FORUM Finance

Jan 16 2019

Global Forecast for the period 2019–2024 for Western Europe

FORECAST FOR GREAT BRITAIN IN CONDITIONS BREXIT

 At turning points, history accelerates its course, events follow one after another, subjective factors are interspersed with objective tendencies, and historical regularity “breaks through” through chance. In Britain, not only foreign policy, but also domestic political life in 2019 and for years to come will be determined by Brexit in any of its versions. Uncertainty is the main condition of the UK in the economy, in domestic and foreign policy.

 The mutual influence of external and internal factors will have an impact on the economic development of the country. Accordingly, distinguishing them in the analysis is a complex task. Thus, objectively, Britain traded with the EU with a deficit, and part of the establishment was always unhappy with the loss of a share of parliamentary sovereignty in favor of the supranational bodies of the EU. However, the referendum on the country’s membership in the EU (2016), perhaps, was the subjective error of Prime Minister D. Cameron as a result of intraparty disagreements. The government failed to convince the nation of the benefits of EU membership. The split over relations with the EU now permeates the whole society, especially the Tory party.

Economic situation

 Projections of the growth rate of the British economy for 2019 from leading IFIs (OECD, IMF, UN), the Bank of England, consulting companies and think tanks differ (from 1.1 to 1.8%). While the British Department of Budget Responsibility raised its forecasts for 2019 and 2020, economic growth will not reach the level that was observed before the referendum until 2023 [1]. The IMF predicts growth in the eurozone to 1.9% in 2019 [2] Given that the IMF predicts a slowdown in global economic growth, it seems difficult to separate the influence of Brexit from the general state of the global economic environment.

 Forecasts for Britain until 2024 are of an indefinite nature. The referendum, economists say, affected the prospects for the development of the economy, and GDP is growing more slowly than predicted before the referendum. In general, forecasts of the state of the British economy for the coming years (up to 2030) suggest a decrease in growth rates regardless of Brexit options.

Internal policy

 In Britain itself, the objectivity of forecasts comes up against the subjective preferences of supporters (bremeiners) and opponents (brexiters) of Britain’s membership in the EU. Thus, the Chancellor of the Treasury F. Hammond (Bremainer) believed that in case of withdrawal without a deal (and switching to WTO rules), the slowdown in economic growth will affect the decline in state revenues. As a result, by 2033/2034 fiscal year, government borrowing will increase by 80 billion f. Art. annually, and GDP growth over 15 years will be 7.7% lower. The government has already abandoned the measures of ‘austerity’ and the task of balancing the budget by 2020, set back under D. Cameron. The Treasury was also preparing for additional financing of key ministries in the event of withdrawal from the EU without a deal [4].

 The government in October 2018 submitted a budget for the 2019/2020 fiscal year (starts in April), marking the end of ‘austerity’ and increasing social spending. It was still to be approved by the Parliament, but the change in the economic course of the state is important. The promised economic growth of 1.6% in 2019, a one-time increase in social spending, tax cuts, and not so much for the poor, but for people with average incomes; the growth of the minimum and hourly wages [5]. Theresa May promised to provide the NHS with 20 billion f. Art. over the next 5 years. Hammond also announced additional expenses of £ 1 billion. Art. on cybersecurity and the modernization of the Trident nuclear system.

The Minister of Finance warned that in the event of withdrawal from the EU without a deal, Britain would have to deal with the problem of importing food, medicine and air traffic. The budget will have to be revised (since there will be no transition period of 21 months), as well as economic development forecasts. On the other hand, the budget was drawn up on the basis of a transition period of 24 rather than 21 months, which may indicate T. May’s plans to extend it due to the unresolved issue of the Irish border [6]. If the situation changes, the government will have to either increase government debt or raise taxes. It seems that the government of T. May, abandoning the ‘austerity’, creates a ‘safety cushion’ in case of new early elections.

