France votes on Ch-EU-rac By Gregory Fossedal Copyright © United Press International May 6, 2005 Link to this story at The Washington Times, Value Line, others: here. Valognes, France — Voters go to the polls here in a few weeks to voice their opinion on both the question of Europe, and the leadership of President Jacques Chirac. If they could, they would vote "no" on Chirac, and — then, probably, albeit narrowly — "yes" on Europe. Unfortunately for the French, the only question on the ballot concerns Europe. The only way, in their mind, to register their extreme frustration with l'Ancien Regime de Chirac is to vote "no" on the constitution. Therein lies the problem for the French, and investors. Falling flat? Jacques Chirac has maximized his own personal involvement in France's vote on the EU constitution. He might do better, instead, to give the message that this is about France's role in Europe — not Chirac's role in France. After a dozen polls over March and April showed the EU measure going down to defeat, several straight samples in the last week of April showed a narrow margin of support. Then, Mr. Chirac appeared on national television to urge a "yes" vote. The latest survey, taken by Paris Match after Chirac's speech, shows support slipping: Back to a 50-50 dead heat. French benefits The irony, of course, is rich. France would seem to have the most to lose from a collapse of the EU, which is at least possible in the aftermath of a no vote. France, like Germany, has managed to secure psychological leadership and leverage in the EU. Both nations have won repeated exemptions from the EU fiscal coordination targets. A common Europe is the only realistic counterweight to American foreign policy, and to trade and economic leverage with China and the U.S. — both vital French aims. How is it, then, that support for the new EU constitution is not only in some danger in France, but in fact still strugling? Part of the problem lies in several errors by the EU itself and by Jacques Chirac in France. These mistakes are worth reviewing because they may point to broader trends in Europe that go to the competence of leadership and voter attitudes in Europe generally — but especially in France and Germany. Even if France votes "yes," there are long-run problems in and lessons for the EU. Ballot error The tactical mistake was to place the EU question on the ballot as a single item — rather than holding the vote during the regular cycle with many races at stake. "Special elections," as William Proxmire noted in 1957, shortly before the then-three-time-loser vanquished a legend in Wisconsin politics (Walter Kohler) in a one-item vote, "are protest elections." A vast majority of Frenchmen would have voted (and will vote) for or against the EU based on the merits of the issue itself. But a large segment of French opinion is very concerned about other matters — such as the incompetence of French economic policy over the last several years, leaving unemployment in double digits even as Britain, America, and Switzerland enjoy jobless rates in the 5 percent vicinity. Right now, the main sentiment of this segment of French opinion is frustration with Mr. Chirac. Frenchmen agree with his policy of staying out of the Iraq war, but not his manner of doing so, which seemed aimed at raising maxium (rather than minimum) conflict with America. They want economic growth, even if they do take the streets when even modest labor reforms or spending cuts are advocated. Many members of his own party hope Chirac does not run for president again, but steps aside for younger leadership. The recent loss of seats by Tony Blair's party just across the channel will probably strengthen those forces as time goes by. In a general election, or with some other questions to vote on, Frenchmen could vote against Chircac, for some of his party members, against others — and, in short, have many items on which to vent their anger and hopes. This happened in Spain earlier this year, where the constitutional referendum passed easily. Then the French could vote on the EU based on — well, based on how they feel about the EU. In this election, they have no such option to segment their basic message: "whatever you're doing isn't working." Europe sans democracy This frustration overlaps with a second concern with the EU constitution, present in France and much of Europe. While democratic in origins and rhetoric, the constitution contains no provision for EU-wide initiative and referendum — and, of course, will leave many individual countries without it at the national level either. For years, such pro-Europe intellectuals as Switzerland's Andreas Gross have agitated intelligently for a European initiative and referendum provision. Alas, they weren't heeded. Such a measure would be a key instrument to building a true European polity and European citizen, as it was in bringing a divided Switzerland together after the civil war of 1847. As well, this safety valve would give voters throughout Europe (and France) the feeling that they will have an opportunity to edit, if you will, the drafts of the constitution-makers. At present, to the French voters who spoke to me, Europe seems to mean chiefly the addition of yet another layer of political elites. If the constitution as written is approved, they will have local bureaucrats, bureaucrats in Paris, and still-more-irreversible