, a personal friend and political ally of the Prime Minister and Alain Juppé’s former chief of staff. He was endorsed by all six local mayors. In his meeting, attended mainly by local worthies, he was clear and honest about the strategic difficulties facing his party and spoke of the need to co-ordinate parliamentary business with that of the local authorities. Whatever one’s political views, he came across as well qualified and well placed to be a good constituency MP. Last Sunday he polled not quite 23%, an unprecedented low watermark in this constituency for a candidate of his political persuasion

In stark contrast to this low-key public meeting, that of his LREM rival was more grandly organised, well attended and featured some nationally known figures. The talk was about Macron’s victory, his vision, and the need for a new departure. Points were made about climate change, renewable energies and Europe, none of which sounded more ground-breaking than an endorsement of motherhood and apple pie. They were dutifully applauded. Hardly a word was spoken about constituency matters, apart from a few bland sentences, like the need for more car sharing to avoid traffic jams at rush hours. Last Sunday, the candidate polled just over 48%, the best first-round result for the centre-left since 1958. He will no doubt be elected to represent the constituency this coming Sunday.

In France, it must be noted though that the role of an MP is not exactly the same as that of a constituency MP in the U.K. Listen to any member of the House of Commons, as I did to Jeremy Corbyn this week in his first speech to the House after the U.K. elections, and it is clear that he considers himself, together with his fellow MPs, as first and foremost the representative of his constituents. In France by contrast, MPs are called députés and are considered as “representatives of the assembled nation”  (“représentants de la nation assemblée”) as stated in the States General convened by Louis XVI in 1789, to which much of France’s modern political history and phraseology can be traced. Even if they are elected from a constituency, representing its interests is seen as a secondary matter to participating in the framing of legislation and monitoring the government of the day.

In this sense, the voters of my constituency, as well as those of countless others throughout the country, are being entirely consistent by sending to the Assemblée Nationale a député who represents a fresh political outlook more than  narrower political interests. As Emmanuel Macron has radically changed the political outlook for the next five years, it seems natural that, under the French system, voters should give him the parliamentary majority to underpin it. In any event, the opposition parties will take some time to reorganise themselves. Many of their supporters feel confused and disoriented  - a further reason for the high rate of abstention last Sunday and probably an even higher one this coming Sunday. 

The fact that the newly elected députés will represent the whole nation does not however give them instant and automatic knowledge of how parliament works. Which is why I have not been the only one to describe them as political novices. This is not meant to be derogatory. There is a lot to be said for new blood and fresh thinking in the somewhat stale Assemblée Nationale, but the government is probably right to consider that the controversial nitty-gritty of labour market reform is not an issue on which they should cut their parliamentary teeth. Some of the new MPs will learn fast, others will find the going tough. And inevitably, with a large number of seats under a single banner, they won’t all have the same views and factions are likely to form. After five years, some may end up joining whatever emerges from the centre-right realignment; others may go the other way and rejoin a rejuvenated Parti Socialiste. Whatever happens, the next five years will be fascinating to observe.

At the end of the period, if Macron’s ideas are implemented as announced, many will come to the end of their short parliamentary career as the number of MPs will be cut by about half. In addition, those who do stand for election to the next Assemblée will do so on the basis of a new voting system that will include a dose of proportional representation.

On Tuesday of last week, the French soccer team beat their English rivals in a friendly match in Paris. The French team scored the winning goal in the second half, even after one of their players had been sent off. It was an impressive and stylish performance. President Macron, watching the match with Prime Minister May, must have relished the victory, as proof of what Team France can achieve when it puts its mind to it. Might he have pondered a more symbolic significance as well? Whether he did or not, the French soccer team, for all its panache last Tuesday, is a long way from qualifying for the World Cup in 2018. Macron is only at the beginning of his campaign to reform France. Let the hard times roll!

Tuesday, 13 June 2017

Poisoned chalice ?