 Indeed, the terms of the Agreement on the withdrawal of the United Kingdom from the EU and the Political Declaration on Future Relations [7] of November 25, 2018 caused a rejection in Britain. However, the concessions made to Britain in negotiations with the EU were objective in nature (for example, along the Irish border) and did not depend on the prime minister’s personality. Even before the parliamentary vote (December 2018), it was obvious that the government would not succeed in securing its approval: the Brikziters and Bremeiners were also dissatisfied with the documents. Further developments could go in several ways:

– re-vote on the agreement in parliament after 21 days;

 – exit from the EU without a deal;

 – “agreed” exit without a deal (‘negotiated no deal’ – with the consent of the European Union, Britain leaves the EU after a year without a deal);

 – a repeated referendum (possible with the approval of the Parliament, if the government introduces such a bill, but the government is categorically ‘against’, fearing that the opposition in the country will escalate) [8];

 – EU membership (in case of a positive outcome of a repeated referendum);

 – early elections (in the expression of no confidence in the government);

 – The resignation of T. May from the post of party leader and, accordingly, the prime minister (if 158 deputies of the Tory faction express confidence in her), the election of a new leader (becomes prime minister).

 These options imply a postponement of the exit of Britain from the EU to a later date (if the parliament passes the new law, and the EU agrees).

 Other options have appeared – the formation of a minority Labor government without elections or a national (coalition) Labor government and conservatives (in the likeness of the national J. Macdonald government 1931–1935).

Under these conditions, the likelihood of the second referendum on the independence of Scotland, the majority in which favored British membership in the EU, remains. On the other hand, relations with Gibraltar over Gibraltar have not been settled and the problem of the Irish border may be exacerbated. Thus, the territorial unity of the United Kingdom is being tested.

 In the UK, political turbulence is at its apogee. Both the general public and the elite are split along the vertical axis of the political spectrum (into brikziters and bremeiners), almost forgetting about the classical opposition along its horizontal axis (right – left).

 The country has not formed the opinion of a significant majority of any of the options for Brexit. Moreover, the British do not see in any of the leading political figures a nationwide figure capable of making an alternative to T. May (has the lowest negative rating) [9].

 The Prime Minister excludes both the second referendum on Britain’s relations with the EU, and new early elections. However, a stalemate in parliament can provoke them. Considering that the popularity ratings of Tory and Labor are within the bounds of statistical error, the conservatives are not guaranteed the outcome of possible early elections (next in 2022), especially since the electorate perceives the Tory party as more split than Labor, and the split parties do not win elections.

Foreign policyrn  rn Britain’s trade and economic policy will depend on solving problems in relations with the EU. In the event of a withdrawal without a transaction, Britain will have to re-establish all individual commitments under the WTO, both for duties and services, and for tariff quotas, as well as negotiate with all WTO members – as if London joined the trade organization again [10 ].

 Britain expects to conclude a trade agreement with the United States, as well as strengthen bilateral military-political relations. However, before the parliamentary vote on the Agreement with the EU, US President D. Trump, undermining T. May’s position, said that the British agreement with the EU would not allow it to conclude a trade agreement with the United States [11]. Note that the United Kingdom was interested in Washington as a member of the EU. Probably the “special relationship” will suffer as a result of Brexit.

 The main task of London in relations with Brussels in post-Brexit is to participate in its foreign and defense policy, in particular in the “European army”, the very idea of ​​which London opposed, being a member of it. In the field of defense and military-technical cooperation, London’s actions were and will be aimed at strengthening ties with individual European countries. So, agreements have already been reached with Poland, and with the countries of Northern Europe (including neutral Sweden and Finland) about their participation in the United Kingdom Expeditionary Force. The United Kingdom, even when leaving the EU, tried to expand its presence in the Western Balkans, whose accession to the EU and NATO is facilitating.

 Britain intends to maintain its position in NATO and even increase its defense spending up to 3% per year, which Washington calls for.

 London in the light of Brexit put forward the concept of “Global Britain”, hoping to conclude trade agreements with China, as well as with the countries of the Commonwealth of Nations (including India) after leaving the EU, sharply activating foreign policy in the African and Asian areas and using development assistance (0.7 % GNI) to strengthen its political influence.

 Britain comes out with harsh anti-Russian rhetoric, trying to raise its prestige in the international arena, and joins in countering the perceived Russian threat of EU partners [12] and NATO, as well as international organizations, shaping Russia’s image as an outcast country and in the UN Security Council. Probably, the policy of Britain in relation to Russia will not change under any conservative government. Improving Russian-British relations is possible under the Labor government and under certain conditions [13].

