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European Economic and Political Crisis

Growing Chinese Investment in Africa an Element of Developing EU Economic and Politicl Crisis


French Professor Makes Case for European Empire complete with European Army   to Compete with USA, Russia, China

Zaki   Laidi: Europe at “War” on 3 Fronts

Zaki Laïdi is professor of international relations at Sciences Po, Paris.

Irish Examiner, Tuesday, December 17, 2019  https://wp.me/pKzXa-QL

“For the first time since 1957, three major powers — the US, China, and Russia — have an interest in weakening Europe. They squeeze the EU in different ways, but they all share a hostility to its governance model.”……..e

Rather, Europe needs the determination and political will to develop new commercial, diplomatic, and military strategic assets. In a world of sabre-rattling and muscle-flexing, effective modesty is preferable to vacuous ambition.”….

“But Europe still needs to develop its monetary, industrial, and military capacity.” 

The US, China, and Russia all resent the EU’s sharing of sovereignty among its states and want to undermine it. The EU must bolster its military to protect its liberal ideals, says Zaki Laïdi.

For the first time since 1957, three major powers — the US, China, and Russia — have an interest in weakening Europe. They squeeze the EU in different ways, but they all share a hostility to its governance model.lume is 100%volume is gedemptvolume is 100%volume is gedempt

The European model, after all, is based on shared sovereignty among states (in crucial areas such as market standards and trade). That liberal idea is antithetical to the American, Chinese, and Russian view of sovereignty, which places the prerogative of states above global rules and norms of behaviour.

Shared sovereignty is possible only among liberal states; unalloyed sovereignty is the preserve of populists and authoritarians. But today’s anti-EU hostility also owes something to Europe’s undeniable economic weight.

Without the EU, the US, under its president, Donald Trump, would likely have succeeded already in forcing Germany and France to surrender to its trade demands. Were it on its own, France would not have been able to reject bilateral negotiations with the US over agricultural issues. The EU, as a ‘common front’, works as a power multiplier for its constituent parts in all areas where sovereignty is shared.

China’s view of Europe is not so different from Trump’s. While the Chinese have taken advantage of the European single market, by acquiring footholds in key EU countries, the last thing they want is for Europeans to share sovereignty in controlling foreign investment, such as through the new screening mechanism launched in April.

China has been cultivating financial dependencies in the Balkans, knowing full well that if these countries become EU members, they will be subject to stronger transparency requirements.

China would much prefer the model underpinning the Belt and Road Initiative (BRI), its massive effort to build trade and transport infrastructure linking China with Africa and Europe. How China and participating countries finance BRI projects is notoriously opaque. In fact, more than half of all Chinese loans to developing countries are not even listed publicly.

Russia, too, resents European unity. Although some EU member states oppose continued sanctions against Russia, all have respected them. Still, Europe is hardly a monolithic bloc in dealing with Russia.

Despite Europe’s energy-independence aims, Germany is co-operating with Russia in building the Nord Stream 2 gas pipeline. For a while, Germany also stood in the way of a firmer EU policy vis-à-vis China, owing to the German auto industry’s reliance on the Chinese market. However, Germany’s position has changed since 2017, with its leaders finally taking stock of the risks posed by Chinese takeovers in sensitive industrial sectors.

The frequent claim that Europe is incapable of playing a global role is thus simply incorrect. Compared to a more isolated developed country, such as Japan, Europe is quite strong indeed. While Japan has been at the mercy of US tariffs on imported steel, the EU has retaliated in kind.

And while Japan has had little choice but to accept a bilateral trade deal with the US (“in principle”), Europe has stonewalled the Trump administration’s attempts to overhaul the US-EU trade arrangement.

To be sure, the EU is still a long way from achieving strategic and economic autonomy. But that does not mean it is incapable of doing so. Europe has many assets with which to defend multilateralism and international norms.

Given its creativity and massive market, it could play a critical role in setting the standards for digitalisation and artificial intelligence, both of which are at the heart of today’s global economic battle.

Lest one forget, it was Europe that took the first step in regulating the platform economy, through the General Data Protection Regulation, which has already set a new world standard.

