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Catastrophe averted?

The leaders of the rich countries went to Washington to save the world from sliding into deep recess

Vincent Cable

Shadow chancellor, Liberal Democrats

By the low standards of economic summitry, the G20 meeting rated quite high. There was a predictable, no doubt pre-written, communiqué, full of the usual banalities. And the meeting suffered from the absence of the world's most important politician, who hasn't yet taken up office. But, these necessary caveats aside, there were important achievements.

The first is that the meeting took place at all. The ludicrous pretence of the G8 (or G7) that the old western powers should set the global economic agenda has been punctured for good. On a purchasing power parity basis, China has the second-biggest economy in the world and India the fourth. It has been clear for some time that China is lender of last resort to the global system (by, in effect, underwriting US government paper) and the main source of global incremental demand (and commodity price inflation). The Chinese self-parody as the pupil sitting meekly at the feet of a dominant, but erring, master defies belief. It is obviously right that China, India and the other main non-G7 countries should be at the top table.

The second achievement was the clear realisation that unless governments hang together they will hang separately. Enough has been learned from interwar history for us to understand the follies of beggar-my-neighbour economics. Perhaps a warning shock was being sent across the bows of the incoming Obama administration not to reinvent the protectionist tariffs of the 1930s in a new guise, directed at China or Mexico in particular, or aiming to salvage the US auto industry through public subsidy. But this new-found concern for open markets has not yet communicated itself to EU or Indian or Chinese trade negotiators, who show no enthusiasm for lifting the block on trade liberalisation under the Doha round.

While trade policy is on the back burner, macroeconomic policy co-ordination is not. With a few exceptions - Germany notably - there is recognition of the need for aggressive monetary and fiscal policy and for large-scale intervention to recapitalise banks. These interventions can be and are being undertaken nationally. But governments acting in isolation attract critical attention from capital markets and currency speculators, as Gordon Brown is discovering. Structures like the G20 are the best safeguard against chaotic, unilateral action.

Will Hutton

Economic commentator

It was remarkable to gather so much economic and political power in one room to address a common agenda. That was the good news - along with commitments to co-ordinate fiscal expansion, to expand the lending power of the IMF and World Bank (Japan's $100bn loan to the IMF will increase the Fund's lending capacity by 40 per cent), to boost cross-border supervision, to tackle credit rating agencies, to reassess mad accounting rules and require member countries to attack the bonus culture in the financial services industry. A year ago such an agreement would have been inconceivable.

The bad news is that much of this is shutting the stable door after the horse has bolted. Four things have to be recognised: that the world has profound imbalances between high-saving, high-surplus areas in Asia and the Gulf and low-saving, structural deficit countries in the transatlantic economy (Germany excepted); that a system of floating exchange rates and private banks can no longer take the weight of recycling those savings; that unless the system is de-risked and the burden of adjustment is placed on deficit and surplus countries alike, the global system faces breakdown; and finally, that the business model used by the banks to recycle surpluses - securitisation and hedging in the $360trn global derivatives market - is broken.

In plain English, China must accept that its currency must appreciate; Britain and America, that they cannot run their economies on foreign savings; and all players that there has to be a system of semi-fixed exchange rates between the yen, the euro and the dollar.

One tough reality is that, for all their new economic weight, China, Brazil, Russia and India do not have fully convertible currencies - nor do they want to accept the discipline involved in having convertible currencies.

Ann Pettifor

Fellow, New Economics Foundation

Over the past decade, the Group of Eight leaders turned their exclusive annual meetings into jamborees. Rock concerts, protesters and celebrities added populist glitz. However, the real purpose of the meetings - international co-operation and co-ordination - was ducked. At last year's G8 Summit in Heiligendamm, Germany, George W Bush and Gordon Brown vetoed Angela Merkel's agenda item for co-operation over tighter international regulation and financial oversight of capital markets. That task, they argued then, could safely be delegated to "the invisible hand". Now that the fantastic, self-regulating machinery of free markets has proved grossly malfunctional, it is good to hear talk of enhanced co-operation and regulation.

But, in places, the joint statement issued by the 20 world leaders borders on the delusional. The phrase "We must . . . ensure . . . that a global crisis, such as this one, does not happen again" implies that they are avoiding the next war when they are still losing this one.