GERMANY IN SEARCH OF NEW IDEAL INSTALLATIONS

 Domestic political trendsrn  

 In February 2018, largely thanks to the talent of A. Merkel to reach a compromise in the most difficult situations, a coalition agreement was agreed between the CDU / CSU and the SPD. After its approval by the baseline of the Social Democrats (the youth wing was against), the Bundestag, on the recommendation of the federal president, voted for the new government. The agreement in mid-March entered into force. At the same time, the majority of Christian Democrats were dissatisfied with the substantial concessions that A. Merkel made to her partners in the party bloc (migration quotas) and social democrats (posts of ministers of foreign affairs and finance). During the year, a number of conflict situations arose that could lead to the collapse of the Grand Coalition. In late May – early July, the Minister of Internal Affairs for Construction and the Homeland, the Chairman of the CSU, H. Seehofer, presented the Master Plan for Migration. The Chancellor expressed her fundamental disagreement with paragraph 27, which contained a provision for the immediate expulsion of those who applied for refugee status in another EU country and who were trying to cross the border with Germany. From her point of view, this contradicted the fundamental European values ​​and interests of the partner countries that host the main stream of illegal immigrants. After a long debate, the coalition partners reached a compromise.

 Opposition parties took advantage of discord between coalition partners. Continuing the personal criticism of A. Merkel for her mistakes in migration policy made in 2015, the Free Democrats expressed their readiness to return to the discussion of the possible Jamaican coalition, provided that it is without the current federal chancellor. The greens did not raise objections against this scenario.rn  rn During the year, the rating of people’s parties constantly decreased (especially the SPD). Among other things, this was reflected in the minimum votes obtained by them at the elections in Bavaria and Hesse in October 2018. On the contrary, the rating of small parties, first of all, “Alternatives for Germany”, increased both at the federal and regional levels. ‘AdG’ is now represented in all land parliaments. The party is trying to become a “handshake”, often speaking with conservative initiatives in the Landtag and the Bundestag, which “have to” support other factions.

The crisis of people’s parties – the union of the CDU / CSU and the SPD will continue. Their leadership will continue to be in search of new ideological attitudes, inner-party discussions will be intensified. An important role in this belongs to the youth organizations of the parties. Young social democrats are especially critical. It is possible to win the former trust of the electorate only through a radical renewal of the leadership (new, and at the same time charismatic leaders are needed) and the search for new mechanisms of interaction with various groups of voters.rn  rn At the beginning of December 2018, the federal congress of the CDU will be held, at which they will elect a new party chairman. A. Merkel will no longer hold this post. In late October, she announced that she was refusing this post. Moreover, there will no longer be a candidate for the post of federal chancellor and the Bundestag will take part in the elections. The decision is largely due to the need to consolidate the ranks of the party and the end of intra-party squabbles. A high probability of leaving the post of chairman exists in A. Nales (SPD). H. Seehofer (CSU) in mid-November has already made such a decision.

 The main question in 2019: will A. Merkel be able to save the Grand Coalition? This will depend on the outcome of the CDU party convention (who will be the chairman, whether its members will support the decision of the chancellor to be the head of government until 2021), and on the current events of next year. In any case, A. Merkel will do everything possible to preserve the coalition during the current legislative period. Both the CSU and the SPD are interested in this. However, during 2019, regular conflicts within the government are not excluded, which may lead to the reformatting of its party composition or extraordinary elections.

 If there are no early elections to the Bundestag (the probability is substantially higher than zero), then the next voter will manifest itself in September 2021. There will not be a big coalition. The main chances to form a government remain with the CDU / CSU, the Green / Soyuz-90 party and the FDP. The federal parliament will continue to be a seven-party one, where Alternative can remain the main opposition force (today it is ahead of the Social Democrats rating). In subsequent legislative periods (since 2025), the emergence of new coalition options is possible. The appearance of new small small lots is unlikely. In any case, these will be governments that will operate in the conditions of compromise agreements and the growth of populist sentiments. This will limit the possibilities for further social and economic reforms, the need for which in the medium term in Germany will continue.

Economyrn  

 In 2018, the main task was to preserve and increase the competitiveness of the German economic, political, socio-economic, cultural and historical space (standort). First of all, this refers to the processes of digital transformation of the economy of Germany – the main priority of coalition governments since 2013. Taking the first place in innovation potential (the number of registered patents and the number of scientific publications) [1], the country still remains average in its implementation i.e. in innovative development. [2] One of the problems is the underdeveloped digital infrastructure. No particular success was achieved during 2018. These tasks are transferred to the next six years.

