France's triumphant 'Joan of Arc' vows to bring back franc and destroy euro

By Ambrose Evans-Pritchard
The Telegraph, London
Sunday, June 30, 2013

http://www.telegraph.co.uk/finance/financialc...Frances-triu...

Marine Le Pen is spoiling for a fight. The leader of France's Front National vows to smash the existing order of Europe and force the breakup of monetary union if she wins the next election.

It is no longer an implausible prospect. "We cannot be seduced," she said, brimming with confidence after her party secured 46 percent of the vote in a by-election earthquake a week ago. Her candidate trounced the ruling Socialists in their own bastion of Villeneuve-sur-Lot.

"The euro ceases to exist the moment that France leaves, and that is our incredible strength. What are they going to do, send in tanks?" she told the Daily Telegraph at the Front National's headquarters, an unmarked building tucked away in the Paris suburb of Nanterre. Her office is small and workaday, almost austere.

"Europe is just a great bluff. One side there is the immense power of sovereign peoples, and on the other side are a few technocrats," she said.

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Yet it is the detail in the Villeneuve vote that has shocked the political class. The Front scored highest in the most Socialist cantons, a sign that it may be breaking out of its right-wing enclaves to become the mass movement of the white working class.

Commentators have begun to talk of "left LePenism" as she outflanks the Socialists with attacks on banks and cross-border capitalism. Anna Rosso-Roig, a candidate for the Communist Party in the 2012 elections, has just defected to the Le Pen camp.

The Socialists had thought the rising star of Marine Le Pen would work to their advantage, splitting the Right. Now they discern a deadly threat. Industry minister Arnaud Montebourg lashed out last week, blaming Brussels for playing into the hands of the Front National by running roughshod over democracies and pushing austerity a l'outrance.

Mrs Le Pen said her first order of business on setting foot in the Elysee Palace will be to announce a referendum on EU membership, "rendez vous" one year later. "I will negotiate over the points on which there can be no compromise. If the result is inadequate, I will call for withdrawal," she said.

The four sticking points are the currency, border control, the primacy of French law, and what she calls "economic patriotism," the power for France to pursue "intelligent protectionism" and safeguard its social model. "I cannot imagine running economic policy without full control over our own money," she said.

Asked if she intends to pull France of the euro immediately, she said: "Yes, because the euro blocks all economic decisions. France is not a country that can accept tutelage from Brussels," she said.

Officials will be told to draw up plans for the restoration of the franc. Eurozone leaders will face a stark choice: either work with France for a "sortie concertee" or coordinated EMU breakup, or await their fate.

Mrs Le Pen fears that other EMU states will resist and let "financial Armaggedon" run its course, but it is a risk that has be taken.

Her plan is based on a study by economists from l'Ecole des Hautes Etudes in Paris led by Professor Jacques Sapir. It concludes that France, Italy, and Spain would all benefit greatly from EMU-exit, restoring lost labour competitiveness at a stroke without years of depression.

They say the eurozone's North-South imbalances have already gone beyond the point of no return. Attempts to reverse this by deflation and wage cuts must entail mass unemployment and loss of the industrial core. The current strategy of internal devaluation is self-defeating in any case, since recession causes debt ratios to climb faster.

Prof. Sapir said the gains are greatest in a coordinated breakup with capital controls where central bank intervention steers the new currencies to target levels. The model assumes that the D-Mark and Guilder are held to a 15 percent rise against the old euro, while the Franc falls 20 percent.

The gains are less if EMU collapses in acrimony and currencies overshoot. This would inflict a violent deflation shock on Germany, but would still be strongly positive for the Latin bloc.

"A lot of politicians have been coming to see me, both Gaullistes and Socialists," Sapir said. "They agree, but don't want to come out publicly. They want somebody else to take the lead. If Marine Le Pen wishes to use my work, I have no problem."