But Europe still needs to develop its monetary, industrial, and military capacity. The EU must expand the international role of the euro, so that it can serve as a safe asset and a standard currency for cross-border trade. Internationalising the euro will require a deep capital market, comparable to that of the US, and there is already a consensus among eurozone member states in favour of heading in this direction.

Establishing the euro as a safe asset — that is, making a Eurobond equivalent to a US Treasury bill — is more controversial. Germany is staunchly opposed to any proposal that implies risk-sharing across the eurozone. But if foreign investors are not confident that the European Central Bank will defend the value of the euro in any eurozone country, they will never see the single currency as a rival to the dollar.

On the second point, Europe needs to create its own industrial ‘champions’. That will require a deepening of the internal market, which remains far too fragmented with respect to services.

It also may call for a reconsideration of EU competition rules. Following EU anti-trust authorities’ decision to block a number of large mergers this year — not least that between Alstom and Siemens — there is a growing debate within Europe about how competition policies can be improved.

Finally, Europe desperately needs to build up its military capacity to lend credibility to its exercise of commercial and soft power. For example, a new European protection force deployed in the Strait of Hormuz would signal to both the US and Iran that Europe can defend its own interests, without having to take sides against its allies. The capacity to project power is a fundamental source of global clout.

Europe does not need a ‘grand strategy’, which is a pompous term that fails to account for local and global constraints.

Rather, it needs the determination and political will to develop new commercial, diplomatic, and military strategic assets. In a world of sabre-rattling and muscle-flexing, effective modesty is preferable to vacuous ambition.

Zaki Laïdi is professor of international relations at Sciences Po, Paris.


———————————————————–Predictions of Return to European Hegemony and World Dominance are Wildly Inaccurate

With the rise of China and and an introspective US, the continent faces an uncertain future and a vassal status writes Slawomir Sierakowski.

Until recently, Europe could have hoped to be a partner for the US. But that now appears increasingly unlikely — not only because of US President Donald Trump’s America-first instincts, but also as a result of the EU’s own failings. In the face of a rising China, European passivity is no less problematic than Trump’s unpredictability.”

Slawomir Sierakowski, founder of the Krytyka Polityczna movement, is director of the Institute for Advanced Study in Warsaw and Senior Fellow at the German Council on Foreign Relations. https://wp.me/pKzXa-QL

Irish Examiner, Thursday, December 19, 2019

With the rise of China and and an introspective US, the continent faces an uncertain future and a vassal status writes Slawomir Sierakowski.

IN 2004, the American economist Jeremy Rifkin wrote a bestselling book, The European Dream, in which he proclaimed that the 21st century would belong to Europe — and even would depend on it. In Rifkin’s view, a Europe held together by the idea of “unity in diversity” would be the most effective answer to globalisation.

Europe was supposed to represent a new “global awareness” and “freedom from the slavery of materialism,” which would be “replaced by empathy”.

We all know how that turned out. The materialistic United States, which Rifkin expected to be eclipsed by Europe, was better able to weather the financial crisis. Brexit, the crises in Greece and Catalonia, and the implosion of liberal democracy in Central and Eastern Europe have highlighted the shortcomings of unity in diversity.

And European societies’ hostile reaction to the wave of migrants fleeing wars and hunger demonstrated that empathy has failed to overcome materialism.

The error was not Europe’s, but Rifkin’s. Europe was not, and is not, bound to succeed. In fact, as 2019 comes to a close, the European Union is seemingly helpless and resigned in the face of its most important challenges: Completing the economic and political integration of the bloc, creating a common defence policy, and even safeguarding basic standards of the rule of law.

Poland’s government, for example, is responding to a European Court of Justice decision regarding violations of judicial independence by introducing legislation that would allow the country’s judges to be removed for criticising violations of the Polish constitution. When leaders of Poland’s ruling Law and Justice (PiS) party proclaim that “this caste must be disciplined”, what can the EU do?

Rifkin’s analysis does not focus much on China, whose emergence as a global leader is displacing not the United States, but Europe. China is now the world’s largest exporter, and, as the biggest producer of electric cars, it may soon overtake Germany to becomethe global leader in the automobile industry.

America’s position as the world’s leading military, financial, and innovation power is not threatened for now.