 The main priorities are still the reform of the energy sector (“energy shift”). The task of complete exit from nuclear energy, reducing the share of coal-fired power plants, increasing the share of renewable energy sources remains. Demand for natural gas, incl. Russian, will increase. The concept of energy transformation will gradually lose the support of the electorate. In subsequent years, the state will be forced to somewhat soften its approaches, shifting the center of gravity to the development of the network economy and the introduction of digital technologies.

 Projections of GDP growth by the end of 2018 decreased from 2.2 to 1.6-1.8%. In 2019, about the same increase is expected. [3] It is obvious that by 2024 it is unlikely to exceed the two percent mark [4]. The main reason is the decline in external demand due to increased protectionist tendencies in world trade, the growing uncertainty of German companies in the prospects for foreign economic relations with the United States and China, and the unpredictability of Brexit. This implies the task of maintaining domestic demand in subsequent years.

 In 2018, another employment record was reached (44.9 million) and minimal unemployment (2.35 million), which, along with the high number of migrants receiving government support, contributes to the high demand of households. In 2019, these levels will be a record 45.2 million and 2.24 million. It is possible that, starting from 2021, as a result of the decline in global market conditions and the further introduction of digital technologies, these indicators will somewhat deteriorate. At the same time, expert calculations indicate that the contribution of digitalization to reducing the number of jobs will be minimal. The migration policy based on the principle of “carrot and carrot” (“Fördern und fordern”) will continue. Persons who do not receive refugee status or violate laws will increasingly be expelled from the country. The number of expelled will increase (now an average is 25 thousand per year). The rest will be integrated – for this, the state has created an effective infrastructure to support persons who have received refugee status, including in the field of vocational training.

Foreign policyrn European Unionrn  

 The main vector of the foreign policy of Germany remains the countries of the European Union and their closest circle. In subsequent years, the strengthening of the Franco-German axis, begun in 2018, will continue as the basis for EU reform and improvement of its mechanisms. Reforms, largely based on the ideas of European values ​​and shared responsibility, will face the resistance of individual countries and their groups, primarily the Visegrad Group. One obstacle is the growing right-wing populism and Euroskepticism. The continuation of this trend can be judged by the results of elections to the European Parliament in May 2019. The CDU will make every effort to win the European People’s Party faction and appoint its party member Manfred Weber to the post of European Commission.

 Germany is a state striving for a joint solution to the migration crisis, both in terms of protecting the external borders of the EU, and in the context of locating citizens who have applied for refugee status in the European Union. The problem of such migrants in the next five years will remain a stumbling block in Berlin’s relations with other European capitals.

 As before, the most difficult partner of Germany is and will be Poland. Without changes in the Polish political leadership, ready to do everything so that Poland took the place of Britain as the main European skeptic, no rapprochement in relations should be expected. No clarity with Brexit. By the end of 2018, more variables appeared than constants in this process. In any case, the UK will remain one of the main foreign and foreign economic partners of Germany until 2024.

 Germany will continue to strengthen PESCO, mainly through cooperation with France. The likelihood of the emergence of actually operating European military-political structures (although many Russian experts disagree with this provision) will gradually increase. Berlin, like Paris, is interested in the further growth of relative foreign and military-political independence and strengthening the international responsibility of the EU (but in the context of the transatlantic commitments of Germany and France as the main European members of NATO). Germany will also continue its efforts to obtain permanent member status of the UN Security Council.

 USA

 The transatlantic vector of Germany in 2018 was influenced by President Trump’s hard line on fulfilling his campaign promises and using foreign policy tools to achieve domestic policy goals, including in the context of the November mid-term elections to the American Congress. Berlin was disappointed by the introduction of sanctions against Russia, which are extraterritorial in accordance with the Law of August 2, 2017 (CAATSA) at the beginning of April 2018, by the US withdrawal from the nuclear deal with Iran in May and return interests of German and European business, as well as the application of protective duties on European steel and aluminum. Berlin was even more disappointed in the refusal of D. Trump to meet the personal requests of A. Merkel and E. Macron in the matter of finding compromise solutions on the specified topics. An additional disappointment for Germany was the withdrawal of the United States from the INF Treaty, in connection with which the risks of a new arms race increased dramatically, and, accordingly, the risk of a military conflict in the EU countries increased.