Even more questionable is the call for continued "economic growth". In a world of finite resources on a planet with limited capacity to absorb toxic emissions, and with bushfires encircling Los Angeles, we would have hoped that world leaders had some awareness of the threat of climate change and of the limits to economic growth. But no. The gravest threat to global security - our rapacious attitude to the earth's resources - is once again whipped up with talk of "market principles, open trade and economic growth".

Jesse Norman

Senior fellow at Policy Exchange

One might have thought the G20 summit a good moment for some straight talk from the Prime Minister. Instead, the political wind machine was cranked up to full blast. The summit would be a second Bretton Woods. Gordon Brown would forge a new global consensus on co-ordinated intervention to stimulate growth (while, of course, leading reforms to prevent the banking crisis from ever recurring). Luckily virtually none of this was true, or the summit would have been a hopeless failure. With fiscal measures already widely adopted, the G20 hardly needed Brown's leadership. No surprise that he returned empty-handed.

Labour has moved from despondency to a manic desperation to remain in office. The result is that the ever-fragile concept of truth in politics has wholly been cast aside. Thus the humiliating bank nationalisation has been dressed up as an act of far-seeing economic statesmanship. And a sensible warning from the shadow chancellor that current economic policy puts sterling at risk has been condemned for breaching an irrelevant semi-convention dating from the time of fixed exchange rates.

Alex Brummer

City editor, Daily Mail

There is a golden rule of international financial meetings. The larger the "G" number, in other words the more countries involved, the less likely it is that any worthwhile or binding decisions will be taken. So while it was wholly encouraging that the G20 summit brought a number of emerging market leaders to the top table of finance, including China, Brazil and Russia, there was never any real prospect of the event becoming the new Bretton Woods.

Furthermore, the summit took place in the final days of the lame duck administration of George Bush. Once it became clear Barack Obama was going nowhere near the confab, the event became even more of an irrelevance.

European leaders may like to blame Wall Street and Anglo-Saxon capitalism for the credit crunch and the recession now spreading through the Group of Seven like wildfire, but there is no hope of concerted international action without the new White House and Federal Reserve on board.

Almost all that was agreed could have been decided before the leaders left home. The commitment to reviving the Doha trade round is pure motherhood and apple pie. The prairie populists on Capitol Hill are unlikely to be enthusiastic.

At the core of the proposals was the commitment to use fiscal measures, tax cuts and public spending to kick-start global economies. But despite Gordon Brown's enthusiastic embrace of a new Keynesian big-spending approach - as advocated by Nobel prize-winner Paul Krugman - he neatly forgot to mention that such big-spending ways were only for those countries with a "policy framework conducive to fiscal sustainability". The UK with its ballooning budget deficit, which could hit £100bn or more next year, is clearly in no such position.

It is hard to fathom in what way the G20 was "historic", as the Prime Minister claimed in the Commons. There is little original in a bunch of old ideas designed to remove risk from the financial system and control executive pay. That is what regulators should have done before the banks ploughed into the iceberg.

James Buchan

Author and financial commentator

What is the Financial Stability Forum? What is "mitigating against pro-cyclicality in regulatory policy"? What, if anything, has the G20 summit in Washington on the weekend of the 15 November achieved?

Nothing very much, is the answer to all three questions. In the twilight of a discredited US administration, and with President-elect Barack Obama absent, the meeting was never likely to achieve a great deal or generate excitement in the US. Yet the final declaration, drafted with suspicious ease by the delegations on Saturday night, has something for everybody but not enough of anything to scare the financial horses.

Nicolas Sarkozy, the French president whose idea the whole thing was, gained some support for more institutional government of trade and finance, but no super-gendarme international of the type that has been directing financial traffic in the French imagination since the 17th century. As Jean-Pierre Robin wrote in the Figaro: "Those with fantasies of supranational supervision will need to change therapist." The US, jealous of its commercial sovereignty even when it is going about without its shirt, put paid to those Gallic dreams and also gained some platitudes about free trade.

The new commercial powers, not only Brazil, Russia, India and mainland China but also rich oil producers such as Saudi Arabia, received diplomatic recognition of their deep pockets. "The world's geopolitical structure has a new dimension," the Brazilian president, Luiz Inácio Lula da Silva, said. "There is no logic to making any political and economic decisions without the G20 members - developing countries must be part of the solution to the global financial crisis."

