After the Cahuzac scandal, the Hollande presidency is in tatters

France's Socialist president has failed to deliver - and in record time.

Barely ten months after his election, François Hollande is a lame duck President. He is even more unpopular than Nicolas Sarkozy was at the same stage of the presidency. The French people elected him in May 2012 because they had had enough with Sarkozy’s right-wing politics which deeply divided the nation. They wanted change. Hollande’s austerity policies and his alignment on Angela Merkel’s positions in Europe have dramatically failed to make a difference so far.The majority of the population even feels that there is a troubling continuity with Sarkozysm on major policy areas such as employment, pensions, benefits, wages, not to mention the neo-colonial war waged by French troops in Mali.

Now, the Hollande presidency is in tatters. A state scandal is threatening to engulf Hollande and the Socialist government. The person responsible for the crisis is Jérôme Cahuzac, who was the Budget Minister until two weeks ago. For the past few months, Cahuzac had been accused of having used a secret Swiss bank account to avoid paying taxes in France. Those allegations were made by Mediapart, an investigative website run by Edwy Plenel, a former editor-in-chief for Le Monde newspaper. The accusations were repeatedly denied by Cahuzac before the President, the Prime Minister,the members of parliament and various media. On 2 April, Cahuzac suddenly admitted to a judge that he hid €600,000 (£510,000) offshore for over twenty years. He was immediately placed under formal investigation for laundering the proceeds of tax fraud by French justice. Hollande appeared on national television the next day and said that Cahuzac’s actions were an "unforgivable moral error".

This dramatic development could not have happened at a worst time for a beleaguered President, nor could the trouble have come from one of the most sensitive departments in government. Indeed, as Budget Minister, Cahuzac was the man in charge of fighting tax evasion. He was also responsible for leading a crusade against tax heavens on behalf of the French State. He had the task of streamlining the budget and running the government’s crackdown on rich people who would be made to pay more taxes. When two weeks ago Cahuzac resigned, Hollande applauded his decision to "better defend his honour". For Hollande and Jean-Marc Ayrault – Hollande’s Prime Minister – it is a no-win situation. If they now acknowledge that they had misgivings about Cahuzac’s probity, they would be held responsible. Thus, they can only claim that they knew nothing about the scandal. In the best case scenario, the executive comes across as weak and indecisive.

Hollande, Ayrault and Socialist members of parliament have tried hard to downplay the whole Cahuzac episode. They argue that it is a personal betrayal and the story only poses a "moral issue". In truth, the Cahuzac scandal has only marginally to do with the dishonesty of a man. It is much more than the sad personification of the "bastard" as defined by Jean-Paul Sartre. No, the Cahuzac swindle also exposes political manipulations and lies at the heart of the Hollande presidency. It truly is a state scandal which creates a political crisis whose political ramifications will be multiple and hard to predict.

Who is Jérôme Cahuzac? This 60 year-old man was a cardiologist who became a plastic surgeon specialising in hair transplants. In this new profession, the disgraced minister amassed a large personal fortune. Cahuzac comes from the self-professed neoliberal/Blairite wing of the Socialist Party. In a recent television debate with Jean-Luc Mélenchon, the leader of the Left Front, he haughtily conceded that never in his thirty-year long career in the Socialist Party, he had "believed in class struggle". When Ayrault appointed him to the government, several party officials warned the Prime Minister that this was a hazardous decision. Arrogant and briskwith his colleagues, Cahuzac belongs to a breed of "Socialists" that ignores virtually everything of the travails of the electorate who brought Hollande to power last year. What is more, Cahuzac was in government the zealous promoter of the harshest austerity policies that France has ever experienced since the end of the Second World War. Here is a man who not only lectured the public about fraud evasion while being a fraudster himself, but who was also responsible for implementing and monitoring unfair and pointless economic policies – such as his target of reducing France’s public deficit to 3 per cent - which inflicted unnecessary suffering on the worst off in society.

Until the New York sex scandal which put an end to his political career, Cahuzac was a "Strausskahnian", i.e. a close and devoted political ally of Dominique Strauss-Kahn. The two "Socialists" shared the same lavish and insouciant lifestyle and the same taste for laissez-faire economics. Both men were friendly with the rich and powerful and bothentertained dubious relationships in the political world. Mediapart has revealed that Philippe Péninque was the person who discretely opened Cahuzac’s bank account in Switzerland in 1992. Péninque used to be a member of Groupe Union Défense (GUD), a violent student union on the extreme right. He is currently a close friend and confident of Marine Le Pen.

Hollande’s responsibility is here clearly engaged as it should have been clear from the start that Cahuzac’s appointment was politically hazardous. A cabinet minister recently revealed that Cahuzac was responsible for messing up the handling of the tax bill on very high earners - the "75 per cent tax" on people earning over €1 million. Warned that some provisions in the bill might be censored by the Constitutional Council, Cahuzac opted to go ahead with it. The bill indeed ended up being censored by the French Supreme Court. Only days ago, Cahuzac was still presented in Socialist circles as the paragon of "good governance" and as a ‘competent and brilliant minister’. How was it possible to appoint such a man to a Socialist cabinet in the first place?