 It is obvious that in 2019 and in the following years the situation will not change. The American administration has come to taste as part of the implementation of the “America First” policy. Germany and France, while remaining loyal to the principles of Euro-Atlantic solidarity, as EU leaders, will not have any opportunity to influence the behavior pattern of the United States.

Russia

 In 2018, the process of improving Russian-German cooperation continued. The turning point in relations after spring 2014 was the meeting of V.V. Putin and A. Merkel May 2, 2017 in Sochi. From this date, the working dialogue was divided into two parts – the formal-official (open) and the informal-trust (closed). The parties clearly identified the dividing lines (Crimea, South-East of Ukraine, human rights, freedom of the press) and began to actively look for common ground and ways to solve existing problems. From May to November, in a variety of formats, a number of substantive working meetings took place at the level of leaders and ministers of our countries. The main international themes were Syria (certain opportunities for cooperation in restoring civilian infrastructure), Ukraine (attempts to move the situation in the south-east of the country from a dead end, including through the implementation of the initiative with the UN peacekeeping mission), Iran (preservation of the nuclear deal, Syrian conflict), countering US extraterritorial sanctions (especially as part of the implementation of the Nord Stream – 2 project, Germany has confirmed its readiness to continue to import Russian hydrocarbons and ozhnostey protect the interests of its business from US sanctions pressure). They discussed issues of economic cooperation, which is gradually recovering after the crisis years (the growth in 2017 of mutual deliveries of goods and services, the continuation of German direct investments, the opening of new industries in Russian regions, success in industrial cooperation and localization, new chances and opportunities for interaction between small and medium-sized businesses, as well as Russian regions with western and eastern federal states). Good prospects remain for humanitarian cooperation. In mid-September in Berlin, the results of the cross Year of municipal and regional partnerships were summed up. In November, the start of a joint Year of scientific and educational cooperation should be launched. In Germany in 2019 will be held ‘Russian Seasons’.

 Germany became the main EU country, with which the Kremlin during 2018. reached the highest level of mutual understanding. This was an important achievement against the background of Russia’s sharply aggravated relations with the collective West since March 2018, when the red lines disappeared because of tough and unreasonable claims / accusations of the United States and Great Britain and the level of mutual trust turned out to be very low. Formally supporting the position of its Western partners, Berlin managed to maintain a meaningful dialogue with Moscow. In many ways, this is the merit of A. Merkel and her office.

 In the case of the preservation of the coalition led by the Federal Chancellor until 2021, an effective working dialogue will continue. The attempts of Poland, the United States, Great Britain will continue to prevent him or translate him into a confrontational course. But they will not succeed. Its content will increase the share of international components – Berlin is interested in joint initiatives with Moscow and their subsequent implementation in practice. After September 2021, some cooling of relations is possible, due to the position of the future government team, which will include green and free Democrats. It will be short-lived and constructive will once again prevail in the dialogue, which will continue until 2024. As before, various discussion platforms, whose active participants are the IMC and the Institute of Europe of the Russian Academy of Sciences, will play an important role.

 Under any variants of the development of events in the FRG in subsequent years, it will remain the main western and European partner of Russia – both in the foreign policy sphere and in the economy, cultural and humanitarian field and civil dialogue.

FRANCE: RESULTS AND PROSPECTS OF THE PRESIDENCY OF EMMANUEL MACRO

 The development of the French economy, the evolution of its domestic and foreign policy in the medium term is largely dependent on the results of a large-scale reform program, which the current President E. Macron has embarked on.

 We are talking about breaking with the socio-economic model prevailing in France after World War II. Its features were the active role of the state in the redistribution of financial flows (54% of GDP pass through the budget), strict administrative regulation of market and labor relations, a very advanced, but unprofitable redistributive social protection system [1].

 If in the first post-war decades this neo-Keynesian model justified itself, now it is, according to the conviction of most representatives of the French business community (“patronage”), does not correspond to the realities of the 21st century globalized world. Signs of this are low growth (1.7% in 2018), chronic budget deficits (81.3 billion euros – 2.8% of GDP) and the trade balance, a swelling of public debt (98.6% of GDP), capital flight and production abroad due to high taxes, mass unemployment (9.1% of the working population) [2].