I suspect the winner is Gordon Brown. The next meeting will be held under his presidency in London in April. The Washington ragbag of proposals to reform or tinker with the current system, such as reminding us about the Financial Stability Form and mitigating against that regrettable pro-cyclicality in regulatory policy, appeals to his technical vanity and plays to his technical strengths.

Paul Mason

Economics editor, Newsnight

There was a sense in Washington, despite the throbbing engines and bulletproof glass, of powerlessness. The communiqué was stronger on the causes of the crisis than on co-ordinated solutions. Policymakers are right to stay focused on the near-term dangers: these are country-level debt default, the rising cost of borrowing for non-financial companies, rapid job losses and - via feedback - further destabilisation of the banking system. We are moving into the phase of fiscal stimulus but there are powerful technical arguments that say without "quantitative easing" - that is, printing money to stimulate demand - it doesn't work. The same people who told me it would come to recapitalisation, that the TARP (troubled assets relief programme) would not work, are now saying: nationalise the banks and print money.

Despite the urgency of the focus on near-term dangers, what was obvious at G20 was the lack of vision as to the future growth model of capitalism. The problem was seen as a failure of regulation; the solution a pretty weak brew of re-regulation that will get diluted even more as the lobbyists begin to have influence. But the problem is more fundamental: the growth model based on high debt instead of high wages has failed and will be hard to revive.

Peter Mandelson

Secretary of State for Business

We have been caught in a global whirlwind of extraordinary force.

It has brought with it a fear that has gripped the world economy and taken hold here at home. We are seeing it every day, with fear among consumers that is depressing demand; fear among banks that is inhibiting them from lending; fear among small- and medium-sized businesses that banks are just about to cut off their credit lines. The choice facing us and governments around the world is this: do we act decisively to counter and overcome this fear, or do we become paralysed by it and fail to act?

The government has already shown its willingness to take the bolder course as the first mover in setting about stabilising the banks. What is needed now is action to stimulate the demand essential for recovery. The UK economy, like economies in the rest of the world, needs a shot of adrenalin.

The Bank of England has already made a significant cut to interest rates. This monetary stimulus now needs to be matched by a fiscal stimulus. And because this is a global crisis this is best done if the benefit of the measures taken nationally is maximised by the same measures being taken around the world. That was the message from the international conference in Washington, as governments recognised the need to take the action necessary to stimulate their economies.

People will say, "But you are resorting to borrowing in order to deliver the stimulus that's needed." My answer to that is, what is the alternative? We certainly haven't heard one from the Conservatives.

David Cameron and George Osborne, trapped by their desire to oppose everything the government does, refuse to accept the scale of the challenge the world's economies now face and the prescribed international action. Their stance appears to be, if the rest of the world disagrees with us, it is because the rest of the world is wrong. The result is incoherence and an Opposition at sixes and sevens. One minute this is "do all it takes" and the next it is - as we heard this week - leave the recession to "take its course".

Sitting on our hands watching houses repossessed and businesses go to the wall is certainly not the approach being urged on me by people I have been speaking to up and down the country. They want their government to act to stimulate demand in the economy here and now. With all due prudence, that is what we are going to do.

Diane Coyle

Author and economist

The G20 meeting confirmed a robust and rapid response (by past standards) to recession, even in the US operating under a rump free-market administration. Policymakers around the world have been shaken to see the financial system at the brink of collapse - on their watch.

Yet it is difficult to predict how severe the recession will be. Bank lending to businesses and individuals is virtually frozen. In many (but not all) areas of the economy, activity has come to a halt. The last financial boom and bust, ending in 2001, had surprisingly little impact on jobs and growth, as the financial bubble had become increasingly untethered from anything real. Today's vicious circle of evaporating liquidity is much more serious, but lower interest rates and bigger government deficits will help. The underlying trends are easier to outline. Some challenges are clearly unaltered, such as climate change and our ageing society.

The technological opportunities are still there, too, in communications, the internet and biotechnology. Globalisation will be less driven by finance in future, but it will not be unwound. It would take a generation to turn back the clock on economic linkages, and the cultural impacts are permanent. In fact, the crisis has underlined our interdependence across national borders.

