With a surge in rightist regimes all over the world, conservatism seems to be at the threshold of every economic and political decision made. A rightist control of government hints at populism and anti-globalization policies. 2016 marked the rise of nationalism, which picked up its pace further more with the election of the US’ incumbent President. The 2017 French election results are certainly the turning point for both the global economy and the fate of EU. With Francois Hollande’s Socialist party losing its sheen and anti-globalist Le Pen’s National Front advancing, the odds seem to be favoring the radicals. If Marine Le Pen wins this presidential election, she will be the first far-right leader to be leading one of the major Western European economies.
LE PEN’S ECONOMIC POLICY PROPOSALS
- CURRENCY CHANGE-
Euro has been adopted as the single currency for the entire EU in 1991. France being the founding member of EU, it adopted the Euro dropping Francs. Euro has seen many ups and downs with the valuation against the dollar, primarily because of two major bubbles, since its inception. National Front which has been led by the Le Pen family, has always been euro-skeptic and this Presidency win would most certainly mean a change in the currency. Remonetizing the francs, according to Madame Le Pen, would mean bringing back the national sovereignty in the monetary policy framework. A shift from Euro to Francs seems inevitable if the votes favor Le Pen.
2. Referendum for FREXIT-
The formation of EU was necessary to bring a sense of peace to the once belligerent states and to take the trade and trading partnerships to a whole new tier. The recent episode of ‘Brexit’ seems to be bringing out a domino effect. With Netherlands and potentially France being next in line to hold a referendum, the stability of EU and the Euro seems to be fragile. Le Pen’s presidency, which will possibly be mandated by a series of nationalistic and radical political decisions, a referendum for Frexit is definitely on her cards.
Protectionism is one of the core economic principles of the rightists. In a world powered by globalism, protectionism would lead to weaker cross-border exchanges and radicalism in its approach towards free trade. In the face of concerns over unemployment and recession, governments are coming under pressure to implement protectionist policies and measures – including tariffs, quotas and various forms of subsidies – as a way of ‘saving’ domestic jobs and enterprises. Le Pen’s economic policies touch primarily upon the ‘priority to nationals first’ agenda. She wants a boost in the domestic industries and speculates the growth rate can spur to 2.5% by 2021.
Le Pen wants to close the French borders and promises to keep France in the EU only if they agreed to renegotiate border-free travel. She proposes a quota to cut immigration by 80% and talks about taxing the employers hiring non-French nationals. Acquiring a French citizenship is set to become tougher as well.
5. LOW-INTEREST RATES AND WELFARE PROGRAMS-
An austerity critic, Le Pen promises to have a budget that is favorable to the working class. She has pledged to cut taxes and introduce welfare programs for the proletariat. The funding would be taken care by the reduced costs due to less immigration and the exit from EU. Marine Le Pen has also talked about printing more of the new currency to bring down the country’s debt.
IMPACT OF THESE POLICY DECISIONS ON THE GLOBAL ECONOMY
France stands as the sixth largest economy in the world. With a high-powered trade, top end chemical industry, and a never-ceasing tourism and fashion industry, France is the impact holder when it comes to strengthening or disrupting the global economic welfare. In a highly globalized society of ours, protectionism coming from a rightist rule brings about significant impacts. Le Pen proposed that France follows Francs as their currency to “retain national sovereignty” and to disseminate their monetary system from the clutches of a “dominant common currency.” But a shift from Euro to Franc would only make the time tougher for the EU. This means the whole of French sovereign debt – around 2 trillion dollars- has to be converted into the new Francs causing massive losses to the foreign investors, potentially leading to a crisis in the financial system. Although National Front has proposed a one on one euro, franc swap, there seems to be a devaluation due to the differences in the labor market in France and EU. But on the positive side, it could increase the French exports. There have also been speculations that this would lead to distress sale of assets in the French dominion. A founding member exiting the EU makes the probability of the other nations leaving high, causing a domino effect. It could mean the end of EU in a way that all the alliance pacts get nullified leading to disruption of business confidence and multilateral trade agreements. The fear of a potential French exit would make the investors lose faith in the market and dampen the consumer spending in short run. Protectionism and restrictions on immigration would certainly make their industries less competitive in the market. With Portugal, Greece, and Italy facing debt and banking crisis, trade and immigration restrictions in France would worsen their situation further. A spillover effect of this is much anticipated owing to the weak ground the EU nations are standing in.
As anti-Islamist and euro-skeptic views surge in the euro zone, Le Pen’s candidacy stands out as the prize. It is evident after the poll results on 23rd April that it is a face off between the centrist Macron and the rightist Le Pen. It is possible that due to the increase in a populist and a nationalist propaganda in the nations across Europe, France will have its first far right president post world war. The May 7th poll would decide the future of the France, the EU, and the worried foreign investors whose money is at stake.