The US withstood previous challenges from Germany and Japan in each of those areas, and very likely will resist China’s competitive threat, too. But Europe very likely will not.

In fact, we are witnessing a great reversal of roles between Europe and China compared to the 19th century. For China, the 1800s were the “age of humiliation”, a period when it was infiltrated by the French, British, and German empires, as well as by Russia and the US. These foreign powers imposed humiliating trade treaties, subordinated and exploited China economically, and controlled it politically.

Today, the EU increasingly resembles 19th-century China: A still-rich empire that cannot be occupied by others, but is weak enough to be infiltrated and exploited. China, meanwhile, has assumed Europe’s former role, with its companies and investors increasingly penetrating the European economy and extending their influence.

Chinese investors are buying Europe’s best factories (including the pearl of German robotics, KUKA) and its largest ports (including Duisburg in Germany, the world’s largest inland port, and Piraeus in Greece). They are signing unequal economic agreements and gradually conquering the EU, beginning with the weakest links, namely Eastern and Southern Europe – and, in particular, Hungary, Greece, and Portugal.

Worse, there is no reaction from Brussels. There is a rickety plan to build European industrial champions, but it is being blocked by the fear of violating EU competition rules.

In addition, European leaders’ silence on questions of human rights is deafening. While Hong Kong’s citizens protest, and the US Congress passes legislation threatening possible sanctions on Chinese and Hong Kong officials for human-rights abuses, Europe puffs itself up and “calls on both sides to refrain from aggression”.

Europe can only watch from the sidelines, because it has no arguments to make. Transatlantic unity is disappearing, and nothing new is emerging in its place. Even cooperation among European intelligence services is a sham: journalists knew who murdered a former Chechen rebel commander in Berlin’s Tiergarten park in August before Germany’s politicians did.

If this stagnation continues, the only question is whether Europe will become the satellite of the US or of China. And, ultimately, that will be decided outside the EU. If isolationism wins out in America, Europe will become a Chinese satellite. And if the US maintains a confrontational stance vis-à-vis China, Europe will remain dependent on America.

Until recently, Europe could have hoped to be a partner for the US. But that now appears increasingly unlikely — not only because of US President Donald Trump’s America-first instincts, but also as a result of the EU’s own failings. In the face of a rising China, European passivity is no less problematic than Trump’s unpredictability.

Slawomir Sierakowski, founder of the Krytyka Polityczna movement, is director of the Institute for Advanced Study in Warsaw and Senior Fellow at the German Council on Foreign Relations.



———————————————————————Europe’s New Look Executive Eyes Geopolitical Actions

By Daniel Gros   ,Irish Examiner,  Tuesday, December 10, 2019  https://wp.me/pKzXa-QL

The EU’s policy toolkit is not well suited for exercising power abroad, writes Daniel Gros

Daniel Gros is director of the Centre for European Policy Studies

Many in Europe fear that by China providing cheap finance for infrastructure projects across a wide range of countries, including some EU member states, China’s Belt and Road Initiative (BRI) is gradually encroaching on the continent’s periphery. But, again, one must ask whether this challenge justifies setting aside good-governance principles.

With former German defence minister Ursula von der Leyen assuming the presidency of the European Commission, the EU now has a new executive. Von der Leyen has promised to lead a “geopolitical” commission,believing that Europe needs to be more assertive in its relations with other countries, and more hard-nosed in pursuing its own interests around the world, particularly vis-à-vis the other large powers.

Because the EU lacks an army or a central secret service, it must use economic policies to achieve its geopolitical aims. But the way Europe’s policy toolkit works in practice suggests it is not well suited for exercising power abroad.

Learn moreThe EU’s most important policy tool is trade, which is one of the few areas where the bloc acts as one. The EU has traditionally run its trade policy along conventional commercial lines, with the goal of maximizing market access for European exporters and protecting certain domestic sectors (particularly agriculture). Could this policy be tweaked for geopolitical purposes?

A closer look at concrete examples suggests not. After all, the EU should be opening its markets to agricultural imports from Northern Africa, to foster growth in that struggling region and stanch the flow of economic migrants into Europe. But opposition from Italian, Spanish, and other olive growers has blocked this option.

