IT ISN’T EASY being Nicolas Sarkozy (or any other democratic leader) in these days of economic and social uncertainties, aggressive political oppositions and volatile electorates. But the French president, unpopular at home and not greatly admired abroad, is working furiously to achieve what could be a transforming personal and national policy success.
With France due to take over the G20 presidency on 14 November Sarkozy has launched diplomatic initiatives aimed at embedding Russia more deeply in global monetary and security systems and persuading China to allow its currency to rise more quickly. It remains to be seen how successful the erratic Sarkozy will be in this plan to reform and rebalance the monetary system. But it is a risk he can afford to take: he has little to lose if he fails, and much to gain if he achieves meaningful progress.
If Sarkozy can succeed where the United States has failed in persuading China to revalue its currency upwards to ease monetary imbalances, and in bringing Russia closer to western monetary and security arrangements, he will boost his reputation and his prospects for re-election in 2012. If he fails, it won’t be too surprising given his ambitious goals and the gap between Chinese rhetoric and action on currency issues.
Already French government officials abroad are at pains to explain Sarkozy’s plans, contain over-blown expectations and deny that France has any fixed policy agenda. Instead they speak of wanting to “build consensus” about the monetary system, do something about the volatility of the prices of raw materials and agricultural products, and deal with trade imbalances.
The officials say they wish to create a momentum for rethinking the monetary system. They stress the importance of not overlooking the rising military and economic strength of Russia as well as China and the need to discuss making greater use of IMF special drawing rights as a stabilising global currency. They are promoting what they call workshops on currency issues in China, North America and Europe, alongside ministerial meetings, to discuss the political realities of currency reform. At the same time France is pursuing the issues in upcoming meetings with Chinese, American, Russian and other European players.
Somewhat disingenuously, the officials deny that Sarkozy is trying to boost his domestic political prospects, insisting that France always takes seriously its leadership roles in organisations. Perhaps. But one consequence of any success would be to lift Sarkozy’s domestic popularity and enhance his reputation. That would certainly boost the morale of a great nation facing difficult economic, political and social challenges.
Sarkozy is not, of course, the only western leader facing such difficulties. Barack Obama faces losses in mid-term elections as the United States continues to struggle economically. Support is fading for West Germany’s Angela Merkel; Britain and Australia have unstable minority governments. Belgium is a political mess. And the misery list grows longer as voters tire of economic and social uncertainty.
But Sarkozy faces a pernicious mix of problems. He is beset with personal and political scandals. Opinion polls report that the French overwhelmingly don’t trust him to solve the country’s problems. French unemployment is a troubling 10 per cent, economic growth has stalled and there is anger over Sarkozy’s moves to ban Islamic women from wearing the burka in public places, to expel Roma and to raise the retirement age to sixty-two by 2018.
So the French president has seized the opportunity to try to tackle monetary problems within the G20 framework. His political motives probably matter less than his policy proposals for stabilising currencies and commodity prices. He can’t afford to propose reforms blatantly designed to promote European interests at the expense of the United States and others.
It is unlikely that President Obama would look positively on French plans to draw Russia closer to Europe, but he would favour any initiative to persuade China to revalue its currency to ease the US trade deficit with China. Realistically, China seems unlikely to be any more responsive to France than it has been to US pressure on its currency. But Sarkozy has taken a bold step. Now he has to maintain the momentum. •
