The New Statesman Essay - Why the French really are different

Andrew Jackon the nation that always insists on being an exception

With its big-budget advertising campaigns, aggressive lawsuits and vicious exchanges of words, it had all the trademarks of the ugliest of 1980s-style US corporate takeover battles. But the hostile bidding war designed to create a single giant banking group that drew to a close this month had one important difference. It was taking place in contemporary France.

Such an unseemly public squabble for control among three Paris-based businesses would have been unimaginable even in the very recent past. Indeed, only a little more than a decade ago it would have been quite simply impossible, since all three banks involved - Societe Generale, Paribas and Banque Nationale de Paris - were still owned by the state.

In a throwback to more typical practices only now on the wane, Jean-Claude Trichet, governor of the Banque de France, tried to intervene earlier this year to find a solution behind closed doors. He was an inspecteur des finances, drawn from the same elite civil service corps as the chairmen of two of the three banks concerned. But the issues were too important, the pressures too great and the egos too large to reach a cosy, amicable agreement. Time had moved on.

The takeover was the latest example of the important evolutions that are taking place in French society. Francois Mitterrand may have launched a populist wave of nationalisations in the early 1980s, just as Margaret Thatcher was doing the reverse across the Channel. Yet the latest socialist government, led by Lionel Jospin, the former president's protege, has overseen a transformation far more compatible with Schroder's Germany or Blair's Britain than it might care to admit - without the benefit of someone else who has already done the dirty work and taken the political flak.

In the two months after Jospin was elected prime minister in 1997 on a slate of blocking privatisations, he set in motion the sale of more state-owned companies than his Gaullist predecessor Alain Juppe had managed throughout his entire two years in office. In many other areas, too, the distinctive Third Way trumpeted by the French left has proved far stronger on rhetoric than reality.

But there are still original aspects to the French approach, and ones too visible, too powerful and too distinctive to be ignored. Too visible, because France is one of the world's most widely visited destinations, attracting 142 million Europeans alone in 1992-96. Too powerful, because it not only has a huge international social and cultural influence but is also an industrial powerhouse with the world's fourth-largest economy - ahead of both the UK and Italy. And too distinctive, because it dares to stand apart from the conformism of its partners in the G7 and similar organisations.

France has frequently managed to provoke animosity among its allies as much as its enemies, as was proved by the all-too-easy bout of "froggy-bashing" unleashed in the wake of President Jacques Chirac's decision to relaunch nuclear testing in the South Pacific shortly after his election in 1995. Britons are willing to make disparaging remarks towards their nearest neighbour that they would never imagine uttering about other countries. Perhaps that is because France is the foreign land to which they are most exposed - and of which they may even be a little jealous, and perhaps because in many ways France and Britain are, to misquote George Bernard Shaw, a common nation divided by two languages. Both are former colonial powers trying to adjust to a less influential role in the world while still believing they have a model worth emulating. Yet their tactics are fundamentally different.

While the British have got on relatively pragmatically with the evolution of their society, the French have characteristically adopted a more tortured intellectual approach to reform - or to the lack of it. Their policy-makers and thinkers have developed a mantra of defensive "exceptions", often defined largely in opposition to the practices of their supposedly "ultra-liberal" and "Anglo-Saxon" counterparts. It began with the "cultural exception" championed by Jack Lang, Mitterrand's culture minister in the 1980s and early 1990s, notably during the Gatt round to protect French cinema from foreign competition. He reinforced a long-standing cross-party belief in protectionism for domestic film and television production, supported by a network of quotas and subsidies. Today French "exceptions" have been labelled in practically every field.

On paper such a diversity of approaches provides a welcome alternative to what the French call the pensee unique of one-track conventional wisdom. The problem is that the cult of exceptionalism is starting to appear artificial and counterproductive. Many of the elements that made France so distinctive and envied in the past are in reality being eroded. And many of those that remain appear increasingly anomalous and unfortunate.

Two of the country's most eye-catching "exceptions" are also its ugliest: a rate of unemployment of well over 10 per cent, and 15 per cent or more support for political parties on the extreme right. They are also tightly intertwined. A high minimum wage, restrictive labour regulations and large social security taxes all help deter companies from hiring staff and contribute to creating an alienated class of people drawn to demagogic solutions to their problems.

Jean-Marie Le Pen's National Front, as well as offshoots with similar ideologies, has fed off France's mainstream political class. When Mitterrand introduced proportional representation in the 1980s, it conveniently served his purposes by swelling Le Pen's support and dividing the opposition. The right, in turn, has played up its "republican" values to make it stand apart from the National Front's racist views, while abandoning to it in the process a welter of policies that would sit quite happily within the UK's Conservative Party, for example.

One reason France has been reluctant to undertake the fundamental economic reform that might help ease unemployment is that it remains haunted by a third notable "exception", the revolutionary spirit of May 1968. It is one with which the defenders of France's exceptional ways feel more comfortable. Many consider the battles on the barricades of Paris less a brief historical aberration than a continuation of the traditions of 1789, 1848 and 1871. After all, the Communist Party still commands strong support among voters and sits in the current cabinet, albeit in ideologically neutered form. And, as the transport strikes of 1995 showed, there was considerable support for the protests well beyond those who were directly affected. As numerous truckers' and farmers' outbursts before and since have demonstrated, the state often appears too timid to interfere and restore order in the face of popular protest, regardless of the underlying rights and wrongs of the issue.