Similarly, the EU has long favoured imports of bananas from key countries (mostly former colonies) that it wants to keep within its orbit. But such a policy makes little economic sense — why restrict imports of bananas from countries that can produce them more cheaply? — and violates World Trade Organisation rules.

As these and many other real-world examples show, bending commercial principles for geopolitical aims simply is not compatible with a rules-based multilateral trading system, not to mention the WTO’s principle of “non-discrimination”.

In fact, subordinating trade policy to a broader geopolitical agenda would require the EU to disregard the very principles that it has repeatedly pledged to uphold and defend. Another area for the potential (mis)use of economic levers concerns Europe’s “near abroad”.READ MORE

Many in Europe fear that by providing cheap finance for infrastructure projects across a wide range of countries, including some EU member states, China’s Belt and Road Initiative (BRI) is gradually encroaching on the continent’s periphery. But, again, one must ask whether this challenge justifies setting aside good-governance principles.

Consider the case of the Balkans, where the EU itself supports many construction projects. Each of these projects undergoes rigorous cost-benefit analysis, and in a mountainous region with weak local economies, the cost of building roads or railways is high.

Proposals for new superhighways to connect relatively small population centers may have the support of local politicians, but they simply do not make economic sense. As such, the EU’s financing institutions — the European Investment Bank and the European Bank for Reconstruction and Development — generally counsel against such projects.

By contrast, the Chinese have proven more than willing to build “highways to nowhere”.

If the EU followed suit and started financing white elephants in the Balkans in order to keep those countries close by its side, whatever goodwill such projects initially generated would evaporate as soon as the costs of maintaining them and servicing their debts came due. Many countries that have signed up to the BRI can already attest to this.

Moreover, one must remember that better connectivity in goods, services, capital, and people along the EU periphery is not always synonymous with faster local growth. By strengthening agglomeration effects, deeper economic integration can reinforce the tendency of talented, more educated people to leave their home country for opportunities elsewhere.

The one area where the EU could feasibly leverage economic means for geopolitical ends is development aid. The EU is the world’s fourth-largest aid donor and its member states collectively spend three times more on aid, accounting for over half of the OECD’s official development assistance.

The countries that receive the bulk of this assistance — Pakistan, Syria, Afghanistan, Ethiopia, and Somalia — also tend to be the sources of the most migrants. The EU thus has a vital interest in helping these countries prosper.

Corruption and economic mismanagement, not a lack of aid funds, are holding these countries back. So, while Europe could channel official development assistance to a few favoured countries in a bid for influence, it would risk propping up corrupt elites who have done nothing to foster development.

Meanwhile, EU money could have a significant positive impact in other countries with less geopolitical importance. If these countries miss out on funds they otherwise would have received, EU development assistance will have become less effective.

In economic terms, the EU is still of a comparable size to China or the US, which is why it is tempting to think that its economic strength could be parlayed into geopolitical power. The EU would have to abandon some of its core principles to go down this road. Would it really be worth it?

Daniel Gros is director of the Centre for European Policy Studies.Copyright: Project Syndicate, 2019

————————————————————-Growing Chinese Investment in Africa an Element of Developing EU Economic and Politicl Crisis  https://wp.me/pKzXa-QL


Table 1: M&A and Greenfield FDI into Africa

M&A (mn USD) Greenfield FDI Inflow (mn USD)
2016 2017 2018 2016 2017 2018
United States -3,085 5,674 -1,405 3,640 3,347 10,275
China 2,932 1,248 554 36,144 8,705 11,930
European Union 1,016 -7,227 1,483 11,864 21,674 25,462

Source: UNCTAD

M&A =Mergers and Acquisitions

China pledges $60 billion in aid and loans to Africa, no …

https://www.washingtonpost.com › world › 2018/09/03

Debttrap Diplomacy and Africa’s Economy

China’s lending to African countries is part of a large-scale overseas investment boom forming part of the country’s quest to become an economic superpower.