What has changed is the political economy of globalisation. In the triad of efficiency, fairness and freedom which dominates political choice in democracies, fairness will take priority in the years ahead, and the drive for ever greater productivity gains will retreat. The semi-nationalisation of the banks has started to shift the boundary between public and private domains; we will have to think more carefully about how to govern private choices that have big social spillovers. The G20 did not touch on this profound question of governance.

Iain Macwhirter

Political commentator

The G20 was largely a throat-clearing session and was never going to put in place the foundations of a new international financial system. Progress on the stalled Doha trade talks is encouraging but provides no guarantee that protectionism will not raise its head in the coming economic slump.

It is inevitable that countries faced with financial collapse will try to defend their economies by any means possible. Britain is already far down the road of "beggar my neighbour" economics by the "managed" devaluation of the pound, a crude attempt to boost UK industry by lowering the prices of British exports and creating a de facto tariff wall around imports from abroad. It won't work because Britain does not make much of anything any more except debt, and the world has plenty of that already.

But the collapse of the pound will seriously damage what is left of UK financial services. No one in their right minds would put money into the UK economy now, with the property market collapsing, UK banks insolvent and government borrowing likely to reach £100bn in the next 18 months.

Gordon Brown seems to believe that sterling is like the dollar, and that people will buy our dud pounds whatever the likely losses. However, as we are discovering, sterling is not a reserve currency and unlike the US we cannot force other countries to pay our debts. The future for our battered island is likely to be hyperinflation punctuated by appeals to the International Monetary Fund for emergency aid. Forget about spending our way out of recession - the UK government simply lacks the resources to fund the huge borrowing that would be required. Something will have to give. Brown will have cause to regret being so beastly to the Icelanders.

Richard Reeves

Director of Demos

James Carville, the hardened political aide to Bill Clinton, said that if he was reincarnated he'd want to come back as the bond market: "You can intimidate anybody." Right now it seems odd to think of any financial markets threatening anybody. But it is one of the ironies of the current economic situation that the capital markets still have some serious muscle.

Western governments, faced with recession, need to throw a lot of money at their ailing financial institutions - money that can be raised only by selling Treasury debt, mostly to the capital-rich investors of the Far East. For Gordon Brown, this is likely to become a more difficult sell, as Prudence is given the push and the pound takes a nosedive. Even national exchequers invite sceptical scrutiny in this new, nervous world.

The financial crisis is at heart a loss of faith. The word credit derives from the Latin credo - "I believe". When the Titanic of the financial world - in the shape of Lehman Brothers - was allowed to sink, the bonds of trust stretching around the world were snapped. In an instant, everyone stopped believing in each other.

A number of sensible measures should be on the agenda when the G20 reconvenes next year, including legislation to ensure bonuses in financial services are paid on the basis of five-year performance; new "pro-cyclical" provisioning rules requiring finance houses to increase their store of capital in economic upturns; and tougher, independent regulation of the rating agencies whose doe-eyed assessments of banks built on a mountain of paper helped get us in this mess.

There is, however, no quick technical fix for such a dramatic loss of confidence. Trust can be lost in the blink of a market-trader's eye - but it will take years to rebuild.

TEN THINGS THEY ACHIEVED

  • 1 Created a road map aimed at stabilising the world economy and overhauling the banking system with targets for the end of March 2009
  • 2 Advocated Keynesian big-spending
    “fiscal stimulus”
  • 3 Expanded from a small club making world decisions to recognise the importance of the economies of Brazil, Russia, India and China
  • 4 Agreed to reform international finance institutions, including better transparency and supervision of credit ratings agencies
  • 5 Agreed that the Financial Stability Forum should include emerging economies
  • 6 Banks and hedge funds to hold increased levels of capital and cash
  • 7 Recommended “supervisory colleges” for all major cross-border financial institutions
  • 8 Return to the Doha round – trade ministers to meet in Geneva next month
  • 9 Instructed G20 finance ministers to draw up plans and timeline
  • 10 Agreed to meet again, in London next April

. . . AND FIVE THEY DIDN’T

  • 1 Agree a future growth model for capitalism. Instead they reconfirmed their “shared belief in market principles”
  • 2 Agree detailed plans for regulatory reforms of banking
  • 3 Establish a plan of action for achieving the already endangered Millennium Development Goals
  • 4 Set up an international supervisory body with sufficient power to control global markets
  • 5 Halt the run on sterling, which fell sharply against the euro and dollar

Alyssa McDonald

This article first appeared in the 24 November 2008 issue of the New Statesman, How to get us out of this mess

Andre Carhillo
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The decline of the Fifth Republic

With the far right and far left surging in the run-up to a defining presidential election, the French seem intent on blowing up the political establishment.

