Dispatch

Sarko's Romney Problem

As the French election heats up, everyone's playing class warfare.

PARIS — As France's presidential candidates tangle on the campaign trail over how to deal with the country's richest 1 percent, President Nicolas Sarkozy sometimes seems to be squaring off against himself.

His dexterity in reassessing his past words, actions, and policies -- not to mention his penchant for questioning himself and then offering bobbing-and-weaving answers -- can make him come across as a sort of political shadow boxer, swinging at his own ghosts.

One of the campaign's most polarizing issues has involved how much the government should tax the rich and how to get the rich to actually pay what they are supposed to. (French expatriates don't pay income taxes in their homeland, while many wealthy people in France benefit from international tax shelters and loopholes to greatly diminish their tax burden.)

The topic is an awkward one for Sarkozy as it leaves him in a quandary that can seem downright Dickensian. No, not of the huddled masses cast off by industrialization, or a tale of two cities and London's superelite: Sarkozy's Dickensian quandary has more to do with the various spirits of the ever-changing French leader -- the Ghosts of Sarkozy Past, Present, and Future -- a trio that greatly undermines his credibility when he promises to make the rich pay their share.

French voters remember the Ghost of Sarkozy Past as a relentlessly optimistic pre-economic-crisis spirit who fawned over the crème de la crème of French society. He was a man for whom money was a stamp of success that rewarded effort and risk-taking. That Sarkozy emerged from a poor family -- or at least the poorest family in one of France's richest neighborhoods, Neuilly-sur-Seine, on the edge of Paris. As a rising politician, that Sarkozy repeatedly bragged to journalists that he palled around with the rich industrialist owners of their newspapers, magazines, and television shows, perhaps to intimidate them before interviews. (Alain Genestar, the former managing editor of the popular tabloid Paris Match blames Sarkozy for having his friend Arnaud Lagardère, the magazine's billionaire owner, fire him after the publication ran a cover photo of Sarkozy's then-wife Cécilia alongside her lover, Richard Attias.

After his first election in 2007, Sarkozy-Past enjoyed a celebratory vacation on the sumptuous multimillion-dollar 200-foot-long yacht of his billionaire buddy, Vincent Bolloré, off the coast of Malta. Quickly dubbed "President Bling-Bling," Sarkozy's nouveau riche image was consolidated when, in the early months of his presidency, he gave a 10 percent tax break to the country's wealthiest 20,000 people (reducing their total tax burden from 60 percent down to 50 percent and adding to France's burgeoning debt). The president's main justification was not one of trickle-down economics. It was based on a sort of economic morality: All people, even billionaires, should retain at least half their gross income.

This early Sarkozy, who promised the French that they would "work more to earn more" set his own salary at more than $300,000 annually -- a 172 percent raise from the previous president. (His presidential income places him among France's 0.1 percent.) Sarkozy is fond, when it suits him electorally, of telling voters, "I have changed." There was a self-conscious turning point in his first presidential candidacy, when he needed to convince some in his party that he had matured, and again, more recently, as he has tried to persuade the French that he has calmed down and grown into a more de Gaullesque (read: grounded, detached, and judicious) president. The president's communicators and his professional collaborators attribute his latest change to the trial-by-fire nature of the presidency and to the soothing presence of his third wife, Carla Bruni-Sarkozy.

It was around the time that he married the heiress-turned-supermodel-turned-pop star-turned-first lady that the Ghost of Sarkozy Present surfaced. The fashion-savvy Bruni facilitated a style and temperament makeover in a man whose driving ambition, for decades, had involved conquering power. After they met and married during the first year of his presidency, Sarkozy's flashy oversized Rolex watch was replaced with a more elegant and discreet timepiece. His over-the-top aviator sunglasses disappeared altogether. His suits suddenly fit him better and conveyed an easy stylishness. He lost weight, and his jumpiness seemed to calm.

The president also began to socialize in Bruni's artsy cultural circles, which offered him a broader and perhaps more thoughtful perspective on the political world. It surely helped that they chose to live at her expansive bohemian-flavored residence in Paris, rather than amid the stodgy old-power corridors of the Élysée Palace.

