PARIS (MNI) – With France’s national elections three months away,
the loss of Standard & Poor’s triple-A sovereign rating late Friday has
offered opponents of President Nicolas Sarkozy a savory windfall, while
government officials seek to play down its impact and share the blame
with critics.
Although perceived as a warning or lesson, the downgrade has not
prompted a re-think of policy, but rather has hardened the positions of
the various camps.
Sarkozy kept his distance from the political hot potato in a speech
over the weekend, promising “important” policy decisions at the end of
the month and encouraging the French to keep their cool and their
courage in the meantime. “The response to a crisis of this amplitude is
not agitation or indignation,” he said.
Instead, it was Prime Minister Francois Fillon who reaffirmed in a
newspaper interview that there was “no credible alternative” to the
government’s economic strategy, even if this year’s budget might have to
be “adjusted” should the cyclical downturn jeopardize the deficit
target.
Conceding that the downgrade from AAA to AA+ was hardly “good
news,” Fillon cautioned against “dramatizing” the “warning” from S&P:
“We remain among the most credible ratings in world, notably with the
United States.”
“I don’t believe there will be immediate consequences in the daily
life of the French,” the prime minister added, noting that France’s
borrowing rates today, at little more than 3% on ten-year bonds, are
nearly 200 basis points lower than a decade ago.
Deflecting criticism from Socialist presidential candidate Francois
Hollande, Fillon asked rhetorically how S&P might evaluate Hollande’s
campaign platform, “in which there are only increases in spending and
taxes and, even worse, a revision of structural decisions like the
pension reform or France’s nuclear policy.”
Hollande himself qualified the downgrade as a “defeat” for the
government that would weaken its hand at the European negotiating table.
“We are no longer in the first league,” he said.
“And it’s not by upsetting the financing of social protection and
by improvising new fiscal repairs that the lame-duck president will
reassure the markets,” the Socialist candidate argued. “He has already
lost their confidence — along with that of the French.”
The Socialists’ shadow finance minister, Michel Sapin, predicted in
a newspaper interview that there would be “profound consequences over
the medium term,” notably for home mortgages.
Socialist parliamentary leader Jean-Marc Ayrault, one of Hollande’s
top campaign advisors, blasted the downgrade as a “humiliation” for the
country resulting from the “bad orientation of economic and social
policy from the outset.” In a radio interview, he denounced Sarkozy’s
vain efforts to “save the national treasure,” and called instead for
policies “to create the conditions for a return to growth.”
The leading centrist presidential candidate, Francois Bayrou, also
warned of “heavy consequences” and charged that governments on both the
left and the right “share responsibility” for the downgrade.
The more radical candidates on the left and right, who are
ferociously critical of the policies and consequences of monetary union,
were once again on the same wave-length in attacking the rating agencies
themselves as instruments of financial oppression.
Leftist Front leader Jean-Luc Melenchon denounced the
“unconditional capitulation” of all political leaders in the face of the
agencies and the crisis, calling for “resistance in the financial war.”
At the other extreme, National Front leader Marine Le Pen charged
that the debt accumulated during Sarkozy’s mandate had made the French
“slaves” to the dictatorship of the financial world.
[TOPICS: M$F$$$,MGX$$$,M$X$$$,M$$CR$]