On a cold Saturday evening in late February, cycling back to my flat in southern Paris, I accidentally ran into a pack of lads on a rampage. They were turning over bins, kicking over expensive motorbikes parked on the street, and obviously looking for someone to fight.

It wasn’t the first time that I’d seen this sort of thing, even in this relatively gentrified part of the city. Usually the best course of action is to stop, let them swarm past and allow the police to do their job. But on this particular night, although I could hear the buzz of a police helicopter above us, there were no officers on the ground. As I nervously became aware of this, one of the lads, no more than five yards away, looked at me and screamed: “T’es qui toi?” (“Who the f*** are you?”). His mates turned and gathered round. Now panicking, I saw that he was pointing a screwdriver at me.

I pelted down the street, heart racing as the young men followed me, so shocked that when I reached my apartment building I twice tapped in the wrong entry code. It was only once indoors, now safe but genuinely scared and sweating, that I understood what had happened.

This was a gang from one of the local ­cités – council estates – that border this part of Paris. They had been flushed out of their normal dens, where they deal in weed and mess about, by police using helicopters and unmarked cars, and were now taking their revenge on these unfamiliar surroundings. When they saw me, a tall, white, male figure, watching in the dark on my bike (stupidly the same dark blue as a police bike), they assumed I could only be one thing: a police spotter. In other words, their most hated enemy.

In the past few weeks, in Paris and across France, there has been a new and special danger in being identified by such gangs as a lone policeman. This is because the ever-present tensions between police and the youth of the cités have become particularly acute following the so-called Affaire Théo. On 2 February in Seine-Saint-Denis, north-east of Paris, four police officers violently attacked an innocent black man, identified only as Théo. The assault was caught on camera and allegedly involved the man’s “rape” with a telescopic baton.

The details of the case caused widespread outrage, right up to the highest level of ­government. In the banlieue, the suburbs where many young people feel excluded from mainstream French life, some felt a desire for revenge. And though their anger related to a specific incident, it was in keeping with the emotions sweeping across France, at all levels of society, in the lead-up to the first round of this year’s presidential election on 23 April.

***

France is in a state of political disarray. This much was obvious during the first live “great debate” on 20 March, organised by the television channel TF1, featuring five front-runners for the presidency.

Probably the greatest loser on the night was François Fillon of the centre-right party les Républicains, who served as prime minister from 2007 to 2012. Fillon has gone from being a sure favourite to outsider in the presidential contest, following allegations of dodgy financial dealings. Most damagingly, a formal judicial investigation has been launched into reports that he paid upwards of €800,000 of taxpayers’ money to his wife and other family members for jobs they didn’t actually do. Fillon, who denies any wrongdoing, has also been accused of failing to declare a €50,000 loan from a French businessman in 2013 (which he has since repaid). He held himself in check during the debate, trying to look dignified and presidential, but he has become the object of scorn from all sides, including his own.

Benoît Hamon, the candidate for the Parti Socialiste (PS), the party of the outgoing and discredited president, François Hollande, did not perform much better in the debate. Hamon identifies with the far left and green wings of the PS and favours a basic income, the legalisation of cannabis, and euthanasia. He resigned from Hollande’s government in 2014 claiming that the president had abandoned socialist values. But at every public appearance Hamon still looks surprised to be in the race. Although he has positioned himself as the “anti-Hollande” candidate – no surprise, as Hollande has the lowest polls ratings of any French president – even Hamon’s supporters concede that he has no reach outside the party faithful, and his dismal poll ratings reflect this.

