Thursday, January 31, 2008

Ségo at Harvard

A Crimson article on Ségolène Royal's upcoming visit to Harvard. I am going to be doing some interpreting for her in various meetings with students and the local press and will of course report on all these events in the blog, but the posts may be delayed a bit, as the whirl of events around her visit will take me away from my keyboard. The ransom of glory ...

The French Base in Abu Dhabi

One of the few tangible results of Sarkozy's recent foray into the Persian Gulf was an agreement to establish a French military base in Abu Dhabi. France will put 400 troops into the region, breaking the US monopoly on western military presence in the region (outside the "coalition of the willing," to be sure, and UN peacekeeping forces elsewhere). To what end? Well, in part to satisfy a desire on the part of countries that Sarkozy calls "France's friends" to send a signal to the US that, if necessary, wealthy oil emirates can acquire military hardware from other sources. So says Defense News. It seems that conservative Arab regimes regard French policy as "more moderate and rational" than American policy, with its rapid shifts of focus.

An analyst at the Gulf Research Center, Musa Al-Qallab, said that "the new base will boost the French defense industry, whose regional sales include the Mirage 2000-9 jet fighter, Leclerc main battle tanks and a large variety of Eurocopter helicopters.
' This military partnership will eventually give a strong momentum to the French defense companies competing with U.S. and Russia for the lucrative UAE and gulf markets,' he said."

Dallas vs. Chateauvallon

On Sunday, Ségolène Royal appeared on Michel Drucker's Vivement Dimanche and spoke of her breakup with François Hollande. "I was deceived," she said. I haven't seen this myself, since the TV5 rebroadcast of Drucker seems to be running a week behind. In any case, four other Socialist women have publicly criticized Royal for making a public spectacle of her private life. How can one take such a course and criticize Sarkozy for doing the same, they ask (naively, perhaps). "You have Dallas on one side, Chateauvallon on the other," said Michèle Sabban, a regional councilor for Ile-de-France. Other critics are Anne Hidalgo, a deputy mayor of Paris, Annick Lepetit, a deputy from Paris, and Elisabeth Guigou, the former justice minister.

Yet it seems to me that Royal knows perfectly well what she's doing. She aims to "presidentialize" the party by becoming its leader and making it the vehicle of her presidential ambitions. To carry this off, she has to become the focal point of all attention, not one voice among others in a debate. If her private life can rivet the audience, then her private life, or at least a carefully tailored public narrative encompassing known facts about her private life, must be put to use.

Toujours de l'audace

I don't want to belabor the Société Générale affair, about which I'm sure we still have a lot to learn. But what we know already boggles the mind. Rue89 describes several alerts issued by Eurex to the bank as early as November of last year. These alerts allegedly triggered internal investigations, but investigators were put off the scent, they say, by e-mails fabricated by Kerviel. I don't think it takes an especially skeptical mind to wonder why the bank's investigators were fobbed off so easily. Presumably Eurex issued its queries because Kerviel had taken unusually large positions that seemed not to be covered by corresponding counter-positions. Presumably the e-mails he fabricated were intended to give the impression that counter-positions existed. Presumably there were counter-parties to those counter-positions who could have been contacted. After all, that is how his scheme was eventually unraveled. Presumably the effort to take this extra step was quite minimal. So why was it not taken, particularly after repeated warnings from Eurex? This story is close to impossible to believe, and in fact we know now that the bank itself doesn't believe it, because it fired five of Kerviel's superiors, presumably because they failed to follow up these warnings. Why is there not more clamor about this in France? It's all well and good to denounce "finance capitalism," that faceless bogeyman. It's a little more difficult when it comes to taking on old friends and colleagues. Pierre Moscovici alluded in his blog the other day to the fact that Daniel Bouton is an old acquaintance and teacher. Bouton may well be a perfectly decent gentleman and a victim in this affair, like so many others, but the fact remains that he is the man in charge and that thus far his answers have been infuriatingly vague for a man universally described as possessing a brilliant mind.

And then there is the matter of potential insider trading by Robert Day, also mentioned by Rue89. Day, an SG board member, heads the Trust Company of the West and is one of the "world's richest people." He is a "Bush Pioneer," having raised over $100,000 for W, as well as a friend of Warren Christopher's, and he once entertained Bill Clinton on his yacht. A well-connected individual indeed.