The events of 30 years ago have helped create and consolidate a corporatist straitjacket that has outlived its useful life. For those in employment - and notably in the public sector - the special privileges won by the unions are impressive. But many of these achievements have been gained at the cost of the unemployed or those in the private sector. And while the unions serve their narrow sectional interests and between them represent just 9 per cent of the workforce, they continue to hold disproportionate power over national institutions, including the state's social security, medical and retirement organisations, labour tribunals and work councils. Managements, in turn, often take a conflictual approach to negotiations, which does little to help.

The spirit of '68 also continues to legitimise another fundamental French "exception", the centuries-old national belief in the overarching importance of regulation and the predominant role of the state. According to the OECD, 27 per cent of the French workforce is in the public sector - higher than all other industrialised countries apart from Finland, Sweden and Denmark - with a wage bill to match. The Jospin government stresses the importance of maintaining service public a la francaise for the railways, the post office and other institutions, even though they often seem characterised by a lot more "public" than by high standards of "service".

The continued power and prestige of the centralised Parisian state means that until recently it has been able effortlessly to recruit the "best and the brightest" graduates. In a country that still boasts a highly meritocratic educational system, the most talented people from a very broad variety of social backgrounds have reached the heights of the civil service, an institution internationally renowned for its efficiency and its ethics. But the system has also led to a very politicised approach to senior appointments. Ministers' advisers are frequently "parachuted" into positions as chairmen of state-owned enterprises, for example, despite their limited knowledge of the commercial sector and often scant management ability. The consequence of this system was epitomised at Credit Lyonnais, perhaps France's most costly "exception", which may require taxpayers to pay up to FF200 billion to cover the losses it incurred in the 1990s.

There are many other, far more positive exceptions in modern French society. No one would dispute the delights of Gallic wine and food, literature and art, landscape and architecture, even if their uniting characteristic is that they have little direct link to the state or to public policy. The same can be said for many of France's most well-known and successful companies - whether the cosmetics group L'Oreal, the fashion house Chanel, the ballpoint pen and shaver manufacturer Bic or the tyre company Michelin. All are family-owned or -controlled and have kept as far outside the grip of the state as they possibly can.

Above all, there is the high-speed TGV rail network, which, like other technological grands projets, never fails to attract the admiration of foreign visitors to France. It combined the country's strong engineering talents and bold visionary desires with an effective if ruthless capacity to implement. That, though, is a glory of the past, largely conceived and undertaken in the 1960s and 1970s. Perhaps what are most lacking in France today are just such bold, forward-looking projects, notably ones that focus less on technical skills and engineering achievements and more on social and economic reforms such as restructuring the imbalanced national pension scheme.

It would be wrong to assume that no transformations have taken place in modern France. Jospin may have indulged in some extraordinary linguistic gymnastics but he has nonetheless pursued many policies that few who followed his words literally would have expected. Labour market "flexibility" is forbidden in his lexicon, but introducing "suppleness" has been permitted. Privatisation is out, but "opening of the capital" of state-owned companies is in. Pension funds may be viewed with suspicion, but "retirement savings" schemes are likely to be allowed. Similar sleights of hand affect his controversial 35-hour-week legislation. Whether this will create new employment is open to question, but it has forced France's notoriously rigid union and management representatives to the negotiating table.

On the whole, however, the public sector has evolved far less than the private in recent years. Like their predecessors, the majority of members of both the National Assembly and Jospin's own cabinet are themselves former civil servants. That means not only do they have no experience of the private sector but they even have the right to demand to be rehired by their former government department up to six years after they have quit. That helps make them what the French call "de-responsibilised", removed from accountability or the consequences of their actions. Particularly as many national politicians also accumulate a range of elected positions simultaneously at local, regional and European levels - making it hard to imagine how they keep in touch with their multiple constituencies.

Many French voters are also de-responsibilised, happily voting for new government spending because only 50 per cent of households pay income tax, compared with 90 per cent in the UK. Most state funding comes in the form of more "hidden" and regressive charges, and taxes on employers. There is also a disproportionate opposition to cutbacks by the state and sympathy for public sector workers on strike, since nearly 60 per cent of the French either are civil servants or have one in their close family. The same order of magnitude, unfortunately, also applies to the unemployed.

If there are huge entrenched forces against change domestically, what is striking is that much reform seems to have come about as a result of external pressures. Is it a coincidence that Italy's "clean hands" campaign against political corruption came before France's or that several of the French judges who have been most active in similar clampdowns have been of foreign origin, such as the Norwegian-born Eva Joly? Equally, many of the economic changes happening in France today are the result of EU policies: whether liberalisation, privatisation or that great French grand projet, the euro.

The French have long shown an impressive capacity to analyse a problem, come up from behind and overtake their rivals. They still have plenty of world-class ideas, individuals and businesses. They do not need to hide behind defensive "exceptions". They can cope perfectly well without efforts to restrict and vitrify the past. While the exceptionalists may disdain US-style food and culture, the majority have made France one of McDonald's biggest markets and Disneyland Paris the most frequently visited paying tourist attraction in Europe. They have created their own US-style restaurants and provided many of the most skilled cartoon animators for Walt Disney films. In these areas, as well as those which are their more traditional preserve, they have and will continue to provide a healthy and outward-looking Gallic contribution to the modern world.

Andrew Jack's "The French Exception" will be published this summer by Profile Books. He is Moscow correspondent of the "Financial Times" and was previously a correspondent in Paris