Debt-trap Diplomacy and Africa’s Economy

China is a major stakeholder in Africa’s economy with a significant influence on many aspects of the continent’s affairs.[34] Recently, African countries have rapidly increased their borrowing from China.[34] According to research conducted as part of the Jubilee Debt Campaign in October 2018,[35] African countries owed China US$10 billion in 2010 increasing to over $30 billion by 2016.[35] China’s lending to African countries is part of a large-scale overseas investment boom forming part of the country’s quest to become an economic superpower.[36] The top five countries in Africa with the largest current Chinese debt, are Angola ($25 billion), Ethiopia ($13.5 billion), Kenya ($7.9 billion), the Republic of Congo ($7.3 billion), and North Sudan ($6.4 billion).[37]


Growing debt to China positively affects Africa’s economy via much-needed developments in infrastructure.[38] The main types of infrastructure that these debts improve include roads, railways and ports.[38] Improved infrastructure favors internal trade, healthcare and education systems.[38] One such example of infrastructure development is the The Merowe Dam Project in Sudan. This is set to more than double the power development in Sudan, which is currently severely lacking.[38]

According to the World Economic Forum, internal trade is the greatest opportunity for realizing Africa’s economic growth potential.[39] Furthermore, infant mortality rates in Africa have been reduced (falling from 740 to 410 deaths per 100,000 births) as a larger proportion of the population now has access to medical care as the result of infrastructure development.[40] Liberia, Rwanda, Malawi, and Madagascar are four countries that experienced a some of the greatest decreases, over 60%, in infant mortality in a period of time from 1990-2011.[41] Although, this pace of infant mortality progress is still very slow everywhere apart from Eritrea, according to UNICEF.[42]

In the 2015 and 2017 records of World Bank, Africa owes large sums of debt not only from China but also from other lenders.[43] Africa’s debts from multilateral lenders amount to 35%, 32% from private lenders, about 20% from China and around 13% from various other governments.[43] Higher interest rates of about 55% from the private sectors prompted Africa to go to China for loans, which is around only 17%.[43] Also, the debts owed of the African countries from China are allocated for investments on sectors needing critical development and growth and not just for consumption.[44] China in exchange just demands payment in the form of jobs, and natural resources.[44] In economic theory and practice, any country can borrow from another country to finance its economic development.[44]  However, it is not always easy to find someone who will lend money even for logical reasons. The global competition on which country is best to invest money in is in fact, a country’s sign of financial strength, which is why Africa does not consider the relationship as a debt-trap.[44]


In the past decade, China has increased its investment relationship with African countries.[45] In 2014, China created a program known as African Human Resources Development Fund (AHRDF), which has helped to train over 10,000 Africans in various professional fields.[46] Improving the education of Africans has helped a large proportion of the African population acquire entrepreneurial skills and employ themselves, which in turn benefits the Chinese businesses that have been built in Africa.[46] China is able to ensure this educational training and decrease the unemployment rate by inviting Africans to Chinese Universities with scholarship options.[47] Unemployment in Sub-Saharan Africa has dropped from 7.88% in 2002 to 6.09% in 2018.[48] While this educational growth continues to incur debt for the African country, however, is balanced by the fact that people are able to work to produce goods to send back to China – thus lessening the debt.[47]

Furthermore, China has made investments into African human resource development programs. This can be seen in various programs that have been developed since 2010, including the China–Africa Science and Technology Partnership Plan, China–Africa joint research and exchange plan, and the China–Africa partnership to address climate change.[49] Human resource development has also been seen in agriculture and technology, where teams from China continue to go into African countries each year to further their training in these ever-changing fields.[49] While these debts to China do increase with these human resource development exchanges, it has also helped reduce the rates of unemployment in African countries, because many on the continent who have been trained through these programs seek employment in infrastructural development projects in their countries.[46]

Economic PerilsEdit

Belt and Road Initiative (BRI) is a multi-billion-dollar expansion project of China, with the aim of expanding its power all around the world through lending countries to spur its economic growth.[45] BRI is also sometimes called “Chinese Marshall Plan”. The BRI project was launched in 2013 by President Xi Jinping with the goal of improving the infrastructure of countries around Europe, Africa, and Asia in exchange of gaining global trade opportunities and economic advantage.[45] The plan consists of spearheading and investing on 60 projects around the world.[50] The initial expected cost of the BRI is over $1tn, and actual costs are even higher.[50] The risks involved for countries are unexpectedly high. In recent news, many countries in the BRI project have started rethinking the perils of the projects and the fact that most have repayment issues.[50] Jonathan Hillman, director of the Reconnecting Asia project at the Center for Strategic and International Studies in Washington believes that there is more to these projects than just mere financial strategy, he stated “It’s also a vehicle for China to write new rules, establish institutions that reflect Chinese interests, and reshape ‘soft’ infrastructure.”[50]