In recent weeks, Jean-Luc Mélenchon, a veteran left-winger and now leader of his own party, France Insoumise (“Unsubmissive France”), has surged in the polls. He has been compared to Jeremy Corbyn but is more like George Galloway, in that he can be trenchant and biting and speaks fluently without notes. Some of his views – anti-EU, anti-Nato, pro-Russia – are close to those of Marine Le Pen, the leader of the far-right Front National (FN). The candidate of the centre or centre-left is Emmanuel Macron, a 39-year-old former investment banker and protégé of Hollande, under whom he served as minister of the economy, industry and digital data. Macron broke with the PS in 2016 to set himself up as an independent candidate with his new movement, En Marche! (“onward”). He presents himself as a voice of moderation and common sense. He defends the EU and the eurozone and is an unashamed liberal globaliser. But Macron is also hard to love: his enemies claim that he is self-serving, an opportunist who cannot be trusted, and, worse, that he lacks experience of high office. On television he can be vain and testy – as was the case when he came under attack from Marine Le Pen, during the TF1 debate.

In many ways, Macron was a gift to Le Pen. She accused him of being out of touch and of not knowing what he was talking about. Even non-FN supporters, who didn’t necessarily agree with her views on security and immigration, conceded that Le Pen was the most convincing speaker. As I was told by a neighbour with an impeccable PS background, it was as if she was the only politician on the night of the debate in charge of what she believed. Le Pen’s popularity increased as a consequence.

So is it now possible to think the unthinkable: that Marine Le Pen could triumph not only in the first round of the presidential election but in the second as well? If that happens, not only would she become the first female president of France but she would transform French politics and further destabilise the European Union.

***

When I put this to Jean-Pierre Legrand, the leader of the Front National in Roubaix, a town of 90,000 inhabitants in the north of France, he shook his head. He wishes Le Pen well but fears that in the second round the mainstream parties will gang up and back whoever her opponent is. “This is what always happens,” he told me. “This is why so-called French democracy is actually a form of dictatorship. You can never really get your hands on power. It belongs to an elite, people like Emmanuel Macron.”

Legrand, 69, has been a supporter of the FN for decades. He smiles a lot and can be witty, but he also likes talking tough, like the hard-headed factory boss he used to be. He admires the way Le Pen has reinvented the party, shedding some of the old-school neo-Nazi trappings. But he is also faithful to, maybe even nostalgic for, the old FN of her father, Jean-Marie Le Pen, who reached the second round of the 2002 presidential election (he lost to the centre-right Jacques Chirac). So I asked him if he was not really a democrat but, like Le Pen père, basically a fascist. “I am not afraid of being called a fascist, or even a Gaullist,” he said. “But all I really believe in is order and authority. And that is what France needs now.”

I had come to Roubaix because it is officially the poorest town in France. It is also, according to most media reports, one of the most troubled. It’s not far from Paris – just over 90 minutes on a fast train – but when you get there it feels like a different, distant place. The train station is scruffy and there is little sense of the usual Gallic civic pride; the stroll down the main boulevard to the Grand Place is drab and quiet, unlike in most French towns.

Roubaix has a large immigrant population, mainly from North Africa but comprising more than 60 nationalities. It has a reputation as a refuge for illegal migrants making for Calais and then the UK, and as a hotbed of Islamist radicalisation. In May last year the conservative news weekly Valeurs actuelles described Roubaix as “le Molenbeek français”. The magazine was referring to the suburb of Brussels where several of the terrorists and sympathisers involved in the November 2015 attacks on Paris, which killed 130 people, including 89 at the Bataclan concert hall, grew up.

Legrand and his FN colleague Astrid Leplat offered to show me around the town, just as they had done with the writer from Valeurs actuelles. The article was criticised by the local newspaper La Voix du Nord as depicting a fantasy version of France conjured up by the FN. I was aware of this argument, but also keen to take up the offer of a tour: it was a rare chance to see an ordinary French town through the eyes of the FN.

I quite liked Roubaix. With its sooty terraced houses, empty textile mills, iron bridges and dirty canals, it reminded me of Salford in the 1970s. The town is neatly laid out even if the streets are scruffy. It is also busy with small businesses – Arabic-language bookshops, kebab houses and tea shops, as well as traditional French cafés and bistros. It looked no more menacing than Bradford or Rusholme in Manchester.

