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Behind the Irish crisis

The new coalition government portrays the crushing defeat of Fianna Fail as a cathartic, revolutiona

The beginning of the economic transformation of Ireland announced itself to me one morning when I was living in Mexico City in 1995. It was there in a headline in the New York Times: "Irish economic growth lifts hopes". The article mentioned rapid growth, booming exports and high rates of new jobs - not what I usually associated with the country I'd left behind eight months before.

Mexico, too, had been the object of worldwide acclaim for its economic performance. Sweeping aside the protectionism that it had championed throughout its 60 years in power, the Institutional Revolutionary Party had opened Mexico to globalisation. The country was booming and millions got hold of a credit card for the first time. Mexicans thought they were about to realise the dream of becoming a first-world country. Watching from the White House, George H W Bush said that Mexico was rising again like the Aztec eagle. The man credited with this wonder was President Carlos Salinas. But just as his six-year term was ending, in 1994, Mexico crashed into crisis: the value of the peso plunged and millions of investors pulled their money out. The International Monetary Fund intervened with a huge bailout. Salinas was blamed for the disaster. His humiliation was so great that he was forced into exile. He chose to live in Ireland.

A few months after settling in Dublin, Salinas gave an interview to the Irish Times, in which he enthused about his new home. He remarked on two national characteristics of his hosts that particularly appealed to him. One was how easily they put their faith in people. "They trust a lot, the Irish," he said admiringly (or perhaps incredulously). The other trait was the strength of the country's desire to be sovereign, which reminded him of Mexico. Sovereignty has a long pedigree in Ireland but, contrary to the impression of the exiled former Mexican president, people often saw it as fragile or unreal. In the New York Times article advertising what was to become the "Celtic Tiger", a young engineer at an American-owned computer chip company in the west of Ireland confided that it was only in the previous decade that the Irish had become "increasingly aware that we control our own destiny".

No longer. The major economic decisions to be taken by the new Irish coalition government will be framed by the interests of the IMF and the European Union, which, between them, have loaned Ireland €85bn. Trust has disappeared - trust in the banks but most of all in Fianna Fail, which used to regard itself not as a mere political party but as a national movement. (Éamon de Valera's granddaughter Síle told a party meeting in the early 1980s: "We all have our very special Fianna Fail faith, as it were, in which we all believe.")

Fianna Fail was so accustomed to power that, on the rare occasions it was consigned to opposition, it was, in the words of the historian Joe Lee, "psychologically orphaned". Nobody has been forced into exile but the scale of the defeat of Fianna Fail - Ireland's own institutional revolutionary party lost 51 of its 71 seats in the election on 25 February - is comparable to the scale of Salinas's humiliation in Mexico.

What is left? Even if the new government succeeds in renegotiating the interest rate on the IMF/EU loan (almost 6 per cent), the Irish will have to endure what Enda Kenny, the new Taoiseach, referred to during the election campaign as "an interminable night" of higher taxes, wage freezes, unemployment and emigration.

At the special conference where the Labour Party decided to join Fine Gael in coalition, delegates were forewarned by their leader, Eamon Gilmore, that at future conferences they would have to pass through "a forest of placards" because of the harsh policies the government would have to implement. Several speakers in favour of coalition recalled how people they had met while canvassing had broken down in tears as they attempted to describe how the crisis had affected their daily lives. Gilmore urged that Labour had to go into government for the sake of "the people who came on the doorsteps to us and cried".

Fine Gael presented the election as catharsis. Kenny described the result - his party's best ever - as a democratic revolution. It was an attempt to capture the zeitgeist, to insinuate that the removal of Fianna Fail from power was akin to the end of the Mubarak regime in Egypt. But the suggestion that what happened on polling day in Ireland amounted to an overturning of the established order was far from the truth.

Leaving aside gains for Sinn Fein and a loose alliance of left-wing independents, as well as Labour's strong showing, the major winner was a conservative party whose general outlook for most of the past 78 years has been barely distinguishable from that of the party it defeated. This is all the more puzzling because the crisis in Ireland, although part of the worldwide market failure in finance, had particular local roots. The major cause of the collapse of the Irish banks was not sub-prime mortgages or abstruse financial instruments, but reckless lending to property developers who, as a class, have long-standing connections with politicians. Given the depth of betrayal by the bankers and the fusillade of polemics against the political system over the past three years, why has the Irish electorate been so conservative?