The negative effects of Chinese financial loans to Africa’s economy include fear of losing local companies to those Chinese with strong buying powers.[45] Debt from China has also promoted illicit trade among China and African countries.[50] Such imports are cheap because of China’s cheap labor and are thus preferred for locally manufactured goods. Examples of cheap imports from China include clothes and electronics. Trade between African countries and China has also affected ties between African countries and other continents, especially Europe and North America. According to Brautigam, Chinese loans are prone to misuses and have promoted the levels of corruption and fight for power in African countries.[45]

Over four fifths of China’s investments are spent on infrastructure projects in underdeveloped and developing countries.[50] Forecasts of the International Monetary Fund (IMF) show that economic growth rate of China will fall to around 6.2%, which is around 0.4% from 2018 of 6.6%.[46] The reason for the possible decline is the increasing trade disputes of China and US. Another is the sudden increase of debts in the past decade, which was used to fuel infrastructure programs.[50] Africa fears the slow growth of China, as this may result to impending government infrastructure projects.


——————————————————————–As Macron Falls Behind The French Fascists, European Economic and Political Crisis Deepens

“Marine Le Pen’s National Rally has overtaken the centrist party of Emmanuel Macron, the French president, for the first time, according to an opinion poll released Sunday, in a further sign of the rise of the far-Right in Europe…  https://wp.me/pKzXa-QL
the French president’s approval ratings have plunged to 21 per cent amid rising discontent over his failure to fulfil his election pledges to slash unemployment, boost growth and cut taxes.”

French far-right overtakes Macron in EU parliament election poll

The party of French far-Right leader Marine Le Pen has overtaken the president’s in European Parliament voting intentions CREDIT:  ANGELO CARCONI/ANSA

  • David Chazan, Daily Telegraph  paris, 4 NOVEMBER 2018

Marine Le Pen’s National Rally has overtaken the centrist party of Emmanuel Macron, the French president, for the first time, according to an opinion poll released Sunday, in a further sign of the rise of the far-Right in Europe.

The Ifop poll measured voting intentions for European Parliament elections next May, seen as a decisive battle between pro-EU liberals and Eurosceptic populists that could be pivotal in shaping the future of the European Union after Brexit.

Liberals championed by Mr Macron are attempting to fend off a rising anti-immigrant and Eurosceptic wave led by Hungary’s prime minister, Viktor Orban, and Matteo Salvini, Italy’s influential deputy prime minister.

The poll showed Ms Le Pen’s party, formerly known as the Front National, with 21 per cent of voting intentions compared to 19 per cent for Mr Macron’s La Republique En Marche (LREM) party.

Together with the seven per cent of people planning to vote for a smaller far-Right party, Stand Up France, and two per cent going for two small “Frexit” parties, the French far-Right has won 30 per cent of voting intentions, a five-point gain since August, according to the poll.




Daily Express

We’ll KNEEL no longer!’ Italy-EU clash BOILS over as Salvini dismisses ‘THREAT’ letter

ITALY Interior Minister Matteo Salvini hit back at the European Union for “threatening” the country to change its 2019 budget proposal, urging Italians to take to the streets to signal Rome “will kneel no longer” https://wp.me/pKzXa-QL

By Aurora Bosotti, Daily Express  Nov 1

The Italian Deputy Prime Minister dismissed calls from the EU for “clarifications” on Italy‘s new budget proposal.

Matteo Salvini lashed out at Brussels, calling on Italians to march down the streets on December 8 to signal their unity and support for their ministers’ economic policy. Addressing citizens with a live video on his Facebook page, the Lega leader said: “Mothers, fathers and children telling those Brussels misters ‘let us work, let us live’.