While Sarkozy may have traded his worst nouveau riche penchants in for his wife's post-rock-star-groupie, pseudo-bohemian chic, this surely didn't bring him any closer to the struggles of normal French people. The Bruni-Sarkozys are so rich -- he is worth around $3.5 million, while she is estimated to be worth six times more -- that they usually forego holiday stays at the plethora of French presidential retreats in France in favor of her sumptuous vacation home in Cap Nègre on the French Riviera. Although the president has learned to rein in projections of his personal life, it's clearly not in line with Bruni's recent comment to a journalist from the newspaper, Le Monde: "We are modest people," she asserted.

A just-released book by the former editor of Le Monde, Éric Fottorino, offers a window into what the Ghost of Sarkozy Future might look like -- and it can hardly come as a surprise to most French people. According to an excerpt of the book, when the president initiated his massive tax cut for the very rich, he wasn't just sparing them from paying a few billion dollars; he was planning on joining that very elite group. Over lunch in 2008, Sarkozy told Fottorino about his post-presidential plans: "My next status will be 'former president,' and that one will last a long time," the former editor writes. "Then I'll do like Bill [Clinton] or like Tony [Blair]: I will do conferences, and there, I'll stuff myself [with money]."

While Sarkozy can seem ever-changing, one thing seems clear: He has a money problem, at least in a time when polls show the French want a leader who understands and empathizes with normal people's daily challenges and who might genuinely improve their plight. In some ways, Sarkozy's situation is similar to that of Republican front-runner Mitt Romney. In a different electoral cycle, both men might benefit from their relationship to (and clear fascination with) money. But at this moment in history, 1 percent candidates face special challenges.

The French president's main challenger, the Socialist François Hollande, earns just enough to make it into the 1 percent, but as politicians go, he might as well be Mr. Everyman. When other presidents visit industrial sites and put on orange jumpsuits and safety helmets, they tend to resemble strange interlopers or visitors from the boardroom. The schlumpy Hollande invariably looks like just another midlevel employee. After 17 years of conservative presidents and four years after the economic crisis struck France, it is hard to imagine a better moment for such an Everyman candidate.

If current polls are proved correct and Hollande edges out the flashier, more dynamic incumbent, it will be largely because he embodies an alternative to France's growing gap between its have-lots and its have-nots.

On Feb. 27, early in the official campaign, the normally cautious Hollande struck surprisingly hard, promising to transform taxation on the rich. While he would retain what is currently France's top income tax rate of 43 percent for people earning up to 1 million euros ($1.33 million), any annual income earned beyond that threshold would be taxed at 75 percent. (Hollande has since suggested that this would apply to people with a fairly regular income, like CEOs, but that there would be more flexibility for, say, an actor or a pop star who struggled during some years and then had a hit.)

As France's best-paid CEOs and soccer players panicked, Hollande explained that his signature economic populist measure was not aimed at filling government coffers. (He has other measures to do that, such as the suppression of tax shelters, increased levies on banks and oil companies, a return to the pre-Sarkozy-level taxes on accumulated wealth and large inheritances, and equalization of the duties on income and investments.) Hollande has clarified that the 75 percent income tax rate will only bring in between $265 million and $400 million because companies will stop paying their top employees more than $1 million euros annually if three-fourths of the top part of that money goes to the government. If that happens, Hollande said on the economic television show Capital, "I will have reached my goal." (He also suggested that the supertax would be eliminated when the economic situation improved.) Polls found that Hollande's proposal -- which would likely amount to political suicide in the United States -- enjoyed the support of seven in 10 French people.

In a normal election, such a measure might inspire high-paid CEOs to flee abroad, but not this time. While Sarkozy initially responded to Hollande's proposal with denigration, his deft sense of the French electorate quickly led him to prepare his own make-the-rich-pay-their-fair-share proposal. On March 12, the president promised to go after French fiscal exiles -- those French who live outside the country for the "sole purpose" of avoiding their domestic tax burden. (His proposal would require expatriate French people to deduct the taxes that they pay in their country of residence from what they would pay if they resided in France, and to send the difference to the French state regardless of where they live. They could avoid this tax, Sarkozy hinted, by giving up their French citizenship.) He estimates that the measure would bring in about $650 million each year.

But how surreal is it for Sarkozy, who once campaigned as a fairly proud economic free-marketeer (at least by French standards), to be proposing such a measure? The origin of his proposal speaks volumes. The political godfather of the fiscal-exile tax is popular far-left presidential candidate Jean-Luc Mélenchon, who is currently polling around 15 percent in most surveys, which generally put him in third place (ahead of popular far-right candidate Marine Le Pen). Mélenchon, who tends to replace terms like "fiscal exiles" with "tax traitors," recently proposed a 100 percent tax on annual income of more than $475,000. Posters for his Leftist Front coalition of microparties ask (in block capital letters): "TIRED OF PAYING FOR THE RICH? US, TOO!"

