Photo Gallery: France in a Fix


Trouble in Paris A Crisis of Democracy Rocks the Fifth Republic

France had hoped that President François Hollande could lead the country out of the swamp of scandal left behind by his precedessor Sarkozy. But accusations against his campaign manager combined with the offshore account held by Budget Minister Jérôme Cahuzac have destroyed that dream and triggered a crisis of democracy.

The most recent French political scandal started long ago, with a puzzling beginning worthy of a good film. Somewhere in the French province, in the house of a lawyer who wasn't home at the time, the phone rang. The answering machine clicked on and recorded nearly four minutes of a muffled dialogue between two men. They talked about a numbered account at the UBS bank and the fact that it was "a pain in the ass" to have to travel personally to Switzerland to give an authorized signature. Such are the hazy beginnings of this scandal.

The recording -- of an accidental mobile-phone call -- went unnoted for 12 years, before becoming politically explosive in recent months. A reporter working for the online news portal Mediapart stumbled across the recording in the summer of 2012. He had originally set out merely to form a clearer picture of the career of the new French budget minister, Jérôme Cahuzac, a rising star of the Socialist government, which has been governing the country since May.

What the persistent journalist, named Fabrice Arfi, discovered instead was a sordid web of political and personal deceit. The man with the numbered bank account who finds that traveling to Switzerland is "a pain in the ass" is none other than Cahuzac himself -- until recently the minister, guardian and auditor of French public finances. He is an attractive man, 60 years old, a sports enthusiast and a talented speaker. At the time, he was also the nation's self-styled champion in the fight against tax evasion and he gave repeated interviews in which he explained how French President François Hollande's promised "exemplary republic" could be achieved.

Last Tuesday, after four agonizing months, Cahuzac finally admitted that he had betrayed the country. Despite having solemnly assured French parliament last December that "I do not have, and have never had, a foreign bank account, not now, not previously," he has in fact had one for the past 20 years. Cahuzac's account was held in Switzerland until 2010 before he moved it to Singapore. It recently had a balance of €600,000 ($775,000). Over the weekend, allegations arose that he had used a falsified tax document to show that he had paid French taxes on the money.

Unsavory Business Practices

French daily Le Monde commented on the admission in a dramatic editorial, calling it "a profound democratic crisis" that adds to the economic and social crises already faced by the country. The newspaper contends that this breaks the "contract of confidence" between the people and its government.

That crisis of confidence  deepened on Thursday when the international journalist project "Offshore Leaks" brought the name Jean-Jacques Augier to light.

Augier is an old friend and adviser of Hollande who, like the president, graduated as a member of the same "Voltaire" class at the elite École Nationale d'Administration (ENA), and he was the treasurer of his election campaign. He is also reportedly a shareholder in two shell companies based on the Cayman Islands. This alone has exposed him to suspicions of engaging in unsavory business practices, according to Le Monde. Augier responded immediately and rejected all allegations of illegal activities.

Augier said in a number of TV interviews that the spin-offs from his Eurane holding were established to handle transactions with his Chinese partners -- and he contends that everything was done aboveboard. "I have done nothing illegal," he insists. Yet the French president, who was on a state visit in Morocco, responded with the helpless words that he "knew nothing" about Augier's business transactions.

Additional accusations arose over the weekend that French Foreign Minister Laurent Fabius possesses a secret bank account in Switzerland. He has vehemently denied the charges and vowed to take legal action against the French daily Libération, which published the charges.

Over the coming weeks, the focus will continue to be on who knew what and when, and the Cahuzac affair promises to overshadow everything. The liar's fall from grace has become a national crisis within just a few days -- a development that can only be understood by taking a step back from the endless daily stream of news reports and examining the bigger picture.

Political Cronyism

Cahuzac's fall spells the end of all hope that the rise to power of the Socialists last May marked the start of a political renewal in France. It was this hope that swept Hollande to power, despite his lack of charisma. His election victory showed that voters were fed up with the scandal-ridden clique system of his predecessor , Nicolas Sarkozy -- and it was a sign that the French expected their new president to shake up decades of political cronyism.