Legrand is proud of Roubaix, or at least of what Roubaix used to be, and has chosen to live here rather than in nearby Lille. Having been a blue-collar worker, too, he admires the noble ambitions and graft of the people who built the town. These were the original indépendants – the aspiring working class, much cherished by the FN, who believe in the values of hard work and public service. But Legrand told me that when he looks at the streets today he sees not the cluttered life of 21st-century, multicultural France but what he called “conquered territory”.

There are problems in Roubaix: 45 per cent of the town’s residents live below the official French poverty line of €977 a month. Describing the local poverty, Legrand used the term “misère”, a word that also translates as “wretchedness”. The unemployment rate is high (40 per cent in parts of town) and on a typical weekday afternoon there are many young men sitting around with nothing to do.

As we drove through some of the tougher areas, Legrand pointed out so-called Salafist mosques, most of them shielded from the streets by the high walls of disused factories. It is these places, unknown and unvisited by outsiders, which have given Roubaix its reputation for radicalism.

It is true that in the recent past Roubaix has produced many extremists. The most notorious is Lionel Dumont, a former soldier who is white and working class, and is viewed as the leader of radical Islam in the French prison system, where he is serving a 25-year sentence for terrorism offences that include trying to set off a car bomb during a G7 meeting in Lille in 1996. Islamists such as Dumont are, in effect, beyond the control of the penal authorities because French laws forbid the monitoring of prisoners on grounds of race or religion. One frustrated director of prisons in the Paris region complained to me that the French penal system was “the real engine room of radicalisation”.

The main reason why Roubaix has produced so many terrorists – including Mehdi Nemmouche, the gunman who fired the shots at the Jewish Museum in Brussels in May 2014 that killed four people – is not immigration, as the Front National would have it, but geography. This part of France is depicted in the media as “a security black hole”, partly because of its proximity to the Belgian border. You can drive into Belgium from Roubaix in ten minutes, as I did with Legrand; the border is just a roundabout and unmonitored. The French and Belgian intelligence services are minutes away from each other but do not share information or collaborate properly. This allowed some of the terrorists who led the 2015 Paris attacks to escape after the killing spree.

***

Crossing the border to Belgium, you notice that the roads are lined with gleaming new warehouses belonging to Amazon and other technology companies. ­Roubaix suddenly seems like a ruin from the early 20th century. It must be difficult for its people not to feel trapped and abandoned – by the French elite to the south and the new economy to the north.

“If you live in Roubaix it is hard to feel connected to the rest of France,” said Hélène Robillard, a junior civil servant. I had come across her in the centre of town. She was leading a group of young women, merrily banging tambourines, blowing whistles and chanting slogans outside one of the
offices of the local council. They were striking against work conditions at the council, but having a laugh, too, in the best Made in Dagenham style.

I asked the women about the film Chez nous (This Is Our Land), which had been released only a few weeks earlier and was playing to packed houses across France. Set in a fictionalised town much like Roubaix, it tells the story of a young woman, Pauline Duhez, a nurse who is seduced into joining the FN and standing for a seat on the council. As she learns the party’s true positions, she becomes disillusioned and angry. The film ends with Pauline returning to the socialist values of her unemployed father, a former steelworker, culminating in a family trip to watch a game featuring the local football team Lens.

The women protesting with Robillard were all determinedly anti-FN. Those who had seen the film were full of enthusiasm. “It is our real life,” said one of them, laughing. “It shows our true values – not fascism, but football, beer and chips.”

Like Pauline in the film, the FN’s Astrid Leplat is a nurse. Jean-Pierre Legrand explained to me that this was why she had been hand-picked by Marine Le Pen to stand
as a regional councillor. The party has adopted a policy of recruiting fonctionnaires (civil servants), especially those who work in the health and support services. This is partly to demonstrate that the FN has left behind its neo-Nazi origins and is now the party of everyday folk, but also to undermine PS dominance of the public services.

When I asked Leplat why she supported the FN, she said that she had witnessed the disastrous effects of repeated budget cuts on hospitals, with overstretched departments and increasingly run-down facilities. “The Front National are there to protect us,” she said.