“We have a right to work, a right to health, a right to education, a right to a pension. In Brussels they have nothing else to do but send us disapproving letters, threatening letters, telling us to change our budget plan, not to change our pension law. Telling us not to reduce taxation but to actually add more.”


Following the Brexit Referendum and the commencement of the Article 50 process of Britain leaving the EU, Europe now faces a presidential election followed by a General Election a year later.

FRANCE -THE CHOICE by Michael Roberts

It’s only a week to go before the first round of the French presidential election and it seems that the race is wide open.  Only two candidates can take part in the second round in May.  But who will those two be?  Extreme right-wing Front National candidate Marine Le Pen has been the front runner in the polls over the last year, but her support has been slipping.  Ex-socialist minister and centrist darling of the bourgeois media, Emmanuel Macron is neck and neck with Le Pen, both at around 22-23%.  The official conservative (Republican) candidate Francois Fillon should be ahead, but he has been damaged by the expenses scandal of his wife and children getting huge government-funded salaries for parliamentary work which they did not do.  Even so, Fillon is getting about 18-19% share of those saying they will vote.  The big surprise in the last few weeks had been the rise of Leftist candidate Jean-Luc Melenchon, whose polling has leapt from 10-11% to around 19% now.  In so doing, the official Socialist party candidate, Benoit Hamon, has seen his vote slump to 6-7%.

It is still most likely that it will be Le Pen and Macron in the second round, with Macron more than likely to win the presidency by some distance over Le Pen.  But all combinations are possible, with the worst for French capital being a battle between leftist Eurosceptic, anti-NATO Melenchon and racist Eurosceptic Le Pen.

Back in February I analysed the state of the French economy, the second-largest in mainland Europe and one of top ten capitalist economies globally.  The profitability of French capital is at a post-war low (profitability is still down a staggering 22% since the peak just before the global financial crash in 2007), real GDP growth is only just over 1% a year, well below that of Germany.  The unemployment rate remains stuck close to 10% compared to just 3.9% in Germany.  Youth unemployment is 24%. Business investment has stagnated in the ‘recovery’ since 2009.

Because of the actions of the French labour movement, inequalities of income and wealth have not risen as much as in other G7 countries like the US and the UK in the last 30 years.

Neoliberal policies have been less effective in getting profitability up and workers down under the thumb of capital.  French capital needs a president that can and will do this now.  Can it find one?

If we look at the programs of each candidate, we can see it is Francois Fillon who offers the best programme for the interests of French capital.  Fillon aims to end the key gain of the French labour movement, the official 35-week, often firmly enforced.  Under Fillon, workers would have to put in 39 hours before overtime or time-off in lieu is paid.  Fillon would slash the public sector workforce by 500,000 (or 10%), while increasing the working week for those who keep their jobs.  The retirement age would be raised to 65 from 62 now and everybody would have to work to that age or face pension loss.  Unemployment benefits would be cut.

Severe fiscal austerity would be imposed with a cut in public sector spending from the (astronomically high for capitalism) 57% of GDP to 50%, with a ‘balanced budget’. The cuts would be necessary because Fillon wants to cut corporate tax rates to 25% and other ‘burdens’ on the business sector, while raising VAT for purchases by French households by 2% pts.  He would scrap the current wealth tax on the rich. One area of extra spending would be more police and more prisons, while reducing gay rights.

This is an outright neo-liberal program that no French president has been able to impose successfully in the last 30 years.  But French capital demands it.  Unfortunately, for big business, Fillon is unlikely to make the presidency.

But what of Macron, the ex-banker and socialist minister, the man most likely to get into the Elysee Palace (the French White House)?  Macron’s program is a mix that attempts to appeal to labour and capital, as though they could be reconciled.  He wants to merge public and private pension and benefit schemes.  He claims that he will get the unemployment rate down to 7% through an investment plan.  And yet he plans to cut public sector spending and run a tight budget.