Unsurprisingly, Hollande quickly one-upped Sarkozy. In an interview on the France 2 television channel on March 15, Hollande promised to make some rich French tax exiles pay a wealth tax (as well as the income tax beyond borders), and he offered a framework that sounds much more doable.

The president's proposals are notably vague, leading to skepticism about whether he really intends to enact them. Sarkozy hasn't clearly explained how French authorities would sort through the cases of 2 million French expatriates around the world and decide which ones have legitimate reasons to live abroad versus those whose sole purpose is tax avoidance. Beyond that, the president's proposal would require rewriting more than 100 complex bilateral tax agreements that could run into all sorts of obstacles and time delays.

Holland's plan aims to rewrite bilateral agreements with three French-speaking low-tax countries on France's borders where the largest numbers of rich French expatriates live: Switzerland, Luxembourg, and Belgium. It remains to be seen what these low-tax countries might demand of France to change the agreements. (For good measure, Hollande has also pledged to reduce the salary of the president and his ministers by 30 percent.)

Ultimately, amid the various promises and estimates, it remains unclear what tax policies France will actually end up with after the May 6 runoff election. Given the debt pressures, the next president is all but certain to offer a combination of increased taxes and substantially reduced spending in the coming years. (Sarkozy has promised to eliminate France's government deficit by 2016, while Hollande says that he would take another year.) The question, given the absence of dynamic economic growth, is really about how either would mete out the pain, and to whom.

But unlike in the United States, the debate here is more flexible. The Republican Party's near-sacred argument that rich people's taxes should almost never be increased, a line of political reasoning that hinges on poorer Americans' support (often in the mistaken belief that they, too, will get rich), isn't particularly convincing to the French.

This is in part because France's economic escalator often seems to break down, and partly due to a cultural aversion to sacrificing the French quality of life to a life-consuming goal of making money. In a sense, French people tend to enjoy certain things that they can do with money, but they rarely have the more American fascination with money for its own sake.

But there are a fairly small number of people in France who do have a more American perspective around money and wealth. The best known of them happens to be France's current president. And that explains why, unless he can banish the ghosts that haunt his reelection effort, his time in the presidential palace could be coming to an end.

Patrick Aventurier/Getty Images

Dispatch

The Stay at Home Scots

When you’ve got whisky, why do you need an army?

Read the first part of the series here.  

GLASGOW & ELGIN, Scotland – People-watching on a freezing Sunday afternoon in February outside a Glasgow shopping center is a surprisingly appropriate place to ponder the foreign and defense policy of a future independent Scotland. Most passersby just want to get out of the rain, but a small group of noisy Syrians and other Arabs were dancing around and calling people's attention to the plight of their people. 

Propped against the wall was a placard reading "Russia & China: Stop Supporting the KILLER." Some of the protesters were waving a large Syrian revolutionary flag; one had wrapped herself in a Scottish flag. It was a little hard to work out exactly what they wanted: NATO intervention, like in Libya last year, or Britain to stay out of Syria? It must be the former, as the only ones with the anti-imperialist war leaflets appear to be Scots skulking about on the margins.

To intervene or not to intervene: that is the issue that has exercised Scots, just as it has everyone else, for years. Alex Salmond, Scotland's first minister and the leader of the pro-independence Scottish National Party (SNP) famously denounced NATO's intervention in Kosovo in 1999 as "unpardonable folly." The unpopular war in Iraq, which the SNP called "illegal," also boosted the party's fortunes; since 2007 it has been the largest political party in the Scottish Parliament.

Libya remains a delicate topic here. In Scotland, the Libyan war -- in a political sense, at least -- began almost three years ago when the Scottish Government released Abdelbaset al-Megrahi, convicted for his part in the 1988 Lockerbie bombing of Pan Am 103, which claimed 270 lives. Diagnosed with cancer and said to have only three months to live, he was set free in 2009 on compassionate grounds after serving only eight and a half years of a life sentence. The United States was furious. When al-Megrahi arrived home in Tripoli, grateful crowds waved the Scottish flag. He is still alive, if not well. So when it came to bombing Libya last year, the SNP had no qualms. It gave the action its full support (but pointed out that this had been sanctioned by the United Nations).

