MS Risk Blog

France Has Chosen the EU: Next Challenges for President Elect Macron

Centrist candidate Emmanuel Macron won the second round of the presidential election on 7 May. The first official results from the Interior Ministry show that Macron received around 62 percent of the vote, versus 34 percent for nationalist candidate Marine Le Pen. This victory can be seen as a breath of fresh air for Europe, as had Le Pen prevailed in Sunday’s vote, she could have helped set in motion the bloc’s crumbling, even if her most radical proposals, such as holding a referendum on France’s Eurozone membership, would have been difficult to implement.

Le Pen’s performance in the election suggests that although Euroskepticism is strong in France, the prospect of leaving the bloc still frightens more voters in the country than it attracts. Nevertheless, the fact that the National Front secured 34 percent of the vote means that the economic and financial risk will continue to be of primary concerns among the most part of the citizens. Macron has a formidable task ahead of him. His presidency will test whether a centrist, pro-European leader can govern France and whether an inexperienced politician can perform better than the professional politicians his campaign criticized.

As far as domestic reforms are concerned, overhauling France’s economy is vital to the Macron plan. In the next five years he wants to make budget savings of €60bn (£51bn; $65bn), so that France sticks to the EU’s government deficit limit of 3% of GDP (total output). Public servants would be cut in number by 120,000 – through natural wastage. Concerning the Labour market, he would not scrap France’s famed 35-hour work week, but he would try to introduce further flexibility around a basic legal framework of labour rights and rules, allowing firms to negotiate deals with their staff on hours and pay.  He would try to introduce further flexibility around a basic legal framework of labour rights and rules, allowing firms to negotiate deals with their staff on hours and pay. On immigration, he aims at creating a 5,000-strong force of EU border guards, make fluency in French the main qualification for obtaining French nationality and give all religious leaders comprehensive training in France’s secular values.

However, some of Macron’s proposals, especially those aimed at further liberalizing France’s economy, reducing the public sector and introducing more flexible labor laws, will meet with resistance from some parts of French society, including unions and student groups. If En Marche! fails to win a majority in the National Assembly in the country’s legislative elections next month, the president will have an even harder time enacting domestic reform. His predecessors Nicolas Sarkozy and Francois Hollande found it difficult to introduce economic reforms even with control of the legislature because of opposition, not only from the public but also from their own parties at times.

On Europe, preserving France’s alliance with Germany, will be a priority for the next administration in Paris, and for Berlin as well. The two countries will probably be on the same page on the Brexit issue, defending the indivisibility of the European Union’s single market and ensuring that the United Kingdom doesn’t get too favorable a trade deal from the bloc. They will also work together to increase defense and security cooperation across the European Union, focusing on protecting its external borders, Macron is also a critic of Russian policy and backs EU sanctions put in place after the Ukraine crisis.

Still, Germany and France will have plenty of room for disagreement, especially where the Eurozone is concerned. Paris, broadly speaking, is willing to tolerate inflation and a cheap euro to keep Europe’s exports competitive. France also tends to take a flexible stance on deficit and debt targets, while espousing protectionism to defend vulnerable sectors of the economy, such as agriculture, against external competition. Many of these ideas go against Germany’s interests. For example, Macron has already proposed creating a separate budget for the Eurozone, financed by jointly issued debt, to pay for investment programs across the currency area. He also wants more shared responsibility within the eurozone and believes Germany’s big trade surplus has to be rebalanced.

There are many challenges ahead for the new President, and it is going to be a long way to go. Most of his success both nationally and internationally will depend on the French Assembly’s support and on the reestablishment of the traditional strong alliance with Germany.

IS Warns of Further Attack Against Christians in Egypt

The so-called Islamic State (IS) group’s leader in Egypt has warned Muslims to stay away from Christian gatherings as well as government, military and police facilities, suggesting that the militant group will keep up attacks on what he referred to as “legitimate targets.”

In an interview published last week in IS’ Al Naba weekly newspaper published on Telegram, the leader, who was not named, stated “we are warning you to stay away from Christian gathering, as well as the gatherings of the army and the police, and the areas that have political government facilities.”

Islamic militants have increasingly targeted religious minorities, a challenge to President Abdel Fattah al-Sisi’s, who has promised to protect them from extremism. Last month, two IS suicide bombers killed at least 45 people at churches in the cities of Alexandria and Tanta, one of the bloodiest attacks the country has experienced in years. IS has also been turning its sights on targets outside its base in the Sinai and has recently been putting more pressure on the Egyptian government and has presented additional challenges for security services.

US Issues Travel Alert for Europe

On 1 May, the United States State Department issued a travel alert for Europe, stating that US citizens should be aware of a continued threat of terrorist attacks across the continent.

In the alert, the US State Department cited recent attacks in France, Sweden, the United Kingdom and Russia, stating that the so-called Islamic State (IS) group and al-Qaeda “have the ability to plan and execute terrorist attacks in Europe.” The alert went on to say that malls, government facilities, hotels, clubs, restaurants, places of worship, parks, airports and other locations are all possible targets for attacks.

On Monday, a State Department official disclosed that the latest alert was not prompted by a specific threat, but rather recognition of the continuing risk of attacks, particularly ahead of the summer holidays.

The State Department’s previous travel alert for Europe, which had been issued ahead of the winter holiday season, expired in February. This latest alert expires on 1 September 2017.

UK PM Accuses EU of Seeking to Affect Result of British Election

British Prime Minister Theresa May accused European politicians and officials last week of seeking to affect the outcome of the 8 June general election by issuing threats over Brexit.

Speaking in front of her Downing Street office after vising the Queen to mark the dissolution of parliament, which is the formal start of the election campaign, Mrs May disclosed that there were some in Brussels who did not want to see Brexit talks succeed. The statement comes after a German newspaper in late April gave a damning account of talks between the British Prime Minister and European Commission President Jean-Claude Juncker, reporting that he had told Mrs May during a dinner at Downing Street that Brexit could not be a success.

In response to this, on 3 May, Mrs May disclosed that “in the last few days we have seen just how tough these talks are likely to be. Britain’s negotiating position in Europe has been misrepresented in the continental press, the European Commission’s negotiating stance has hardened, threats against Britain have been issued by European politicians and officials,” adding that “all of these acts have been deliberately timed to affect the result of the general election.” Mrs May, whose Conservative Party have a double-digit lead in the polls, went on to say that reaching the best Brexit deal would be the overriding task for whoever wins the 8 June election. She called on voters to give her their backing to “fight for Britain,” noting that while Britain wanted to reach a deal with the European Union (EU), that view as not shared by everyone in Brussels, stating “the events of the last few days have shown that, whatever our wishes, and however reasonable the positions of Europe’s other leaders – there are some in Brussels who do not want these talks to succeed. Who do not want Britain to prosper.”

French Presidential Election: Macron Secures Win

On Sunday, 7 May, Emmanuel Macron was elected French president with a business-friendly vision of European integration, defeating Marine Le Pen, who threatened to take the country out of the European Union (EU). Mr Macron’s win will also bring huge relief to European allies who had feared another populist upheaval, following Britain’s vote last year to leave the EU.

With virtually all votes counted, Mr Macron won 66 percent of the vote against just under 34 percent for Ms Le Pen – a gap wider than the 20 or so percentage points that pre-election surveys had suggested. However it was a record performance for the National Front (FN) party of Ms Le Pen, effectively underlying the scale of the divisions that Mr Macron now faces.

Mr Macon will officially be sworn into office on Sunday 14 May.