Popularity

It's no secret that Nicolas Sarkozy's approval ratings have been declining. Two recent polls suggest that 52-55% percent now think that France is "headed in the wrong direction." Fillon now scores higher ratings than Sarko.

Two explanations are generally advanced for this decline: the Bruni/bling-bling argument and the pouvoir d'achat/puissance de la présidence argument.

The Bruni/bling-bling argument holds that the president's exploitation of his private life, meretricious tastes, and lavish self-indulgence have offended some voters, particularly elder voters, and destroyed the alternative image that Sarko had, with some success, attempted to create for himself, namely, that of a hard-working, even ascetic, statesman who had made a gift of his person to France. As François Hollande neatly encapsulates the case, "Sarkozy is paying dearly for his vacations."

The pouvoir d'achat/puissance de la présidence argument holds that Sarkozy's candid press-conference statement that there is really very little that the president can do to increase purchasing power undermined his effort to portray himself as a wizard capable of effecting change merely by willing it. Libé compares this misstep to Mitterrand's statement that "we've tried everything" to remedy the unemployment situation and to Jospin's statement that the state could do nothing to prevent Michelin from closing a plant. These moments of accidental candor puncture the illusion of presidential power, which, according to this theory, a president must do everything to maintain.

There are two problems with these arguments. The first is that presidents nearly always decline sharply in popularity once the "state of grace" is over. In retrospect it's always easy to find the "missteps" that explain the inevitable. The second is that the people are taken for gullible dupes, who fall time and again for the illusion of presidential omnipotence, as though intoxicated by the wine of promises that flows freely in campaigns, only to wake up with a hangover the morning after.

Perhaps what the polls actually reflect is a failure of pedagogy. One of the roles of a president is to be a teacher. Sarkozy as campaigner was actually a pretty good teacher, better, at any rate, than his opponents. He set forth a plausible view of certain genuine problems with the French economy. The French work fewer annual hours per capita than their neighbors, for instance. Voters found his lecture series interesting and elected him. He made a few changes. Certain promised results have yet to appear. People therefore expect another series of lectures: now that you've taken some steps and seen the results, how has your assessment of the situation changed? What steps do you plan to take next? An admission of non-omnipotence is actually a first, and healthy, step. But nothing further has been heard.

We know that Sarkozy's campaign lecture series was swotted up with the help of Emmanuelle Mignon and the various intellectuals she enlisted to prepare the candidate on a range of issues. But now that he is in office, he finds himself too busy, too solicited on all sides, to continue his education. And having crammed himself for the exam without acquiring the capacity to think through the issues for himself, he finds himself without ready answers, and therefore is testy when pressed. Anyone who has taught can recognize the bright student who falls back on answers learned by rote, who has excelled in an introductory course but who is likely to hit a wall in a more advanced and demanding setting.

Bouton on France2

Daniel Bouton, the head of Société Générale, appeared on the 8 PM news on France2 last night to do damage control. Metaphor continues to run riot. As I mentioned yesterday, the image of the ship in a storm requiring a seasoned captain to remain at the helm continues to be popular. Bouton used it. But then he compared Jérôme Kerviel's feat in circumventing the bank's controls to that of a daredevil leaping from a speeding car in flames to another alongside it. This seemed a less than inspired choice, since it portrayed the bank as a blazing automobile careening out of control--which may well be accurate but hardly an image that a crackerjack PR firm would have chosen, suggesting that SG may be in such dire straits that it has had to cut the public relations budget drastically. When David Pujadas pushed the banker to comment on Kerviel's testimony that circumventing the bank's safeguards had been child's play and required no sophisticated knowledge, Bouton's answer was classic: How can you believe a man guilty of such a colossal fraud? Again, any competent advisor would have counseled against such a non sequitur.

Bouton also emphasized repeatedly that SG employs 130,000 people. The rest, we are asked to believe, are not only as honest as the day is long but deeply committed to the bank and its present management. So we were meant to gather, as well, from the brief segments of employees demonstrating in favor of management outside SG headquarters in La Défense and of employees at a branch office in Montpellier offering their support. These manifestations of solidarity touched Bouton deeply, he said, and he brought his hands to his chest to emphasize his emotion.

I hope he's better at finance than he is at la com.