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Sarkozy to Seek 2nd Term Playing Crisis Card

President Nicolas Sarkozy said he’ll seek a second term, pledging to focus on fighting unemployment and seeing France through Europe’s financial crisis.

“If I’ve decided to run it’s because I’ve got things to say, I have propositions for the French,” he said today on TF1 television. “Can you imagine a captain in this storm saying ‘I’m tired, I’m pulling out?’”

Sarkozy, 57, has joined with Germany’s Angela Merkel to find an exit from the economic slump caused by the region’s debt crisis that began more than two years ago in Greece. With 68 days to go before the first round of voting, Sarkozy’s 36 percent approval rating makes him France’s most unpopular incumbent president.

Faced with French joblessness at a 12-year high, Sarkozy said his priorities will include training for the unemployed and cutting government spending. He said he would call a referendum on forcing all long-term unemployed people on state assistance to sign up for job training.

“We don’t want a society where when you lose your job you live in a trailer home, like in the U.S.,” he said. “But it’s only thanks to the charges paid by those with jobs that we can pay for our social protections. There are rights, but at the same time there are obligations.”

The first round of French elections will be held on April 22, with the top two candidates facing off May 6.

Trailing Hollande

Trailing in the polls behind Socialist candidate Francois Hollande, a lawmaker from central France and former party chief who has never held a Cabinet post, Sarkozy risks becoming the eighth euro-area leader to be ousted since 2010, following those in Ireland, Portugal, Greece, Italy, Spain, Slovenia and Slovakia. A defeat would make him the second French president after Valery Giscard D’Estaing to lose a re-election bid.

“Sarkozy has to stress his presidential standing, that he’s one of two European leaders leading the response to the euro crisis,” William Keylor, a professor of modern French history at Boston University, said in a phone interview. “Hollande has no international stature at all.”

The president also turned to a formula that served him well in the 2007 elections, courting the partisans of the National Front, the nationalist party of Marine Le Pen. Sarkozy today criticized what he said were lax Socialist proposals on immigration, saying it’s not “reasonable” to regularize all illegal immigrants.

‘Fine Line’

“Sarkozy has to tread a very fine line,” Keylor said. “On his right he has a very invigorated National Front so he has to try to win back some of those votes. But he’s up against a moderate Socialist so he can’t scare the center.”

Hollande has a 5.5-point lead over Sarkozy in the first round and would get 57.5 percent against 42.5 in the second round, according to a poll published Feb. 9 by Ifop.

Sarkozy has trailed Hollande, 57, in every poll since the Socialist declared his bid in March, with a gap as wide as 20 percentage points. Le Pen, the daughter of Jean-Marie Le Pen, who made it to the second round in 2002, is running third. The race will have 38 declared first-round candidates. A final list will be published between March 19 and 21.

At the start of his first term, Sarkozy was France’s most popular leader since General Charles de Gaulle, World War II hero and founder of the Fifth Republic.

A lawyer by training, Sarkozy took office pledging to make a break from the past, instilling a work-hard-get-rich ethos in a country that has an uneasy relationship with wealth.

Sarkozy’s Record

He weakened the 35-hour workweek instituted by the Socialist government of Prime Minister Lionel Jospin, limited taxes on France’s wealthiest and let universities forge partnerships with businesses. Sarkozy also implemented a legal minimum service for public transport, including air-traffic controllers, train and bus drivers and cut military costs, closing 83 defense sites.

To reduce the government’s budget deficit, he pushed through a two-year increase in the retirement age to 62 and cut business taxes to encourage investment.

“When Sarkozy was elected, he talked a lot about purchasing power and working more to earn more,” said Bruno Cautres, an analyst at Cevipof, a political research center in Paris. “But people haven’t seen their situation improve.”

His efforts were stymied by the global economic crisis that took hold almost immediately after he took office. His mandate began on May 16, 2007, three months before Europe started coping with the fallout from the U.S. subprime crisis. That was followed by the emergence in 2009 of Europe’s debt crisis.

Economic Woes

Standard & Poor’s stripped France of its AAA credit rating for the first time on Jan. 13, saying European policy makers hadn’t done enough to address the “systemic stresses in the euro zone.” This week, Moody’s Investors Service said it may downgrade France’s top Aaa rating.

Although the markets shrugged off the S&P cut, it has hurt Sarkozy’s credibility. His leadership has become a harder sell even though France has weathered the economic malaise better than countries such as Spain, with its 23 percent unemployment.

“The French economy isn’t doing as badly as Greece or Spain, but growth is very anemic,” said Boston University’s Keylor. “When the economy is bad, it trumps all other issues and the people in power are held responsible.”

France’s economy has slumped, with jobless claims jumping by 5.6 percent last year to a 12-year high of 2.87 million. Its debt has risen to 1.69 trillion euros, or 85.3 percent of gross domestic product, from 64.2 percent just before Sarkozy was elected. France’s trade deficit was a record 69.6 billion euros last year, up from 42.5 billion euros in 2007.

German Ties

To revive growth and jobs, Sarkozy last month announced measures, including an unpopular increase in the country’s value-added-tax to compensate for cuts in labor charges, emulating German efforts in the past decade.

Sarkozy has forged stronger ties with Merkel to navigate the region through the debt crisis. Over the last two years, the two have held dozens of meetings. Merkel this month said she supports the French president “at every level.”

Hollande, meanwhile, is critical of the austerity plans advocated by Germany, saying they stifle growth. He has vowed to renegotiate a German-inspired treaty tightening budget rules endorsed by 25 European Union leaders last month.

“There are two things that appear to be scaring investors about the prospects of a Hollande victory: what he’s saying and the implications for the Paris-Bonn axis,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, wrote in a note this week.

‘Promising Dreams’

Sarkozy today took a swipe at Hollande’s plan to hire more teachers, saying: “Is it reasonable in the state we are in to say we can hire 60,000 civil servants? Promising dreams always leads to nightmares. I want to talk honestly to the French about the world we are in.”

With about two months before the first round of the elections, Sarkozy has his work cut out for him, said Boston University’s Keylor.

“All the polls show that he’s behind, and the French election campaign is so short that he can’t rely on some event to rally his support,” he said. “It would be a surprise if he pulls it off.”

To contact the reporter on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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