Like Fillon, he would cut corporate tax for businesses to 25% of declared profits.  He keeps the 35-hour week, but companies would be allowed to ‘negotiate’ a longer week.  Low-wage earners would be exempted from certain social welfare levies, a measure that would put an extra month’s wage per year in the employee’s pocket (but no clarity on how this would be paid for, except through ‘higher growth’).  He too would boost police and prisons but also provide a ‘payment for culture’ to students and reduce school class sizes.  He would cut the number of MPs and reduce time for re-election of officials, while banning Fillon-type payments to family members. This programme is thus a mix of help to business and wishful thinking for labour.  But it seems to appeal to just enough voters over the neoliberal alternative of Fillon.

Both Fillon and Macron are pro-EU and pro-euro.  This is the one big policy difference with Le Pen and Melenchon.  Le Pen’s program is a mixture of racist, anti-immigrant, anti-EU policies alongside pro-labour measures for the public sector and wages.  Le Pen would ‘re-negotiate’ the EU treaty with the rest of the EU and if that failed, call a referendum on leaving the EU within six months.  If French voters decided to stay in the EU, she would resign the presidency.  If they voted to leave, France would end the euro as its currency and re-introduce the franc.  Such a policy would be shattering for the French economy and probably sound the death-knell of the EU and the euro as we know it.

Le Pen would get on with ending immigration, strip many French muslims of citizenship, revoke international trade treaties and NATO operations and confine free education to French citizens only.  Companies employing foreigners would pay an extra 10% tax and foreign imports would be subject to a 3% tax.  And, of course, the police forces would be expanded.

Like the Brexiters in the UK referendum, she claims that she can cut taxes on average households and raise welfare benefits by saving money on EU membership and regulations (that has turned out to be a myth in the UK, where austerity has increased).  The number of MPS would be halved.

But Le Pen also aims to help (small) business with lower taxes.  And instead of raising the retirement age, as Fillon proposes, she would cut it to 60 years, increase benefits to the old and to children, while keeping the working week at 35 hours and overtime tax-free!

Le Pen’s economic policy is thus anathema to French capital and attractive to French labour, but combined with racist and nationalist measures.  But, of course, there is no real attack on the hegemony of French big business.  So this policy of raising wages and benefits while leaving the euro and introducing protectionism, in an economic world of low growth and a possible new economic slump, is utopian. Neither the needs of labour nor capital will be met.

When we turn to Melenchon, we see a similar utopianism, if from the perspective of defending the interests of labour over capital.  His economic program is similar to that of Corbyn’s Labour in the UK, if going further.  He proposes a 100-billion-euro economic stimulus plan funded by government borrowing and some nationalisation in sectors such as the motorway network.  He says he would raise public spending by 275 billion euros to fund the plan, to raise minimum and public sector wages, create jobs to reduce the unemployment rate to 6% and also, like Le Pen, cut the retirement age to 60.

This extra spending would, Keynesian-like, fund itself from higher economic growth and employment.  But with big business needing profits to invest, calling for more taxes on business (as well as the rich), may deliver the opposite of faster growth.  At the same time, he too would cut corporate tax rates to 25%!

Melenchon would also renegotiate the EU treaties, ignore the EU fiscal austerity pact, call for a devaluation of the euro, take national control of the Banque de France from the ECB and leave NATO and the IMF.  And following Le Pen, if these measures are blocked, he would have a referendum on EU membership.

Melenchon’s program is similar to that of socialist Francois Mitterand (although somewhat less radical than Mitterand’s) when the latter won the presidency in 1981.  He too wanted to take France on an independent line from the rest of Europe in expanding the economy through public spending, nationalisation and more taxes on business and the rich.  That program fell down in face of the deep global slump in 1980-2, when financial investors fled France and the franc.  The choice then was for Mitterand to go the whole hog and take control from French capital or capitulate to neoliberal policies.  He chose the latter with his so-called “tournant de la rigueur” (austerity turn) in 1983.  That choice would soon face Melenchon, in the unlikely event that he won the presidency.

Apart from the economic utopianism of Le Pen and Melenchon under capitalism, they both face an immediate political problem.  In June, the French vote for a new National Assembly, which, at least right now, would probably elect a majority of conservative pro-capital, pro-EU MPs who would be backed by a media campaign from big business, the EU Commission and other EU governments aiming to shackle the new president.  The battle would be on from day one, while the euro and French financial assets reel from the shock.

But it probably won’t happen.

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