Eleven months later, the French are beside themselves with disappointment. Cahuzac's behavior has put an end to the dream that the Socialists could return a sense of decency and propriety to the government's work. Instead, the electorate is increasingly coming to the alarming conclusion that it is living in a rotten republic, in the midst of a deep political crisis.

There is a general climate of suspicion that is cloaked in anxious questions: How could Hollande, how could Prime Minister Jean-Marc Ayrault and Finance Minister Pierre Moscovici, not know that their prominent colleague Cahuzac had a sleazy bank account? President Hollande defends himself by saying that Cahuzac lied to him "face to face" about the affair.

In a poorly-lit, clumsy video message on Wednesday, the president invoked in a statesmanlike manner the principle of innocent until proven guilty, and pointed out that this must also apply to Cahuzac. This defense has prompted critics to accuse him of naiveté and raised the following question: In a ministry as sensitive as public finances, shouldn't the slightest suspicion have provided sufficient grounds for dismissal?

Eleven months after taking office, Hollande already appears to be on his knees  politically. On the Thursday before Easter, only a few days before Cahuzac's declaration of guilt, Hollande went on television for 75 minutes and attempted to respond to questions about why key economic figures have worsened  during his tenure in office. He didn't have any good answers. The latest polls of Hollande's popularity -- published last week in Le Figaro Magazine, and three days before Cahuzac's confession -- revealed historically miserable ratings.

Rising Extremities

According to a poll conducted by TNS Sofres, 70 percent of the French have little or no confidence in Hollande's work, and Prime Minister Ayrault received similarly dismal ratings. At ninth place on the list of politicians who, in the opinion of the French, should play "an important role" now stands the leader of the right-wing populist National Front, Marine Le Pen, who has been consistently gaining in popularity for months. In the wake of the Cahuzac shock, she is calling for the resignation of the government, the dissolution of the National Assembly and immediate new elections, while left-wing populist leader Jean-Luc Mélenchon has been calling for a broom to sweep the "oligarchy" from the upper echelons of the state.

What is new in France these days is that one doesn't have to harbor extreme political views anymore to find such political soap-boxing attractive. There is a deep-seated sense of frustration with a system that appears incapable of renewal. The majority of the population is of the opinion that France has failed for decades to revamp its public administration and political establishment to prepare it for today's globalized world.

That is why it is hardly an exaggeration to speak of a crisis of state. The general mood in the country is one of abject pessimism, as if the current republic designated with the Roman numeral V has reached a phase of irreversible decadence. Off-handed comments about French democracy having aristocratic tendencies have long been prevalent. But they have always sounded a more charming than warranted by the true situation. Now, the French are paying a bitter price.

The fact that the office of president is endowed with virtually absolutist power has given rise to a political establishment that looks to the Elysée Palace the way the royal court once looked to the crown. Every moderately dedicated mayor must endeavor at all times to maintain direct ties to the presidential office, because it is really only there that decisions are made. Projects of every type and size -- in the regions, the départements and the provincial cities -- are rarely approved during the course of clear, transparent administrative processes, but rather at informal Parisian dinner parties marked by a spirit of nepotism. This is no stereotype, but rather France's constitutional reality.

More Difficult Times Ahead

This may give serious impetus to the constitutional debate over a new "Sixth Republic" -- a political project which has failed to make any significant headway for over 10 years now. France's ongoing erosion of democracy can only be halted with a strengthened parliament, a democratically-anchored head of government, a weaker president and, in general, a much wider distribution of power. Following the events of last week, there can no longer be any doubt that such changes are needed.

The "Cahuzac bomb," as all French newspapers are referring to the affair, has torn additional gaping holes in the political establishment, which can no longer simply be patched up using the old system. A major cabinet reshuffle, which was rumored to be under consideration in Paris on Friday, would only be a small, conventional solution -- and not well suited to tackling this serious crisis.

According to Mediapart, the mood at Elysée Palace is one of pure "panic." For the time being, there are only diverse extremists and populists who are prepared to fill the power vacuum with a political circus and contempt for politics. More difficult times lie ahead for France.

Translated from the German by Paul Cohen
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