The Irish economic crisis has been documented as a collective calamity affecting the entire population. Photo spreads of the ghost estates, shells of unfinished houses abruptly abandoned by builders when the money ran out and stories of those who remortgaged modest properties to buy now worthless apartments in Bulgarian resorts have suggested that heavy losses have touched everyone. They haven't.

During my visits to Dublin over the past three years, I have been puzzled to see fashionable restaurants still full not only on Fridays and Saturdays but on Sunday evenings and weekdays as well. Such resilience suggests that there is a stratum of Irish society for which the recession is an inconvenience, rather than a catastrophe.

In the last week of the election campaign, I spent an evening canvassing with Lucinda Creighton, a young, articulate, high-profile, right-leaning member of parliament for Fine Gael for the seat of Dublin South-East. In pre-boom Dublin, in the 1980s and early 1990s, the large Georgian houses in Belgrave Square in Ranelagh were given over to student flats. Now, one after another, they have been lavishly restored with polished granite steps, gleaming varnished doors and shining brass knockers. The front yards are strewn with tasteful gravel and likely to have parked in them BMWs and Jaguars. Fine Gael's eager body of canvassers attacked these streets with energy.

What was remarkable about that evening was how we heard no anger on the doorsteps. Nobody cried or broke down with a tale of burdens or hardship. At one door, a man in a pink shirt assured Creighton that she would get his vote even though he had previously voted for Fianna Fail. The candidate began to assure him that she understood it must be a hard decision. But he looked at her as if she were naive or misguided: to jump from Fianna Fail to Fine Gael would cause him no torment at all, he said.

A personal story opened a window on this serenity. It is the way of Irish politics that voters use their parliamentary representatives to solve their home problems, so the Fine Gael candidate was often presented with stories of individual difficulties. One man said he had heard that Fine Gael was proposing to introduce capital gains tax on house sales. He explained that he had recently developed epilepsy and would not be able to look after himself when his adult children finally left home. To pay for a place in a nursing home, he would have to sell his house. But a capital gains tax might deter him, and then where would he be? Creighton assured him not to worry; a capital gains tax on homes was not in the manifesto.

This man had bought his house in 1986. Despite the collapse in asset prices, anybody who bought a house in Ireland in the 1980s or 1990s is still sitting on a lot of wealth. Irish house prices quadrupled between 1996 and 2007. Just as many of those who survived the famine of the mid-19th century prospered and became more powerful among a greatly reduced population, this time there will be a substantial class of people who will benefit from the Irish crash.

The winners from the famine - strong farmers, the Catholic Church - formed the bedrock for the conservative society that Ireland is today. Because modern Ireland was born in difficult economic times, Irish politicians failed to develop an idea of what a wealthy Ireland should look like. Irish independence coincided with the destruction of a globalised economy during the First World War: it was the age of autarky.

The men who took power in the first gov­ernment in independent Ireland in 1922, the founders of Fine Gael, had given all their attention to political and cultural independence but little thought to the economic goals of the new state. For ten years, they ran Ireland with Vic­torian austerity, pursuing balanced budgets and sound money. Then came Fianna Fail, with its credo of self-sufficiency. Éamon de Valera, who was to dominate Irish politics for the next 30 years, questioned whether the standard of living in western Europe was "the right and proper one" and committed his country to what elsewhere would be regarded as righteous poverty. It was a policy that, for a moment, captivated John Maynard Keynes. In a celebrated lecture in Dublin in 1933, attended by de Valera, Keynes affirmed: "Were I an Irishman, I should find much to attract me in the economic outlook of your present government."

But the rapid advances all over Europe after the Second World War left Ireland falling farther behind. While the masses on the Continent had fridges, washing machines and Vespa scooters, in Ireland, as the visiting German writer Heinrich Böll noted, they made do with the Mass, movies and cigarettes. In 1956, the Irish Times summed up the differences in economic policies between the two civil-war parties for voters as: "You can drink a little more under Fine Gael or smoke a little more under Fianna Fail."

As the political scientist Tom Garvin argued with some brio in his provocatively titled book Preventing the Future: Why Was Ireland So Poor for So Long?, published in 2004, Ireland was held back by inadequate education, a reactionary Church and the dead hand of class and vested interests.

