How Yellow Vest Protests Swelled Into Risk for Macron

(Bloomberg) -- What started last November as a grassroots movement against plans to hike gas taxes spiraled into violent protests against the cost of living and French President Emmanuel Macron’s policies and style. After public opinion fell behind the Yellow Vests, Macron announced a stimulus plan for households. He also launched a “Great National Debate” that will go on until mid-March. He aims to channel the anger into a discussion over the future of France. Macron’s gestures have been ridiculed by opposition parties and dismissed as too little too late by protesters. But they did seem to take some steam out of the protests and led to a slight bounce in his approval ratings.

1. What sparked the protests?

The initial discontent focused on plans to raise gas taxes to curb emissions and fund incentives for cleaner cars and home-heating systems. It was a final straw for many in France’s small towns and rural areas, who rely on cars and have seen public services dwindle. An online petition grew into a grassroots movement that used social media to organize local road blockades and other actions. They named themselves after the “gilets jaunes,” or reflective yellow safety vests, that French motorists must have in their cars in case of an emergency. After a first national “Day of Action” on Nov. 17, demands by the loosely affiliated protesters expanded, ranging from raising the minimum wage, increasing retirees’ pensions and restoring the wealth tax to calls by some for Macron to resign. Much of the anger focused on Macron himself. The youngest French leader since Napoleon is seen my many as out of touch with average people.

2. How has Macron responded?

At first his government sought to dismiss the movement. Macron himself didn’t mention it until Dec. 1, the day of the most violent protests that saw rioters deface the Arc de Triomphe. Three days later, the government scrapped the fuel tax. When blockades continued, and another Saturday protest saw an estimated 138,000 people take to the streets, Macron sprung into action. He said he’ll raise the effective minimum wage, abolish taxes on overtime, and get rid of a controversial tax on pensions. He called on French companies to help out by offering employees a tax-free year-end bonus, which many companies did. He also announced three months of “debate” to hear people’s views on where France is headed.

3. Did that calm things down?

Yes and no. The weekly Saturday protests, while still marred by some violence, devolved into smaller gatherings. But they haven’t gone away. The violence and risks to Macron’s government mean the demonstrations continue to dominate headlines in France, giving even the most fringe parts of the movement a national platform. Some Yellow Vests have said they would support things like bringing back the death penalty, which France abolished in 1981, or ending gay marriage, which France has had since 2013. An initiative that gained more traction would allow for referendums to decide laws and state policy, something the government opposes.

4. What’s the national debate all about ?

Macron gets accused of not listening, so now he wants to show that he is. City halls across the country have put out “grievance registers,” where anyone can write what’s bothering them or make suggestions, a tradition dating back to before the 1789 revolution. Town hall meetings will be held across the country to debate a series of issues. On Jan. 14, Macron published a “Letter to the French,” where he laid out the themes of the debate: taxes, ecological transition, democracy, and organization of the state. He also set some limits, such as saying he won’t go back on tax cuts he made at the start of his term, which are intended to make France more attractive to investors.

5. What else can Macron do?

It’s tough to say. The cost of the moves so far will almost certainly see France breach the European Union’s budget deficit ceiling this year. Macron is arguing that the concessions are necessary to maintain public support for his efforts to make the economy more efficient, including reforming unemployment insurance and simplifying France’s retirement systems. The risk is that the debates produce insistent demands for Macron to reverse policies he’s put in place such as limiting the wealth tax or liberalizing the labor law. Or that the debates throw up demands for ruling through referendums, or veer outside the announced themes to discuss the death penalty or gay marriage. If he entertains these demands, he risks opening an even greater social rift in the country. If he rejects them outright, he may further drive home the point he’s out of touch.

6. What’s at stake for Macron?

Macron had bet that by front-loading unpopular, but in his view necessary reforms, the benefits would become clear by the time he faced re-election in 2022. But with his approval ratings near record lows, European parliamentary elections and a series of municipal and regional votes in 2019 and 2020 could shape up as referendums on his policies. Surveys show that many Yellow Vest activists are likely to vote for either Marine Le Pen’s anti-immigrant National Rally or Jean-Luc Melenchon’s far-left France Unbowed. Both party leaders were defeated by Macron in the 2017 presidential election and eye another shot at power. Any breakthroughs by those parties in the May European elections will make it difficult for Macron to push on with his agenda -- for France and beyond.

7. What’s the cost to France?

The Yellow Vests protests hit the French economy just as the government was banking on a rebound from a lackluster growth in most of 2018. Finance Minister Bruno Le Maire called the protests a “catastrophe” and retailers, hotels and restaurants say they will never catch up some of the lost sales. Even if the protests dwindle there are concerns of lasting damage to the France’s image -- tourist reservations in Paris dropped as much as 50 percent at the end of last year compared with the same period of 2017. Still, there may be some upside for the economy. Macron’s measures to boost low incomes with tax cuts could add as much as 0.2 percentage points to growth in 2019, the Bank of France estimates.

8. Why have people supported the Yellow Vests?

France is accustomed to protests. After all, the nation’s identity was formed by the 1789 revolution. The Yellow Vests protests are the fifth of a series of major public uprisings in the past half-century that have helped shape the nation. What’s different this time is that the Yellow Vests lack a central organization, meaning there’s no one to negotiate with. It’s also not clear what “supporting” them really means. Regardless of the protests, most French people would probably say they want more government services and fewer taxes. After peaking at 72 percent in early December, support for the Yellow Vests fell to 57 percent by early January, according to an Ifop poll.

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