The Summer Of Sarkozy

For close Sarkozy watchers, the attempt at this kind of reform should come as no surprise. The surprise is that it did not come sooner. In his 2007 book "Testimony," Sarkozy recalls how he first spoke of "la rupture"—a clean break—at a Union for a Popular Movement (UMP) party meeting in 2005. That clean break would have many facets, including transforming France's relationship with Israel versus the Arab world, making universities more competitive and modernizing the economy. But underlying it all was the idea that the country needed to be shocked out of its longstanding complacency. "The word 'change' had lost its significance because reforms were never followed up," he wrote, "and the word 'reform' itself has become meaningless because it was overused."

In his view, the biggest mistake would-be reformers made, in France and elsewhere, was to undertake reforms sequentially. The problem, he says, is that this stirs up interest groups but doesn't provoke enough support from economic liberals and modernizers. "You often end up stopping at the second reform, exhausted by the battles over the first." The better way is to bundle reforms together and do them as quickly as possible.

These are not new ideas—New Zealand's controversial Finance Minister Roger Douglas has championed precisely that strategy for years and helped transform his nation in the mid-'80s. Benjamin Netanyahu has said Douglas's strategy inspired him when he became Israel's Finance minister in 2003. But the approach is revolutionary for modern France, and it is what defines Sarkozy against his onetime political mentor, Chirac, who believed that French society is so reluctant to change that any reforms must be done carefully to avoid upsetting things.

Sarkozy's all-at-once reform method has already proved to be politically savvy. It splits longstanding loyalties, atomizes opposition and plays interests off one another while providing smoke screens for new reforms. In May, the government's announcement of public-sector job cuts put teachers in the streets. But their movement was deflated when a second reform was announced that would force schools to supervise children when the teachers went on strike. This move toward "minimum service" pitted millions of teachers against many more millions of parents. Guess who is most likely to win?

In other cases, Sarkozy's administration is fast-tracking reforms through Parliament in numbers so great, the opposition can't keep up. The unions complain "it's like releasing a pack of rabbits in front of hunters—you don't know which to target," says Gaël Sliman, a pollster at BVA. The approach has baffled and, to some extent, neutered the unions, which in 1995 staged anti-reform protests so large, they shut the nation down for weeks. In fact, Sarkozy's political maneuvering has created so much infighting among the unions they can't even agree on how to demonstrate. Last week, unions called for 1 million demonstrators to protest. They drew just half that.

The failure to mount a more spectacular protest is one sign that the time is right for Sarkozy's reforms. Another is the subtle shift in the attitude of the French, who seem to have realized that the entitlements given to small, motivated special interests are holding the nation hostage. The 2005 debate over the EU constitution spurred introspection about France's role in a globalized world. Now, rising food and fuel prices are forcing people to wonder if something needs to change. In April, Sarkozy introduced his economic modernization bill, which would gut a 1990s law prohibiting big chain retailers from using their size to negotiate lower prices for consumers and from opening a store larger than 300 square meters without permission from nearby merchants. The result was that hard discounters like Germany's Aldi found it virtually impossible to expand, and prices stayed unnecessarily high. In the past, changing that law would have been nearly impossible, but now "people are so squeezed by the current boom in oil price that they want everything else to give them purchasing power," argues economist Jacques Delpla.