JEFF PACHOUD/AFP/Getty Images

Nicolas Sarkozy may be his country’s most unabashedly pro-U.S. leader since Lafayette. France’s assertive new president has promised drastic economic reforms à la Anglo-Américain, and believes he has a mandate for change. He vowed a modernizing “rupture” with French politics during the campaign and said French politicians should emulate Margaret Thatcher and Tony Blair. He speaks often of his admiration for the United States, and his rhetoric of hard work and appeals to the “France that gets up early” is pure Ronald Reagan. Accordingly, his proposals include lower corporate taxes, smaller public sector pensions, and a relaxation of the sacred 35-hour workweek.

Make no mistake, France needs Sarkozy’s medicine—badly. According to the Economist, its growth rate is the slowest of any large European country. Government spending eats up half of gross domestic product—the highest share of the major economies. During the past quarter century, France’s per capita GDP has dropped from seventh to 17th in the world. Unemployment is entrenched around 10 percent nationwide, and it is at least twice as high in the banlieues, the hardscrabble suburbs dominated by marginalized North African immigrants and their descendants.

France’s economic and social problems are serious, but they are not insurmountable—especially if Sarkozy acts as boldly as he talks. No French president since Charles de Gaulle has positioned himself better to make sweeping changes. But don’t count out the French resistance. Sarkozy will soon discover just how ready defenders of the status quo are to take to the barricades in order to stop him.

So what must he do? Lesson One he will draw from Reagan and Thatcher: Tame the public sector unions first. Look for him to start with the transport sector. He can’t get anything done without neutralizing the two major transport unions, so he may as well begin there. If Sarkozy can guarantee minimum train and bus service for two hours in the morning and evening, these unions can no longer exercise a veto by bringing France to its knees during rush hour. How can Sarkozy pull it off, if his predecessor Jacques Chirac couldn’t or didn’t dare? For one, Sarkozy was elected to do exactly this; he’s made his reformist intentions clear all along. (By contrast, Chirac was last elected solely for not being right-winger Jean-Marie Le Pen.) Sarkozy will also have a strong majority in the Assembly after next month’s elections, led by a bruising legislative quarterback in prime minister-to-be François Fillon, a veteran of pension-trimming battles royale.

Once he sidelines the unions, Sarkozy will need to get France’s job engine humming by resurrecting the controversial First Employment Contract (Contrat Première Embauche). Known as the Kleenex contract to its opponents because it makes it possible to “discard” employees, it was announced last year but foundered during two months of student and union protest. Along with allowing companies to grow and shrink with the market, the idea is, if companies could fire workers who didn’t pan out, they might be more willing to hire them in the first place. This change would particularly affect applicants from job-poor banlieues, whom bosses have a good record of being reluctant to hire. Kleenex contracts will really bring them into the streets, but at least by this step, the rest of France will still be able to take the tube. Look for Sarkozy to try to replace France’s 32 different types of working contracts with one. If he takes on the big challenges early—transport unions and labor market liberalization—he gives the economy time to improve before he needs to go to the voters again.

Finally, Sarkozy must survive through September. Public sector pay raises are negotiated in autumn. Sarkozy will be itching for a battle to stare down the CGT (Confédération Générale du Travail), a large Communist trade union that led a general strike in 1995 against former Prime Minister Alain Juppé’s pension reforms, as well as opposition to Fillon’s in 2003. September is also when the nation is back from holiday, which in French logic means it’s time to go on strike. Stakes are high: Chirac’s defeat in Juppé’s 1995 reform effort was the start of his political senescence. Sarkozy believes he will fare better, having already indicated he will replace one out of every two retiring civil servants.

But what of the resistance? Two groups will matter most: the students and the banlieues.

Students are historically the most ardent partisans of any ancien régime. Already, students at Université Paris 1 Panthéon Sorbonne have voted for a general strike and to block off their campus. Some of their more radicalized numbers ran riot on election night, leaving behind 730 burned cars in what is certainly not the last of student unrest. Nor is it their fault, wholly; they’re merely following textbook French economics. In a survey last year of popular undergraduate economics textbooks, the International Herald Tribune found one asking students, “Are there still enough jobs for everyone?” If not, the book says, the state should create them in the public sector. How can Sarkozy neutralize this constituency? Better to learn a lesson from the Maginot Line, and go around: Pass labor reforms over the summer, while students are at the beach.

Then, there are the banlieues. These suburban rings around Paris and other major cities are bleak places, dominated by stark housing projects where every expanse is entrapped by barbed wire. In October 2005, the accidental deaths of two teenagers in Clichy-sous-Bois kindled three weeks of chaos in which 8,973 cars were burned and 2,888 rioters were arrested. Sarkozy, minister of the interior at that time, earned the bitter enmity of many in the banlieues for labeling the rioters “scum.”

Hated though he may be, Sarkozy is ironically the banlieues’ best hope of integration into the French mainstream. First, his tough talk has obscured his earlier record of conciliation. Until 2005, he was carving out a reputation as a mediator with the North African minority, creating a Muslim council for dialogue with the government and calling for relaxing French secular traditions to permit state aid to build mosques (so Muslims need not look abroad for money). He’s likely to appoint his campaign spokeswoman, Rachida Dati, who is of North African descent, to lead the proposed new Ministry of Immigration and National Identity. Second, Sarkozy’s message of moral responsibility and authority resonates in many quarters of the banlieues. And most importantly, Sarkozy’s focus on jobs and growth addresses the banlieues’ main problem: unemployment. Thus, a tough, but fair and hopeful message coupled with a growing economy is Sarkozy’s ticket to rapprochement with the banlieues.

On Sunday, standing in the Place de la Concorde, Sarkozy accepted the presidency of his country’s Fifth Republic. He promised to be “the president of all French” and to restore French pride. If he succeeds, he will be known as France’s Thatcher. If he fails, Peugeot will not be able to the replace all the cars that will burn.