Leplat told me she hadn’t seen Chez nous and that she probably wouldn’t, because it would upset her. There were also political reasons why she didn’t want to see it: it had been financed with public money from Hauts-de-France, the northern region that covers Roubaix, as well as the television companies France 2 and France 3. When I pointed out that most French cinema relies on public subsidy, she argued that the film’s release had been deliberately timed to undermine the February launch of the FN’s presidential campaign.

“How else can this be explained?” she said. “The Front National is always persecuted by the establishment elites in culture and politics.”

***

Back in Paris, as part of a documentary I was making for BBC Radio 4, I interviewed Émilie Dequenne, the actress who plays Pauline in Chez nous, and the film’s director, Lucas Belvaux. We met at the production company’s office just off the rue du Faubourg Saint-Honoré in the swish heart of Paris – a corner of the city that couldn’t be further removed from the streets of Roubaix. But both Dequenne and Belvaux are intimately connected with the region and the northern working-class life, because they grew up near the Franco-Belgian border and still have family ties there. I asked them whether the FN had a point about the film.

“The film is not ambiguous,” Dequenne said. “It is clearly a warning about being ­seduced by the far right. But it also has lots of [different] ambiguities. The main character, Pauline, is a good person, and not stupid. She wants to help people. She thinks that this is not the case with the main pol­itical parties. So she is attracted by a party that seems to care.”

“I agree it is a warning,” Belvaux said. “We are not yet a fascist country, but I do fear that this could happen.

“There are big social and cultural divisions in France. Not everybody who will vote for the Front National is a bad person, but there are many angry people in this country who feel hurt and damaged. When this is the case, fascism can arrive much more quickly than you think.”

Until now, voting for the FN has been a sign of protest, historically a safety valve for releasing discontent. Whenever the FN has got near to victory, right and left have come together as a bloc to exclude it from power. This is what happened in 2002, of course, when Jean-Marie Le Pen, the then leader of the FN, made it through to the second round of the presidential elections. Jacques Chirac won the run-off with 82 per cent of the vote, despite accusations of corruption. The rallying cry across all non-FN political lines was: “Vote for the crook, not the fascist!” Yet there is no guarantee that this will happen again, because Marine Le Pen has successfully reinvented and rebranded the FN, making it more acceptable to mainstream voters.

Even if Marine loses, there is another danger. If those French parties of the left and right which historically have been strongest continue to implode, there will be a new constituency of voters who in future will be “homeless”. Even if Macron wins – having blurred the lines between right and left – he will disappoint at some stage. When this happens, those who supported him may not find their way back to the established parties, thus opening up an avenue to power for the far right. Sylvain Bourmeau, an associate professor at the École des Hautes Études en Sciences Sociales in Paris, told me that this was part of the Front National’s long-term strategy.

The withering of a historically strong party has already happened in the UK, where voters’ movement to Ukip and the SNP has undermined, if not destroyed, Labour as a national force. Marine Le Pen has already voiced her admiration for Ukip for “breaking the mould”. However, it is important to remember that the FN is not “populist” in the way that Ukip, or indeed Donald Trump, is. Nor are Roubaix and the north of France the same as the “rust belt” of the United States.

Rather, the present conflicts in France are ideological, with roots in the antagonisms and turmoil of French history. The FN’s ultimate goal is to get rid of the present French Republic – the result of the “mistake” of the “liberal revolution” of 1789. In other words, the promise of liberté, égalité, fraternité is to be replaced by an “awakening”, which would lead to a “national movement”: that is, the rebirth of the French nation. The FN is not just about racism, immigration or identity: it wants to send French history into reverse gear.

That is how high the stakes are, and why the coming elections are the most important in France since the Second World War. There is a generalised tension right now – the tension that I encountered on my bike on my own street in southern Paris – which sometimes finds expression in gang violence, anti-police riots and even terrorism, all fuelling the rise of the FN.

For all the polls, signs and omens, it is ­impossible to predict the election result. Whatever happens in the coming weeks and months, with the old political certainties melting away, it seems more than ever that France is set on a long and unstoppable journey into darkness. L

Andrew Hussey is the author of “The French Intifada” (Granta Books). He lives in Paris. His documentary “Culture, Class and Le Pen” will be broadcast on BBC Radio 4 on 24 April (8pm)

This article first appeared in the 20 April 2017 issue of the New Statesman, May's gamble

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