A line can be drawn from the Libyan sands all the way to the question of Scottish independence and what that means for Scotland's ability to participate in foreign conflicts. Angus Robertson, the SNP's spokesman on defense and foreign affairs, has two air force bases -- Kinloss and Lossiemouth -- in his constituency of Moray which were recently threatened by defense cuts. After the Libya bombing commenced, he said: "If ever there was to be an argument against their closure we've had it in the last few days." The Royal Air Force (RAF) said that planes and crews from Lossiemouth had been at the "forefront" of the NATO campaign.

Moray is a more than four hour drive northeast of gritty Glasgow. Elgin, the main town -- which sits some 20 minutes drive from the sea -- has a typical British high street with all the same familiar shops. Inside the bustling Starbucks, a heavily tattooed couple drink coffee as their child waits patiently. Swirling blue designs cover half the man's face, reminiscent of the famously tattooed Pictish warriors of ancient Scotland. A nearby church has been converted into a Tandoori restaurant, and there is a British Army recruiting office off the high street.

The big news in February in the Northern Scot was standard fare for a local newspaper: Elgin museum's Peruvian mummy and its Ecuadorian shrunken head have been sent to "undergo craniofacial reconstruction -- providing a fascinating glimpse of how they would have appeared." But beginning in 2010, the paper mobilized thousands of people to save the base at Lossiemouth, threatened by British defense cuts. Closure of the bases, says editor Mike Collins, "didn't bear thinking about" -- meaning that losing 8 percent of all local civilian employment in the area would have been a disaster.

So Collins and other activists organized a protest in November 2010; 7,000 people turned out -- a huge number for a tiny place. The leaders of the protest movement then took a petition to London and, with pipers piping, presented it at Downing Street, and later secured a meeting with Prime Minister David Cameron. "He knew about the campaign. He would have been blind and deaf not to have been aware of it by then," says Collins. Kinloss is now being handed over to the army but Lossiemouth will remain with the RAF. It represents more than a victory, explains Collins, as the odds of even saving one base were stacked against them.

But if Scotland votes for independence in 2014, both the RAF and the British Army will leave for good, taking the jobs with them, unless the SNP manages some special agreement or a newly created Scottish military take the bases over. For now, though, the issue of independence has not really become the topic of debate, says Collins: Locals are more interested in writing to the paper about wind turbines, which many loathe, and, he sighs, issues like "dog poo" on city streets. Still, he thinks as the independence vote looms, it will become the main topic of conversation. "A lot of people are still undecided ... it could have huge consequences."

Graham Leadbitter, a local SNP councillor, insists that independence would not mean the closure of the bases. A new Scottish military would take them over and besides, he says, they would be adapted to Scottish needs. Across town, Conservative councillor Allan Wright scoffs. Like almost all members of his party, he is against independence. If it comes, the bases could just be "whisked away," he says, adding that it's "la-la land" to imagine that they would stay and continue to provide so many jobs. "We could never afford it."

Not all Elgin businesses depend on the bases, though. A few minutes drive from the town center sits the Glen Moray whisky distillery. It employs 19 people and sells half of what it produces in the U.K. -- the rest in Germany, France, and North America, says Iain Allan, the distillery's visitor center manager.

"Everything is going wonderfully," he says, showing off the cavernous warehouses filled with casks of whisky. "We have expanded by 50 percent this year and we are planning another 50 percent."  Soaring demand from Russia, India and China especially has brought capacity out of mothballs across Scotland. When it comes to independence though, Allan is somewhat non-committal. After all, he says, Germans and others would still drink Scotch whether Scotland becomes independent or not.

Back in Elgin, I seek out the local archivist Graeme Wilson, the unofficial sage of the region, who launches into a tale of a poltergeist, which then disappeared after workmen removed skeletons from its high street haunt. Turning to the bases, he says that in the 1950s and 1960s "there was trouble over girls," but now the soldiers live inside the local communities. "There is no fighting with your neighbor who has just helped fix your car." The sage of Elgin seems relaxed about independence. "If there is independence," he says, "it will take some time to work things out. It won't happen overnight. People are not thinking about it yet." Then he sits back and says: "Mañana is a great word!"

Derek Blair/AFP/Getty Images