 During the year and a half of E. Macron’s power, the government appointed by him E. Philip held through Parliament 77 major bills, on the basis of which the labor code, primary, secondary and higher education systems were radically revised, measures to combat corruption, terrorism and asylum rules were tightened to immigrants. The next turn will be radical reforms of the civil service, pensions, vocational training, unemployment insurance.

 All these radical transformations became possible thanks to a combination of two factors – the further strengthening of the power vertical of the regime of the Fifth Republic, the top of which is the president, and the change of its former party-political system.

 In the highest echelons of power, the positions of people from bureaucracy, business circles and the technocratic elite, exemplified by the head of state (former financial inspector, investment banker, minister of economics) and government staff E. Philippe, have noticeably strengthened. The planned revision of the current 1958 Constitution further enhances the role of the executive at the expense of the legislature, which was originally incorporated into the regime of the Fifth Republic by its founder, General de Gaulle 60 years ago. It provides for a reduction by one third of the number of deputies and senators, as well as limiting the scope of their legislative functions.

In the presidential and parliamentary elections of 2017, both moderate system parties — right-wing Republicans and left-wing socialists, who succeeded in power over the past decades, suffered a crushing defeat, questioning their existence. Thus, three generations of the traditional political elite, discredited by economic stagnation and corruption scandals, are swept away from the political arena.

 As a result, the former bipolar party system was replaced by the undivided hegemony of the new centrist (“left and right”) party “Forward, Republic!”, Created by E. Macron during the 2016–2017 election campaign. She received an absolute majority in the lower house of parliament – the National Assembly – 313 seats, and with the party centrist members of the Modern Democracy Party – MODEM and defectors from the left and right oppositions – 350–360 of 577 seats. Having neither political experience nor strong positions on the ground, they disciplinedly support the government and the president, to whom they owe their election.

 At first glance, it may seem that E. Macron’s position and the continuation of the reforms begun by him until the next presidential and parliamentary elections in 2022 are not in danger. Opposition from the populist movements on the extreme flanks of the political spectrum – the leftist “Unconquered France” J.-L. Melanshona and the ultra-right “National Association” (formerly “National Front”) M. Le Pen, who, according to survey data, are supported by 10–11% and 25–30% of the protest electorate, respectively, are deeply divided, which obviously excludes their tactical coalition sample of Italy. At the same time, the remnants of the former system parties (the Republicans and especially the socialists) are still far from recovering from the defeat and are, in fact, out of the game.

 However, the sustainability of the current system should not be exaggerated. The president’s hopes of improving the situation on world markets have not yet come true, and therefore the results of the reforms carried out within the country make them wait. The main macroeconomic indicators of France in 2018 (growth rates, deficits, national debt, unemployment) remain without noticeable changes for the better.

 Meanwhile, the benefits of the reforms and their price are clearly unevenly distributed. The greatest benefits from the revision of fiscal policy (abolition of tax on large states, reduction of income tax by 20 billion euros, etc.) and the Labor Code, which significantly curtailed the rights of trade unions, were obtained by entrepreneurs, as well as top and middle managers, individuals the liberal professions, the intelligentsia of large urban centers, which successfully fit into the processes of globalization and European integration. It is among these privileged categories (upper middle class) that make up the “nuclear” electorate of the Presidential party “Forward, Republic!” (24% of voters in the first round of the presidential election of 2017) that its postmodern, liberal-globalist discourse finds the greatest understanding and support.

 At the same time, the inevitable costs of breaking with the previous model against the background of low economic growth have now to be borne by numerous socially vulnerable groups of the population – pensioners, workers, farmers, ordinary civil servants, students, especially in small cities and rural areas of depressed regions of the Northeast. Southeast, Central Mass, experiencing a deep structural break of the outgoing traditional industries and agriculture.

Until recently, attempts by disgruntled people to protest with traditional “direct action” forms of France — strikes and mass street demonstrations — did not receive wide scope given the mass unemployment and the split of the trade union movement into radicals and reformists. However, now the situation is changing: on November 17, 2018, the streets and roads of France were blocked by 382 thousand activists in yellow vests who oppose rising prices for gasoline and diesel fuel. This spontaneous movement was not organized by any party or trade union and continued for the following days. He was joined by students, college students, ambulance drivers, nurses and other health care personnel. The authorities’ references to the need for measures taken for environmental reasons did not have an effect.

