Fresh crisis as France’s Hollande orders cabinet shakeup

PARIS, France (2nd UPDATE) – France was thrown into fresh crisis on Monday, August 25, after President Francois Hollande told his prime minister to form a new government, following a much-criticized show of insubordination by the country’s firebrand economy minister.

It is the second reshuffle in just five months as the ruling Socialists struggle to pull France out of the economic doldrums and the government is riven by infighting between left-leaning party members and those like Prime Minister Manuel Valls who veer more to the centre.

A presidency statement said Valls had offered the resignation of his government – a formality that allows him to form a new cabinet – and the new line-up would be announced on Tuesday, August 26.

“The head of state asked him (Valls) to form a team consistent with the direction he has himself set for the country,” it said.

The presidency did not give any reasons, but the move came after Economy Minister Arnaud Montebourg bad-mouthed France’s economic direction and the austerity policies of European powerhouse Germany, angering Valls.

“You have to raise your voice. Germany is trapped in an austerity policy that it imposed across Europe,” Montebourg said in an interview with Le Monde newspaper published Saturday, August 23.

Then in a speech on Sunday, August 24, Montebourg said he had asked Hollande and Valls for a “major shift” in economic policy.

“Given the seriousness of the economic situation, an economy minister has a duty to offer alternative solutions.”

No stranger to controversy

Valls, who has consistently said he will not tolerate any form of insubordination among his ministers, has not yet reacted in person.

But his entourage said Sunday that Montebourg had crossed a line, and while it is as yet unclear whether he will remain in the government, it appears increasingly unlikely.

The 51-year-old left-wing minister is no stranger to controversy, having made headlines in the past for his outspoken criticism of ally Germany, which he has blamed for factory closures in France.

He was promoted to his current position in April in a government shake-up after the Socialist party suffered a drubbing at local elections, and has had to cosy up to finance minister Michel Sapin who supports the very austerity measures that he disagrees with.

As industrial renewal minister before his promotion, he had grabbed headlines by labeling the head of tyre giant Titan an “extremist” after the CEO criticized the French workforce as lazy.

He also became embroiled in a very public fight with steelmaker ArcelorMittal over the closure of a plant.

The latest reshuffle comes at a time when France is mired in stubbornly slow economic recovery, with high unemployment.

The central bank warned this month that Hollande had no hope of reaching his target of 1.0% growth for 2014.

The French economy has been stagnant for the past six months and the government was forced to halve its growth forecast to 0.5% for this year.

Both Hollande and Valls say the answer is their so-called Responsibility Pact that offers businesses tax breaks of some 40 billion euros ($55 billion) in exchange for a pledge by companies to create 500,000 jobs over three years.

Hollande plans to finance this with 50 billion euros in spending cuts, and the plan has angered those on the left of the party – including Montebourg – who argue that the focus should be on cutting taxes to boost consumer’s spending power. – Rappler.com