By the end of the 1950s, Ireland's population, at fewer than three million, was the lowest ever officially recorded. With hundreds of people leaving small towns every week to take the boat to England, contemporary commentators worried that the Irish nation might survive, as one writer put it, "only as an enervated remnant in a land occupied by foreigners".

In 1958, the Irish government made a momentous policy shift, opening the country up to trade and foreign investment and preparing to apply to join the European Economic Community. The man to carry out this policy was Seán Lemass of Fianna Fail. He was almost 60 when he came to power, having long laboured in the shadow of de Valera. In July 1963, a month after John F Kennedy made a journey to his ancestral home, Lemass appeared on the front cover of Time magazine. He was credited with "lifting the Green Curtain", as if the opening up of the Irish economy was the equivalent of a peek behind the Iron Curtain.

In prose that prefigured the future Celtic Tiger era, Time marvelled at the "new factories and office buildings, the Irish-assembled cars fighting for street space in Dublin, the well-dressed people shopping in supermarkets" and "the waning of national self pity". Even the movies were forcing change. The then justice minister, Charles Haughey - Lemass's son-in-law - revealed that sex had become so frequent on screen that the censors had been told to go easy with the scissors "or else our cinemas won't get any films at all".

The 1960s brought television and free edu­cation, as well as more titillating nights at the pictures. The decade also marked a watershed in political culture. Lemass, as one of his contemporaries from the independence struggle remarked, came into office a poor man and was poor when he retired as Taoiseach in November 1966. In a recently published study of his career, there is a photo of Lemass, son of a draper, looking dapper on his way to work in a dark woollen overcoat with white flecks.

In another picture from four years later, taken in the grounds of Stormont on the morning of his historic and unannounced visit to Belfast in 1965, the first by a prime minister from the Republic of Ireland to the North, he is wearing the same overcoat.

Such unconcern for style would never do for his son-in-law. Haughey epitomised a new relationship between politicians and men on the make; "the men in the mohair suits" became a catchphrase for those who occupied the intersection of politics and business in the 1960s. When he finally became Taoiseach, in December 1979, Haughey was as famous for the monogrammed shirts that he bought in Paris, with "donations" from his friends in business, as for any of his other accomplishments.

A pattern had been established in that first boom of the 1960s. Ireland had been so poor for so long, so consumed with issues of identity, sovereignty and language, that it neglected to develop a philosophy of the money culture.

In 1964, a year after Time's profile of Lemass, a young historian and future politician named David Thornley noted the death of the policy of economic nationalism. "What is remarkable to the point of incredibility," he wrote, "is the passiveness with which this change has been accepted inside a single generation."

Five years later, Conor Cruise O'Brien returned from the United States to contest the 1969 election for the Labour Party in Haughey's Dublin seat. During the campaign, he regularly drew attention to Haughey's dubious finances but the issue had little traction.

“I don't think my attacks on him did me any good or him any harm," O'Brien recalled later. "The electorate doesn't take in a thing like conflict of interest. They thought it was a straight case that I was envying this rich man - it seemed a kind of standard political exchange within
the system."

At the turn of the new century, when the Irish economy had experienced several years of remarkable growth, a celebratory book of interviews was published with business leaders who had made their mark. It was the moment when the boom - which was based on the convergence of sensible policies with a fortuitous demographic moment, when most people were of working age - was drawing to a natural close, and before the artificial boom that was based on property took off. Sober appraisal of fortuitous circumstances was out; self-congratulation was in.

The editor of the collection, a business consultant named John J Travers, praised "a distinctively Irish enterprise spirit"; one could only conclude, therefore, that its signature traits of "ability, imagination and passion" were in short supply in other nations. He put his faith in the morality of entrepreneurs: "While a government framework of regulation and law is essential in achieving the balance between individual and community interest," he wrote, "the ultimate determinant of that balance will be the culture, beliefs and value systems of the individual members of a society."

The events of the past few years have exposed how much of this faith was misplaced. The overwhelming sense in Ireland is that the wealth of the boom years that was not creamed off by a golden circle of initiates has been wasted and lost for a generation that should have inherited it. Regulation, law, culture and value systems all proved inadequate to prevent the elite from making spectacularly poor judgements.