 Every following Saturday, the “yellow vests” movement became more and more widespread, developing into a national socio-political crisis. Extremists of the extreme right and left-wing were infiltrated into the ranks of the demonstrators, as well as criminal elements from dysfunctional suburbs who smashed urban infrastructure, built barricades, burned cars, plundered shops and restaurants. The forces of law and order – the police and gendarmerie – hardly kept control of the situation. The number of detainees and wounded on both sides exceeded several hundred people. Attempts by the government to establish a dialogue with the protesters did not give convincing results. On December 10, President E. Macron addressed the nation on television, promising to adjust the means to achieve his goals of modernizing the country, taking into account its social problems.

 This crisis was not accidental. The political stability of the “neo-partisan” vertical of power is undermined by the marginalization of the intermediate links between the state and society — the elected bodies of local self-government. Municipal, departmental regional councils, mayors of 36 thousand large and small communes do not want to put up with the emasculation of their powers and the reduction of funds by the centralized administrative bureaucracy. The expression of their discontent is the upper house of parliament – the Senate, where the Presidential party “Forward, Republic!” Remains in the minority [3].

 The same applies to hundreds of thousands of non-partisan civil society organizations – professional, cultural, religious, environmental, human rights, and so on. Although in preparing for reforms, the authorities are trying to relieve themselves of the responsibility of organizing a dialogue between social partners, in particular, entrepreneurs and trade unions, in fact the last the word remains with the government, which relies on the “obedient” majority of deputies in the National Assembly.

 Dissatisfaction with the lower ranks is reflected in the steady decline in the president’s ratings: if immediately after the election of E. Macron in May 2017, 63% of respondents expressed confidence and support during the polls, in October 2018, only 29%. This is noticeably lower than in the respective periods of the first mandates of both his predecessors, N. Sarkozy and F. Hollande, who could not be re-elected for a second 5-year term.

 The sensitive damage to the image of E. Macron is also caused by the overly self-confident, arrogant demeanor of the young ambitious head of state, which brought him the unflattering nickname of “the president of the rich”. He himself has to admit that he could not overcome the citizens’ distrust of those in power.

 A symptom of the narrowing of mass support for the regime and related conflicts in the upper echelon of power was the forced reorganization of the cabinet of E. Philippe, conducted by the president in connection with the demonstrative resignation of two key ministers – the environmental transit of N. Hulot and the interior of Jean Colon [4].

Moreover, the latter occupied a special place in E. Macron’s entourage – he was the first of the leaders of the then social party that actively supported the then unknown candidate during the 2017 presidential campaign and contributed to his victory. The immediate reason for his departure was a scandal in connection with the illegal actions of the personal security guard of President A. Benalla, because of which the minister had to defend himself before the parliamentary commission of inquiry.

 The departure of both vice-premiers reflects the crisis in the president’s relations with local governments and NGOs – Jean Colon was the mayor of Lyon and decided to return to his hometown, and N. Hulot is a kind of icon of environmentalists.

 Changes in the composition of the government remained limited – 18 out of 22 ministers headed by the prime minister remained in their places, 6 changed posts and 8 were appointed for the first time. In his address to the nation, the president declared that there would be no political reassessment. At the same time, he was forced to promise to reckon with local governments – to soften the “Jacobin” centralization in favor of the province, and the draft constitutional audit included expanding the powers of the advisory Economic, Social and Environmental Council (ESES), which represents the main civil society organizations.

 However, the implementation of these promises depends on their results – specific changes in the economy, primarily the growth of the purchasing power of the population and increase in employment. If until May – June 2020, when E. Macron’s presidential term expires and the powers of the deputies of his parliamentary majority expire, tangible changes for the better in the economy will not occur, then the extension of their mandates for the next 5-year term will be questionable [5].

 A characteristic feature of E. Macron’s strategy and style is the desire to integrate his reform program into a wide international context in order to justify in the eyes of citizens the need for difficult, sometimes painful transformations by strict demands of the external world. At the same time, he insists on the universal dimension of the values ​​of the Great French Revolution of 1789 – democracy and human rights. The active role of France in their defense is presented as the basis of the country’s role as one of the few powers with global interests and responsibilities, especially in the face of the global challenges of our time (climate, migration, etc.).