One may put the question to Pierre Moscovici, the Minister of Finance. After Cahuzac’s exit, Moscovici is the last "Strausskahnian" left in government. One of the rare Blair admirers in France, Moscovici now stands accused by Mediapart of having used the State apparatus to try to whitewash his political friend. Weeks ago, Moscovici declared that he had inquired to the Swiss banking institutions about Cahuzac’s secret account and that he was satisfied that no such account existed.

The Cahuzac scandal is well and truly essentially a political scandal. This episode involves a caste of politicians who have completely let down the people who elected them. Some thought that they were untouchable. After ten months in office, this Socialist government has already turned its back on the needs and aspirations of the working people.

Philippe Marlière is professor of French politics at University College London. He tweets @PhMarliere

The French president François Hollande (2nd left), followed by prime minister Jean-Marc Ayrault and the former budget minister Jerome Cahuzac. (Photo: Getty.)
Getty
Show Hide image

After Article 50 is triggered, what happens next?

Theresa May says Article 50 will be triggered on 29 March. The UK must prepare for years, if not decades, of negotiating. 

Back in June, when Europe woke to the news of Brexit, the response was muted. “When I first emerged from my haze to go to the European Parliament there was a big sign saying ‘We will miss you’, which was sweet,” Labour MEP Seb Dance remembered at a European Parliament event in London. “The German car industry said we don’t want any disruption of trade.”

But according to Dance – best known for holding up a “He’s Lying” sign behind Nigel Farage’s head – the mood has hardened with the passing months.

The UK is seen as demanding. The Prime Minister’s repeated refusal to guarantee EU citizens’ rights is viewed as toxic. The German car manufacturers now say the EU is more important than British trade. “I am afraid that bonhomie has evaporated,” Dance said. 

On Wednesday 29 March the UK will trigger Article 50. Doing so will end our period of national soul-searching and begin the formal process of divorce. So what next?

The European Parliament will have its say

In the EU, just as in the UK, the European Parliament will not be the lead negotiator. But it is nevertheless very powerful, because MEPs can vote on the final Brexit deal, and wield, in effect, a veto.

The Parliament’s chief negotiator is Guy Verhofstadt, a committed European who has previously given Remoaners hope with a plan to offer them EU passports. Expect them to tune in en masse to watch when this idea is revived in April (it’s unlikely to succeed, but MEPs want to discuss the principle). 

After Article 50 is triggered, Dance expects MEPs to draw up a resolution setting out its red lines in the Brexit negotiations, and present this to the European Commission.

The European Commission will spearhead negotiations

Although the Parliament may provide the most drama, it is the European Commission, which manages the day-to-day business of the EU, which will lead negotiations. The EU’s chief negotiator is Michel Barnier. 

Barnier is a member of the pan-EU European People’s Party, like Jean-Claude Juncker and German Chancellor Angela Merkel. He has said of the negotiations: “We are ready. Keep calm and negotiate.”

This will be a “deal” of two halves

The Brexit divorce is expected to take 16 to 18 months from March (although this is simply guesswork), which could mean Britain officially Brexits at the start of 2019.

But here’s the thing. The divorce is likely to focus on settling up bills and – hopefully – agreeing a transitional arrangement. This is because the real deal that will shape Britain’s future outside the EU is the trade deal. And there’s no deadline on that. 

As Dance put it: “The duration of that trade agreement will exceed the life of the current Parliament, and might exceed the life of the next as well.”

The trade agreement may look a bit like Ceta

The European Parliament has just approved the Comprehensive Economic and Trade Agreement (Ceta) with Canada, a mammoth trade deal which has taken eight years to negotiate. 

One of the main stumbling points in trade deals is agreeing on similar regulatory standards. The UK currently shares regulations with the rest of the UK, so this should speed up the process.

But another obstacle is that national or regional parliaments can vote against a trade deal. In October, the rebellious Belgian region of Wallonia nearly destroyed Ceta. An EU-UK deal would be far more politically sensitive. 

The only way is forward

Lawyers working for the campaign group The People’s Challenge have argued that it will legally be possible for the UK Parliament to revoke Article 50 if the choice is between a terrible deal and no deal at all. 

But other constitutional experts think this is highly unlikely to work – unless a penitent Britain can persuade the rest of the EU to agree to turn back the clock. 

Davor Jancic, who lectures on EU law at Queen Mary University of London, believes Article 50 is irrevocable. 

Jeff King, a professor of law at University College London, is also doubtful, but has this kernel of hope for all the Remainers out there:

“No EU law scholar has suggested that with the agreement of the other 27 member states you cannot allow a member state to withdraw its notice.”

Good luck chanting that at a march. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.