There is little doubt in most peoples’ minds that Emmanuel Macron scored a magnificent victory in last Sunday’s parliamentary elections. The mainstream media have been falling over themselves to find every possible synonym for “triumph”. “Macron sans opposition”, screamed a banner headline in “Le Monde “. The FT morning briefing on Monday was titled: ”Macron wins big”. The precise number of seats in the Assemblée Nationale won by candidates from his party, La République en Marche (LREM) allied with François Bayrou’s party, Modem, will not be known until after the run-off votes next Sunday, June 18. But it looks fairly certain that it will largely exceed 400 (out of 577), a very comfortable majority indeed.  Les Républicans, who have paid the price for their divisions over strategy, will end up with around 100 seats and the Parti Socialiste has been pulverised. Those former members of the party who stood under the Macron banner of LREM have come off well, whereas those that didn’t have faced intense competition from the more radical left-wing rebel party, La France Insoumise (LFI) led by Jean-Luc Mélenchon. Many former ministers and senior party officials have been ousted in the first round of voting, submerged by the on-going shock waves unleashed on April 23. In his much lauded rise to power, it has now become clear that Emmanuel Macron’s stroke of genius was to see, before anyone else, that the traditional parties of the left and, to a lesser extent, the right were so worn and torn that he just needed give them a powerful shove at the right moment to see them keel over and collapse in a heap.

Does all this mean that he will now have a free hand to reform the French economy by pushing through the bold programme that he has promised the country?  In the light of the consummate political skills he has shown so far, he may very well bring it off.  But a few words of caution are undoubtedly necessary.  

The first point to make is that turnout on Sunday was a measly 50%, the lowest for parliamentary elections since 1958. It suggests, among other things, that voters basically followed the institutional logic of the fifth republic: most of those who turned out considered that Macron should be given the parliamentary majority he is seeking and voted, almost automatically, for the candidates of his party, while many others felt that the outcome was a foregone conclusion and that there was little point in turning out to vote for the opposition.  Either way, it does not amount to a massive endorsement of his reform programme, at best an indication that voters are willing to give him a chance to do what he has pledged do. Naturally enough, little detail has yet been revealed, particularly on labour market reform.

When such detail emerges, it is unlikely to be scrutinised by a freshly elected lower house, largely populated by political novices with little or no knowledge of parliamentary procedure. The government has made it clear that, in order to expedite this first major reform initiative, it will simply ask parliament to approve enabling legislation and proceed further through the equivalent of executive orders (ordonnances). If this procedure is followed, most of the detailed measures will be drafted by civil servants and signed off by ministers, presumably with substantial input from trades unions. Parliament’s role will be minimal. Even if objections to the procedure are raised in the Senate, the membership of which has not been changed in the slightest by Sunday’s elections, it can only propose amendments that both the government and the lower house are constitutionally entitled to ignore.

If there is any serious opposition to whatever measure are put forward, recent history suggests that it will come only from the streets. In this respect, there is an interesting parallel with the 1993 parliamentary elections, that gave a similar, 472 seat, majority to a coalition of right-wing and centre parties. The President of the time, François Mitterand, was obliged to appoint a right-wing Prime Minister, the patrician Edouard Balladur, who interpreted his majority as a green light for bold reforms designed to ..........reduce high youth unemployment!  His labour minister attempted to introduce what was called an “initial labour contract” (contrat d’insertion professionnelle), aimed at young, first-time job-seekers. Under the proposals, they were to be offered a labour contract that employers could terminate at their discretion within two years while paying only 80% of the minimum wage. A wave of protests and street demonstrations by a united front of unions, university and high-school students forced the government to withdraw the proposals a few months later. Since then,  two similar initiatives have have been attempted by different governments and have met a similar fate for similar reasons. The conclusion that must be drawn is that in France, the size of a parliamentary majority is irrelevant in the face of a combined front of unions and students that is visibly, vocally and sometimes violently opposed to it. Nearly twenty-five years later, unemployment among young people is still stubbornly high.

Emmanuel Macron and his government must be keenly aware of these precedents and, one hopes, determined not to make the same mistakes again.  At least one member of LREM must have had all this in mind when he said (quoted by “le Monde”) during a victory celebration on Sunday evening: “the risk is that if there is no opposition in the Assemblée, it will eventually be expressed in the streets!”

There is no doubting the political skills that Emmanuel Macron has displayed in conquering and consolidating power. The next big question is whether he will be able bring the same powers of persuasion to bear on the exercise of power and overcome the many and varied forms of opposition that will rise to challenge him. In summary, will he be able to do not only better, but a lot better, than all the governments of the fifth republic since the onset of the economic crisis at the beginning of the 1970s?  We should know within a few months whether this talented young President is able to extract a magic potion from a potentially poisoned chalice.