The first major crisis of the new French government led to the resignation on July 19 of the highly respected chief of the general staff Gen. Pierre de Villiers, which sent shock waves throughout the country. While the newly elected President Emmanuel Macron had convinced Gen. de Villiers to extend his tenure for one more year by promising no reduction in the defense budget, he then announced, just before the July 14th celebrations, cuts in that budget of €850 million in order to comply with the Maastricht criteria of a 3% deficit to GDP.
That was too much for France’s top general, who criticized in no uncertain terms the severe budget cuts, however in a closed-door meeting of the National Assembly Defense Committee. His statements were later leaked to the media by one of those parlementarians, for the first time in the history of such a committee. In keeping with his “Jupiterian” presidency, Macron reacted haughtily by publicly admonishing General de Villiers for overstepping his duties, de facto forcing him to resign, and proclaiming “I am the boss”.
In fact, the situation in the armed forces is critical. Given the severe budget cuts since 1990, the deployments abroad (Sahel, Middle East, etc.), and the use of the army to guarantee homeland security in the fight against terrorism, the military is very much over-stretched, and equipment is down to the bare bones.
Macron did promise to increase the defense budget by €10 billion by 2022, but in the current state of collapse of the French economy, that is completely illusory. And until now, the new government has not given any sign that it is ready to implement the needed financial reforms.
On the contrary, the main thrust of its economic policy now is to make Paris the financial hub in Europe, following the Brexit, which would supposedly sideline London. When French Economy Minister Bruno Le Maire was in New York June 28-29, he delivered a personal letter from Macron to the six largest Wall Street banks, calling on them to invest in France, because the labor code would be made more flexible. Prime Minister Edouard Philippe then decided to participate on July 11 in the yearly meeting of Paris Euro-place, where the laid out a “package” aimed at attracting the major banks.
The measures he announced included the elimination of the highest bracket of income taxes, a flat rate of taxation on capital gains from sales of financial instruments set at 30%, the erosion of social protections for workers, allowing financiers who move to Paris to maintain the privileges they had in London, etc.
Whether Macron will manage to attract such financial capital remains to be seen, as other competitors, such as Frankfurt, Dublin and Luxembourg are doing everything possible to attract it themselves.
In contrast, former French Presidential Candidate Jacques Cheminade has mobilized his party to bring about a totally different economic policy.