bureaucrats in Brussels to deal with. A provision for direct democracy would give voters confidence that, in the coming years, they can fix small errors and large ones, and direct Europe on the course they want. Without it, they feel they may never have another chance to force their leaders to change course. In the 150 years that followed the Swiss constitution of 1848, Switzerland amended its constitution about 100 times. The knowledge that they would be able to do so, of course, was a powerful confidence-builder during ratification. The lack of it, by contrast, in the EU vote, leads the French and others to fear, this next vote may be their last chance to express themselves on Europe, ever. Europe sans Dieu Some months ago, one of the world's most original political minds, Populism and Elitism author Jeffrey Bell, suggested that the EU's framers probably erred in excising even some rather vague and non-programmatic references to God and to the religious basis of public institutions in the constitution. The thought has received little coverage, and, truth be told, didn't strike me as terribly important at the time. In retrospect, however, this may have been another mistake. This is not to suggest that Europeans have any strong urge to adopt an Islamic-style intermingling of religion and the state. Far from it. Still, the strong anti-religius tone of the EU in recent years — as when Italy's Rocco Buttiglione was rejected as an EU minister because of his Roman Catholic views on social issues — does concern a substantial plurality of Europeans. Even some in France seem uncomfortable with what might be called a kind of anti-religious zealoutry, a desire to expunge and isolate all religion as if it were some kind of virus. Alexis de Tocqueville — the famous author who is not so famous, but should be, for his years of service in the parliament, representing this region of Normandy — was a consistent voice against clericalism, but also against anti-clerical extremism in the French assembly. France could use his voice, or one in his spirit, today. In the meantime, Europe's politicians seem to have moved sufficiently close to the anti-clerical extreme to concern many swing voters. Mon way or the highway There is still an under-appreciated chance that the matter can be turned around in the weekds to come. Yet in recent days, the French government almost seems at pains to alienate whatever opinion streams may yet be open-minded. Mr. Chirac and others in Europe have stressed that any vote against this particular constitution means the end of the EU altogether. There is "no plan b," officials emphasize. This is not helpful. French voters, of course, know perfectly well that this is what politicians always say before such a vote — and that if the result is still "no," they will immediately turn about 180 degrees and begin to rebuild the damn. This is what happened after Switzerland's rejection of full EU membership in the 1990s; the Swiss foreign ministry went back and negotiated a series of ad hoc treaties more to the liking of the voters. No less than any other great people, the French do not appreciate being lectured like a school child. "Vote yes, you dunderheads," is how the all-or-nothing, apocalyptic rhetoric of the government sounds to them now. Far from assuaging public opinion by communing with its concerns, the government has treated those concerns with contempt, and thereby, exacerbated them. (Memo to Mr. Chirac: The way to win is to take yourself out of the fray, Mr. President, rather than injecting yourself. Have a debate, as Mitterand did on the eve of the original EU treaty vote, but use a surrogate. Find a soft-spoken, non-partisain politician — the closest incarnation of Alexis de Tocqueville available today — to do it. Someone who agrees with many of the opposition's criticisms of you, but will urge Frenchmen to use their ballot to express an opinion on the EU in 2005, and on Chirac, later. Incidentally, this de Gaullean aloofness will raise your own political standing.) Bottom Line It is tempting, even at this late date, to short the French stock market. My clients certainly aren't buying it at this point. The decline of Europe's economy, however, especially France and Germany, is already so advanced that it's hard to anticipate much more bad news that isn't already in the market. And the prospect of a turnaround and a French "yes" vote, following a likely Blair win in Britain, might mark the lows for European equity markets. By contrast, for a number of other reasons, the Euro is a good short at this time. European growth is slow relative to America and China, and the continent needs a devaluation against the yuan. The only way to get it is a devaluation against the yuan-linked dollar. The prospect of a French "no" vote, then, simply adds force, as if more were needed, to the logic of a position long the dollar against the Euro. In the event matters turn around and France votes yes, a brief Euro-relief rally will be an opportunity to increase the short position. Still short the Euro. Gregory Fossedal, foss@upi.com, is an advisor to international investors on global markets and ideopolitical risk, and a research fellow at the Alexis de Tocqueville Institution. Mr. Fossedal's opinions are entirely his own, and are not necessarily those of his clients, UPI, or AdTI. Furthermore, they are subject to change without notice.