 During the first year of his stay at the Elysée Palace, E. Macron made 46 visits abroad, visiting 29 countries, not counting participation in international conferences. A smaller number of foreign visitors visited Paris. The culmination of this activity on November 11–13, 2018 in the French capital was the solemn ceremony on the occasion of the 100th anniversary of the truce in the First World War and the Paris Peace Forum, which was attended by the heads of state and government of about 60 countries, including V. Putin and D. Trump.

 Such a stormy activity brought mixed results. The social crisis of November-December 2018 seriously affected the international image of President E. Macron, hampering the achievement of his goals.

 E. Macron proclaims a major restructuring of the European Union as its main international task. The idea is to strengthen its core – the eurozone around the Franco-German tandem, create a special parliamentary assembly in it, adopt a large overall budget for investments in future technologies, unify budgetary, tax, social policies under the control of a common finance minister, and finally strengthen it. EU defense identity, taking into account Brexit and the evolution of the conditions of the transatlantic partnership with the United States.

Nevertheless, the implementation of this program is not out of the negotiation stage. Given the serious internal political difficulties of the main partner E. Macron – German Chancellor A. Merkel – Berlin, in any composition of the new ruling coalition, is in no hurry to spend money to mitigate the financial difficulties of the Mediterranean debtor countries, which to some extent also concerns France itself.

 Meanwhile, the Visegrad states, above all Hungary and Poland, categorically object to a joint solution of the problem of refugees and immigrants with EU members. The coming to power in these countries, as well as in Austria and Italy, national populist Euro-skeptics, the growth of their influence in Germany and even France itself seriously worsen the chances of E. Macron’s party in the European Parliament elections in May 2019.

 The positions of France in the traditional sphere of its interests – in the Greater East, in the Mediterranean and in Africa – look contradictory. Despite the relative success of the military action against the Islamists in Mali, she has failed to play an independent role in the search for a way out of the protracted civil wars in Syria, Iraq, and Libya.

 As for Syria, E. Macron stubbornly seeks to find a compromise between the Astana group (Russia, Iran, Turkey) and the so-called. ‘Small group’ – the United States, Britain, Germany, Saudi Arabia, etc. seeking a political solution through the constitutional committee in Geneva under the auspices of the UN. However, his chances of success are limited by the fact that Paris acts only as one of the participants of the American-Saudi coalition. Meanwhile, the one-sided alignment of Riad, sealed with the exchange of oil for weapons, significantly limits the maneuverability of French diplomacy in the deeply divided Muslim world (Sunni conflicts – Shiites, Israel and Palestine), especially in relations with Iran. This became especially evident against the background of the scandal in connection with the murder of Saudi special services by opposition journalist D. Hashikdzhi.

 Finally, E. Macron’s claims to represent the common interests of the EU in a dialogue with the leading powers of the multipolar world – the USA, Russia, China, moreover, to act between them as a kind of mediator, bring mixed results. Despite the personal contact of the French president with D. Trump, he did not succeed in getting an acceptable compromise from Washington on any of the controversial issues (US withdrawal from the climate agreement, Iranian dossier, protectionism in trade, etc.).

 findingsrn  

The social crisis of the end of 2018 will certainly affect the ability of France to promote its initiatives in the international arena. Nevertheless, in the near future (2019), the possibility of some positive moves by France in the search for compromise solutions is not excluded. Against the background of the Brexit, the political crisis in the Federal Republic of Germany and the uncertainty of the prospects for the D. Trump administration after the elections on November 6, 2018. E. Macron could, in principle, intensify his initiatives.

 Until 2024, the Russian-French dialogue awaits certain tests of strength, primarily in connection with the elections to the European Parliament (May 2019) – Paris reproaches Russia for supporting European skeptics. While accusing the Russian Federation of cyber-interference in the European elections, E. Macron tried to undermine the chances of his opponents of the European skeptics in Eastern Europe, Italy, Austria, and most importantly – in France itself. Meanwhile, the chances of finding a compromise with Paris on the Ukrainian issues and sanctions policy are minimized by the fact that in the Normandy format the main role in the Franco-German tandem has always been played by Berlin. Another irritating moment may be Paris’s cautious stance in the face of Russia’s revitalization in Africa (Egypt, Libya, Central African Republic).

 Nevertheless, in general, the positive potential for the development of our relations with France, of course, remains regardless of the extension of E. Macron’s mandate for the next five years after 2022 and the inevitable fluctuations, both in bilateral cooperation and in cooperation with other countries. .

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