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Sarkozy aims to turn page from pension battle

world Updated: Oct 24, 2010 15:30 IST

Reuters
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His ratings are in tatters and most of France loathes his pension reform, but President Nicolas Sarkozy hopes to turn the page swiftly with a cabinet reshuffle and some image-boosting initiatives as G20 president.

Facing a tough 2012 election battle to win a second term, Sarkozy will score points internationally, with financial markets and in his centre-right UMP party for standing up to unions to push through a reform of the generous pensions system.

The bill to make people work two extra years for their pensions to stem a growing funding shortfall should be signed into law this week after Senate approval on Friday, ending a historic Socialist symbol of retirement at 60.

Unions vow to continue the fight and have called for strikes and demonstrations in the next two weeks. A single spark such as an incident of police brutality could still reignite a national conflagration.

To overcome dismal opinion polls and lingering protests, the president aims to start afresh with a new cabinet and a tax overhaul aimed at wooing mainstream centre-right voters and bolstering his chances against a more popular left.

"Social cohesion is a priority. The new government's mission must be a social revival and trying to rebuild that perspective with the trade unions," former prime minister Jean-Pierre Raffarin, a conservative close to Sarkozy, told RTL radio.

He called for progress in areas such as equal pay for men and women, improving working conditions and helping people in arduous work.

The energetic president is expected to switch several key ministers in November when he returns from a Seoul summit of the Group of 20 economic leadership forum, including possibly the prime minister and those in charge of labour, transport, foreign affairs and budget.

Raffarin, tipped for a possible comeback in a smaller, more focused cabinet, cited Environment Minister Jean Louis Borloo as a potential prime minister with good ties to the trade unions.

Commentators say another former prime minister, Alain Juppe, may also get a senior role to add weight to the government.

ACTIVIST DIPLOMACY

Mid-November also marks France's takeover of the G20 presidency. Sarkozy hopes that will give him influence on hot global issues such as exchange rates and commodities speculation that will enhance his image, just as activist diplomacy during France's European Union presidency boosted his ratings in 2008.

The biggest coup he could achieve would be coaxing a hitherto reluctant China into multilateral cooperation on currency stability, an objective he hopes to advance when Chinese President Hu Jintao visits France in early November.

Sarkozy has also told members of parliament he wants to look at a fiscal reform in the spring that is expected to focus on ending widely criticised tax benefits for the wealthy which he enacted to reward core supporters as soon as he took office.

The so-called "tax shield" which ensures that no one pays more than 50 percent of their income to the treasury helped earn Sarkozy the damaging label of "president of the rich" in a deeply egalitarian country which abhors the flaunting of wealth.

Ministers have hinted at a possible package deal in which the tax shield goes in return for changes to a wealth tax, which has driven many millionaires into exile but also hit a growing number of middle-class households as house prices rise.

A burst of diplomacy, outreach to the unions and tax reform may help Sarkozy draw a line under a long series of protests and oil refinery and transport strikes that have disrupted travel and dried up a quarter of petrol pumps across the country.

"He's so low in the polls that he can't go much lower. In a sense it's an advantage," remarked political analyst Stephen Ekovich at the American University of Paris.

CROWD-PLEASING REFORMS?

Hurt by a funding scandal involving his centre-right UMP party and stung by European criticism of his mass expulsion of illegal Roma migrants, Sarkozy's ratings dipped below 30 per cent in one recent poll.

Two-thirds of voters oppose his move to lift the minimum retirement age by two years to 62 and the often vitriolic street protests of recent weeks suggest Sarkozy will have a hard time reconquering public support.

Yet the mercurial president is known for bouncing back from adversity. Analysts expect him to focus on crowd-pleasing initiatives aimed at both far-right and centrist voters for the last 18 months of his term. Nationalist gestures might include fighting for EU farm funds or more immigrant-targetted legislation like his law banning burqas.

Sarkozy may also glean more support on the right for having taken a firm stance against strikers blocking fuel depots and youths who went on the rampage in sporadic riots.

"I think he's actually doing okay in all this conflict," said Jean-Thomas Lesueur, head of the economically liberal Institut Thomas More think-tank which follows Sarkozy closely.

"It's worked in his interest to take on the unions and let the situation deteriorate to the point where discontent mounts and he can say: look, I am fighting this nuisance."

Sarkozy has stuck fast to his line that his reform is the only way to safeguard France's pay-as-you-go pension system and protect a coveted AAA credit rating which enables France to finance its large debt at lowest market rates.

Many observers think this week's half-term school holidays could suck the momentum out of two more nationwide protests planned for Oct. 28 and Nov. 6.
"As soon as (the law) is approved, the end-of-match whistle is blown. The demonstrations will fade away," said Jerome Fourquet, deputy director at pollster IFOP.