Ireland faces years of austerity to pay off the debts of its banks. Some kind of managed default may yet be the only option, because it is difficult to see how ordinary taxpayers can continue to carry the burden. Ireland has limited options for generating wealth: it will have to continue to be open to the world, which is why keeping its corporate tax rate at 12.5 per cent has become such an unlikely symbol of sovereignty. Ireland's aim for 2016 - the centenary of the Easter Rising - is, according to Kenny, to be "the best small country in the world to do business in". But can the country's politics be reconstituted on the basis of such a narrow obsession?

The nearest thing to an articulation of the economic philosophy of the government that presided over the boom and bust was in a speech made in July 2000 by Mary Harney, then deputy prime minister, to an audience of visiting American lawyers in Dublin. Geographically, she said, Ireland was closer to Berlin than Boston but: "Spiritually, we are probably a lot closer to Boston than Berlin."

The Irish economy that her government had shaped, Harney said, was created primarily to appeal to corporate America. "We have cut taxes on capital. We have cut taxes on corporate profits. We have cut taxes on personal incomes. The result has been an explosion in economic activity and Ireland is now the fastest-growing country in the developed world. And did we have to pay some very high price for pursuing this policy option? . . . The answer is no. We didn't. This model works. It allows us to achieve our full economic potential for the first time in our history as an independent state."

In his Dublin speech in 1933, in which he flattered de Valera, Keynes remarked that the Great Depression had made people disillusioned "not because we are poorer . . . but because other values seem to have been sacrificed unnecessarily". His words capture well a sense of the way many people in Ireland feel about their current ruin.

It is fashionable to ridicule de Valera for his pious notions about a frugal society and what Garvin called his anti-economic views. De Valera's Ireland was impoverished, Garvin argued, because its leaders thought "in static and rural ways and in ethical rather than scientific terms". It was necessary to jettison this thinking for Ireland to become rich. It may be necessary to think in ethical terms for Ireland to work out how to be rich once more.

Maurice Walsh is Alistair Horne visiting fellow at St Antony's College, Oxford and teaches at Kingston University. His latest book, "The News from Ireland: Foreign Correspondents and the Irish Revolution", is newly published in paperback (IB Tauris, £12.99)

This article first appeared in the 25 April 2011 issue of the New Statesman, Easter special

Jean-Luc Mélenchon. Photo; Getty
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How Jean-Luc Mélenchon built a resistance

Like Jeremy Corbyn, France's leftist candidate for the presidency has been caricatured by the media. Nonetheless, he has succeeded in building a movement. 

After months of indifference, the rise of Jean-Luc Mélenchon in the French presidential race has finally caught the attention of the British media. Still, it is frequently misrepresented and reduced to familiar categories: populism, Euroscepticism and spendthriftedness, with commentators quick to draw parallels with Jeremy Corbyn. However, to boil down the Mélenchon phenomenon to such clichés is to fundamentally misunderstand it. 

The authors of this article propose taking a closer look at a highly innovative manifesto and campaign. Cambridge University lecturer Olivier Tonneau is involved with La France Insoumise (France Defiant) and co-authored the cartoon version of Mélenchon’s programme. He runs a blog dedicated to exposing its policies and addressing the many rumours and falsehoods floated about the candidate. Nick Jones is a student who was in Paris at the time of Nuit Debout, and experienced first-hand the energy and thirst for radical change in France.

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Given the deep wound that Brexit has inflicted upon British society, perhaps the most urgent clarification is that Mélenchon does not wish to leave the EU, although he does have a radical strategy to reform it. France and Britain have different relations to the EU. Whilst Britain’s austerity policies were self-inflicted, the same is not true of France. The French people voted “no” to the European constitution in 2005 only to see its vote overturned in Parliament by a coalition of the center-left and center-right parties. This event marked a tectonic shift in French politics, and incidentally determined Mélenchon’s break from the Socialist Party. In 2012, François Hollande was elected on the promise of renegotiating the Lisbon treaty, a promise he failed to hold, and proceeded to impose austerity measures in France (cutting down public spending and corporate taxes, flexibilising the labour market), constantly justifying these measures by the necessity to abide by European norms. He has thus fuelled a deep resentment against both the center-left and the EU. Meanwhile, Mélenchon has campaigned for a showdown with the EU: reform it or leave it (“plan A, plan B”).

