Image
François Hollande's new prime minister, Manuel Valls, is a centrist and a bruiser. He will need these qualities if he is to help turn France round

Five years ago, in 2009, after Manuel Valls urged his unreconstructed party to drop the word "socialist" from its name, he was ordered by its leader to shut up or quit. Two years later, after explaining how painful it would be to remedy France's economic weaknesses, he scored less than 6% in the party primary for the 2012 presidential nomination. Yet on March 31st François Hollande, the French president, appointed the party's most heretical activist as his new prime minister, in place of the bland Jean-Marc Ayrault. It was a move as uncharacteristically bold as it is potentially encouraging for the cause of economic reform in France.


Comment: That is, he's the man who will have no compunction about unleashing extreme right-wing neo-liberal "austerity measures" on the French population in order to apply so-called "economic shock therapy".


That the ultra-cautious Mr Hollande has made such an appointment reflects how crushing was his defeat in the local elections held on March 23rd and 30th. Thanks to high unemployment, high taxes, low growth and inept government, the Socialists lost over 150 towns, mostly to the mainstream right, including Toulouse, which they thought safe, Roubaix and Tourcoing, two towns in the industrial north with a long left-wing heritage, and Limoges, held by the left ever since 1912. Marine Le Pen's populist National Front picked up eleven more town halls, including Fréjus and Béziers, to add to Hénin-Beaumont, which it won in the first round, a big step forward for her party. The only consolation for the Socialists was that Anne Hidalgo won Paris (coincidentally, she shares with Mr Valls the distinction of Spanish birth and family origins).

Right up to the last moment, the president seemed to hope that he could avoid appointing France's now most popular politician, and thus a potential rival, to Matignon. But, with his poll ratings languishing at just 17%, the risk-averse Mr Hollande was forced to take an unusual gamble, calculating that his woolly presidency needed a bit of Mr Valls's tough-guy tactics. Fully 61% of the French approved of the choice. By April 2nd, Mr Valls had his feet under his new desk and had picked his new government.


It was not, however, exactly the fresh "combat government" that Mr Hollande had promised. There was no change for several solid old-timers, including Laurent Fabius, the foreign minister, and Jean-Yves Le Drian, at defence. By contrast Pierre Moscovici, the finance minister, lost his job to Michel Sapin, who held the post in 1992-93 and is to have control of the budget, too. There were also some truly odd choices. Arnaud Montebourg is staying as industry minister, where he has proved unable to resist meddling in corporate affairs and exasperating foreign investors and digital entrepreneurs. So, despite recent blunders, is Christiane Taubira at justice. Ségolène Royal, Mr Hollande's ex-partner and the Socialists' 2007 defeated presidential candidate, takes over the environment portfolio, which she held in 1992-93.

The new team seems to reflect both Mr Valls's need to keep the party's left wing quiet and Mr Hollande's taste for compromise and distrust of his prime minister. As such, it hints at the constraints under which Mr Valls will operate. Impetuous at times, he is deeply distrusted by a chunk of the Socialist left wing, particularly after his hard line over evicting illegal Roma. Mr Valls has no parliamentary base, and is not known as a team player. The Greens, who were junior partners in Mr Ayrault's government, have refused even to take part in Mr Valls's government. The party's leftists blame Mr Hollande's new business-friendly orientation for the poor local-election results - and they see Mr Valls's politics as the problem, not the solution.

A former spin doctor for Lionel Jospin when he was prime minister, and communication chief in Mr Hollande's presidential campaign, Mr Valls will need more than PR skills to answer the pressing question hanging over France: is Mr Hollande serious about the new business-friendly economic policy he announced in January, but has since done little about? He promised €10 billion ($14 billion) of new payroll-tax cuts for firms, as part of a "responsibility pact" meant to encourage job creation, and pledged €50 billion of budget cuts in 2015-17 as well as (according to Mr Hollande this week) tax cuts for employees that he terms a "solidarity pact".

Mr Valls has no experience of economic policy. He is a party hack and former mayor of the multicultural suburb of Evry, best known for his tough line as interior minister on security and immigration. Yet he has also carved out a reputation as a "social-liberal", meaning centre-left moderate in the French left-wing lexicon. A one-time aide to Michel Rocard, a Socialist prime minister in the Mitterrand years, Mr Valls has thought hard about how to impose modern social democracy on the French Socialist Party, criticising the 35-hour working week his party introduced, and arguing against selling voters "false hopes" based on a tax-and-spend doctrine.

Nobody doubts the new prime minister's energy and grit. In many ways he resembles another ambitious former interior minister who set his sights high: Nicolas Sarkozy, the former centre-right president. Like Mr Sarkozy, the Barcelona-born Mr Valls, whose father was a Catalan painter, has something of the outsider's drive and dynamism. Also like Mr Sarkozy, he is not a pure product of the French elite, not having attended the Ecole Nationale d'Administration, which has groomed so many French prime ministers and presidents (and indeed members of Mr Valls's government), including Mr Hollande.

Yet Mr Valls will have to tread a delicate line between business's hopes and the left's fears. By mid-April he needs to present France's future budget plans to the European Commission, which has put France under special supervision, and explain how it plans to keep the deficit below 3% of GDP next year. Figures this week showed that the pace of fiscal consolidation has slowed: in 2013 France missed its deficit target of 4.1%, ending up at 4.3%.

If Mr Valls plans to request yet another delay (and Mr Hollande this week hinted that he would), the wary commission will want at least firm evidence that he is serious about reforming public spending at home. This means spelling out budget savings and finalising the "responsibility pact", which must go to a parliamentary vote of confidence by the end of April. In short, hemmed in by fiscal and political constraints, Mr Valls may have less room for manoeuvre than he hoped - which may be precisely why Mr Hollande agreed, against the odds, to give him the job.