Mrs Le Pen is a single mother of 44, more relaxed about gay rights and abortion than she lets on, closer in some ways to the assassinated Dutch populist Pim Fortuyn than to her cantankerous father, Jean Le Pen, who stepped down as party leader two years ago. Mr Le Pen in turn deplores her eclectic modernism as an overlay of "petit bourgeois" views picked up in Paris schools.

She has carried out a quiet purge of the Front, pushing known anti-Semites to the sidelines. Vichy nostalgia is out. While her father called the Holocaust an historical "detail," she calls it the "pinnacle of human barbarism." She courts Jewish favour, aiming her fire at jihadists instead. "Political parties are like people. There is adolescence when you do do crazy things, and then maturity. We are now ready for power," she said.

This campaign of "dédiabolisation" or image detox seems to have worked. Only a minority of voters still thinks the Front is a "threat to democracy." Mrs Le Pen is winning over white working class women in droves. The feminized Front is no longer the party of the angry white male. The softer image is why finance minister Pierre Moscovici describes Le Pen as "more dangerous than her father."

It is her defence of the French welfare model and her critique of capitalism that gives her a Leftist hue -- some call it 1930s national socialism -- so far in outlook from Britain's UKIP. She sounds like Occupy activists in her attacks on high finance and the way corporations profit from labour arbitrage, playing off wages in the West against cheap labour in Asia. "It is the law of the jungle," she said.

Nor is she on the UKIP page with her broadsides against Washington and NATO, or her call for France to retake its place as "non-aligned" voice in a multipolar world. It is an anti-Atlanticist patriotism.

She claims to be the true heir of General Charles de Gaulle, accusing the Gaulliste UMP party of selling its soul to Europe and the Anglo-Saxon order. "There was a de Gaulle of the Left, and a de Gaulle of the Right. There were two de Gaulles. We stand for both," she said.

Mrs Le Pen said the Socialists are in meltdown, victim of their own subservience to EU economic doctrines, while their barrage of attacks on Germany's Angela Merkel smacks of a dependency syndrome. "They whine about Chancellor Merkel, the wicked enforcer who metes out punishment, but Merkel is merely defending the interests of Germany, which are not the same as ours."

She said the EMU crisis is structural. North and South need different exchange rates. "The D-mark would be rising if it were not for the euro, and that means Germany has a chronically undervalued currency. The euro is far too strong for France, and it is eating away our competitiveness," she said.

It is hard know whether the French people would ever vote en masse for an all-out clash with Europe, let alone for Le Pen's Jeanne d'Arc messianism. Yet the longer the economic slump goes on, the greater the risk for Brussels and Berlin that French patience will snap, setting off one of those eruptions that have punctuated French history.

A recent Pew Foundation survey said French support for the EU Project has collapsed from 60 to 40 percent over the last year, and 77 percent think economic integration has been damaging.

President Francois Hollande says the EMU crisis is "finished" and recovery is at hand, though it is not clear what will break the vicious cycle as France carries out fiscal tightening of 1.8 percent of GDP this year and the deepest cuts in half a century. Monetary policy remains contractionary for most of Latin Europe.

"If the government really tries to force the budget deficit down to 3 percent of GDP, the economy will contract again next year by 0.5 to 0.8 percent," said Prof. Sapir. "Unemployment will continue rising by 30,000 to 40,000 a month. There may be another 600,000 people without jobs by the end of 2014."

France endured the same slow torture in the early 1930s under the gold standard, stoically accepting the "500 deflation decrees" of Premier Pierre Laval. The dam broke in 1936 with the election of spurned outsiders, then the Leftist Front Populaire, with Communist support. The gold standard collapsed.

The emergence of Marine Le Pen as a contender for office in Europe's pivotal power may prove the electric shock needed to force a radical shift in EMU crisis strategy, or at least to force France's Socialist Party to break with Germany and fight for a full reflation agenda, if only to avert its own ruin.

"We have succumbed to a spirit of slavery in France. We have forgotten how to lead, and our voice is not heard any more," Le Pen said.

It will be heard now.

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