His strategy, designed by his chief economist Jacques Généreux, consists of unilaterally disobeying European Treatises: disregarding budgetary norms to implement a Keynesian stimulus package, creating a public investment bank, and ending privatisation policies. His prognosis is that the EU will not dare exclude France because such an exclusion would signal the end of the European project altogether. The EU will thus have to inscribe French exceptions to the treatises (just as it had done for UK). Such exceptions could prove highly desirable to other austerity-stricken countries such as the infamous PIIGS (Portugal, Ireland, Italy, Greece and Spain), with enormous pressure placed on the most intransigent promoters of austerity, the chief of which is Germany.

Far from being anti-European, this strategy is aimed to save the European project which, according to Généreux, is doomed to implode if unreformed. Généreux had reached this conclusion as early as 2012: Brexit and the European-wide rise of the far-right has confirmed his diagnosis. Unencumbered by a reluctant party, Mélenchon has been able to forcefully defend a position that Corbyn was unable to hold, thus shattering the “in/out, good/bad” dichotomy of the Remain and Leave campaigns in the UK.

Already, by 2012, Mélenchon’s Parti de Gauche (co-founded with the Green MP Martine Billard) had published an eco-socialist manifesto which advanced on the Left’s historical bend towards productivism. This time round, Mélenchon’s program is an environmentally focused Keynesian plan. Its aim is to turn France into using 100 per cent renewable energy by 2050 – ending the country’s heavy dependence on nuclear power – by implementing the “negawatt scenario” elaborated by a collective of scientists and engineers.

Mélenchon is especially determined to make the most of France’s maritime territory – the second largest in the world. His program also addresses in detail matters of public health: for instance, schools should serve organically sourced products exclusively, securing a market for organic producers. The turn to organic production, for instance, is expected to create 300,000 jobs. Mélenchon’s environmental plans tie in neatly with forensic budgeting and a clear plan for job-growth, in line with the “One Million Climate Jobs Now” campaign in the UK.

Another aspect of Mélenchon’s Keynesian plan is its redistributive policies. Low and middle wages are spent within the economy on essential goods such as food and clothing, whereas high wages are lost in the speculative bubble: by raising the minimum wage, pensions, and social benefits, Mélenchon intends to boost demand and help small and medium businesses prosper. He also acknowledges the need to reduce working time, without necessarily cutting the length of the working week. Instead, he wishes to return the retirement age to 60 – a measure that is acutely urgent given the high unemployment rate among senior citizens – and impose a strict adherence to the current, 35-hour week.

Impossible to fund? Not at all. More than hundred economists from 17 countries – including Ha-Joon Chang – published a column supporting Mélenchon’s program. His policies were presented in details by economists and high-ranking public servants in a 5-hour budget program broadcasted on YouTube, whose last hour was a discussion with economic journalists from liberal news outlets. Ghilaine Ottenheimer from Challenge praised the broadcast as “modern” and “bold”; Hedwige Chevrillon (BFM Business) compared the approach to that of the ‘slow food movement’ and deemed it a rare opportunity to think things through; Marc Landré (Le Figaro) was impressed by the openness with which La France Insoumise was laying itself open to criticism.

The broadcast has already been viewed more than half a million times. On every aspect of its program, from the environment to counter-terrorism via culture and international relations, La France Insoumise has taken the same care to involve experts. Who, then, are the ‘Insoumis’? How did such an extraordinary campaign get off the ground? This question takes us back to 2012.

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After Mélenchon’s remarkable 2012 campaign, the Front de Gauche fell apart because of strategic disagreements: the Communist Party wanted to maintain alliances with the Socialist Party whereas Mélenchon was convinced that any association with the now hugely-unpopular party of Hollande could only drag them with its fall. When Mélenchon claimed in 2015 that he did not aim to ‘unite the left’ but to ‘federate the people’, it was widely perceived as the desperate gambit of an isolated figure. And yet the gambit paid off: there was indeed a people to answer his call. With the massive demonstrations against Macron’s labour laws and the grassroots movement Nuit Debout, the writing was on the wall. Mélenchon was careful not to lay claims to these movements which were profoundly suspicious of established politicians and parties, but he has nevertheless been able to tap into their energy by creating La France Insoumise, a loose structure within which everybody contributes freely.

The Insoumis have shown ebullient creativity: some created a board game, others a computer game (Fiscal Kombat), and one of the authors of the present article wrote a comic book adaptation of the manifesto. Alongside quirky stunts such as appearing at meetings via hologram, the Insoumis have brought a vitally seductive and energetic edge to Mélenchon’s campaign. Crucially, they have brought to fruition another aspect of Mélenchon’s strategy: his struggle against the press.

In 2012, Mélenchon often claimed that the media was the “second skin of the system”. The only way to break the neoliberal hegemony was to subvert its own logic: that of audience and profit. Thus was created the colourful figure who claimed to incarnate “the sound and the fury of his time”. Yet, having become a celebrity, Mélenchon had to avoid being pigeon-holed into a caricature. The media, he claims, are “not a mirror but an arena”, so he adopted a confrontational strategy aimed at exposing the biases of journalists and interviewers.

Yet there is only so much one can say in the constraining format of TV and radio interviews; all one could achieve was to fire “bullet words” that would open cracks in the listeners’ preconceptions. In response, listeners had to be provided with alternative sources of information. In 2012, Mélenchon’s blog was the most read of any French politician; in 2013, a galaxy of “6th Republic blogs” was created; in 2016 Mélenchon’s extremely successful YouTube channel was launched; it has so far has over 22 million views. The book detailing his manifesto, L’Avenir en commun (A Shared Future) has found its way into bestseller lists, shifting well over 250,000 copies. If such independently-made material is inaccessible to non-French speakers, international viewers should not be tricked into seeing it as Trump-style, anti-system fake news. For example, a host of global NGOs including Oxfam and ActionAid have backed key aspects of Mélenchon’s campaign, with Amnesty and Greenpeace ranking him highest overall in their breakdown of all the candidate’s policies. Leading economists have also signed a pledge backing his candidacy will be published this week.

The communication machine of Defiant France is firing on all cylinders. It is remarkable that the fear-mongering of the mainstream media has failed to halt Mélenchon’s surge in the polls – remarkable, but not surprising given that his latest meeting, in Toulouse, was attended by 70,000 people, and had attracted 320,000 views on YouTube in under 24 hours. 

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Do not be mistaken: something astonishing is happening. This is about much more than meeting attendance. To be sure, Mélenchon is not simply preaching to the choir: bucking all recent trends, recent polls have shown that he is denting Marine Le Pen’s share of the working-class vote, and has overtaken her as the most favoured candidate of the youth. People are flocking from all across the political spectrum: recently, an entrepreneur from the Silicon Valley published a piece titled If Mélenchon is elected, I return to France.

He is not an isolated case, and a petition of the entrepreneurs with Mélenchon has just been launched. Even the ‘Gaullists’, disillusioned with the Fillon scandals, are now seduced by Mélenchon’s cultural style, his integrity, and his vision of France’s place in the world which is in line with the tradition of the General himself. What seemed like a fanciful vision is thus coming true: the French people is being transformed. One of the most striking signs of the campaign’s success is the change in people’s priorities: whilst employment had always ranked first, it has now been displaced by institutional reform. This, of course, is intrinsically tied to the centrepiece of Mélenchon’s program, which aims to accomplish no less than a Révolution citoyenne: creating the 6th Republic by means of a Constituent Assembly.

Under the Nazi Occupation of France, resistance networks sought not only to liberate the country, but also to bring about a better world. At great peril, they formed the National Resistance Council and drafted a program which was circulated under the cover of a novel titled Les Jours Heureux. It is no coincidence that the crowds at Mélenchon’s meetings do not chant his name but the word “resistance”, and that Melenchon himself synthetizes his aim with the phrase “let us bring forth the happy days”. The perils are undoubtedly lesser but with a deeply dysfunctional economic system preventing us from addressing climate change and fuelling the rise of the far-right, the stakes may be even higher.

Olivier Tonneau is lecturer in Modern and Medieval Languages at Homerton College, Cambridge. He participates in La France Insoumise, the movement supporting Jean-Luc mélenchon's presidential campaign. He writes a blog on French politics. Nick Jones is in the final year of his undergraduate degree studying French at Homerton. During his year abroad in Paris, he was a participant in, and keen observer of, the grassroots movement Nuit Debout. 

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