How France Is a Microcosm for the Euro-Zone Crisis

Renewed urban violence in France and continuing instability of the euro offer reminders that economic disparities and widening divisions can only be remedied through the difficult work of integration

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Pascal Rossignol / Reuters

French firemen inspect damage inside a leisure center in Amiens on Aug. 14, 2012, after gangs of youths set cars and buildings ablaze overnight

The rioting that rocked the French city of Amiens on Aug. 13 and 14 was a grim reminder that little has changed since 2005, when the exclusion and alienation of France’s blighted housing projects exploded in violence that spread across the country. France, the world then discovered, was a seriously divided country. It still is. And despite billions spent on housing renovation and infrastructure improvement in some of France’s worst neighborhoods, the eruption in Amiens this week was another demonstration that the gap between mainstream society and its blighted banlieues remains as large as ever.

But France and its discontents are also a microcosm for the instability in the euro zone. Like France, the 17-country collective is in reality a fractured grouping of have and have-not members whose economic, employment and wealth imbalances are increasingly untenable. And in both the French and euro-zone crises, resolutions requiring a degree of integration, compromise and sacrifice of individual interests to wider common cause are still being resisted even as calamity looms. Instead, moves to unite under a single roof and mutually respected rules — whether fiscal or social — are rejected as too messy, unpopular and scary.

Aversion to decisive integration is quite evident in the euro crisis. Even as the financial markets put pressure on the most indebted and economically febrile euro partners, the zone’s leaders have shied away from the one thing investors want most: binding and enforceable rules on deficit and debt levels for all the nations using the common currency.

The accord produced at June’s E.U. summit took some steps toward budgetary and banking integration across the euro zone. But that stopped well short of the far-reaching measures needed to resolve what critics like Paul Krugman argue is the currency’s essential failing: the absence of a single economic area functioning under the same fiscal rules, capable of pooling collective reserves and debt, and overseen by a strong central bank ready to intervene in the face of economic or monetary troubles.

Why all the aversion to integrate — even as the euro’s very existence still appears imperiled? Wealthier and reform-strengthened states like Germany and Finland don’t want to jeopardize their finances by conjoining them with partners like Greece and Italy — whose history of reckless spending, nonchalance with escalating debt and horror of reform helped create the crisis in the first place. Why trust them to obey new rules when they flaunted existing regulations, higher-minded and deeper-pocketed members ask?

Of course, all euro nations — including Germany — violated deficit and debt limits as governments put national priorities over mutually beneficial strictures. Crisis or not, none are thus far willing to bow to the crisis by relinquishing spending power they may want to abuse once calm has returned. Plus, nationalism gets in the way.

Countries with generous welfare states and weighty tax structures like France and the Netherlands don’t want to be told how they can and can’t raise and spend public money by Brussels — even if it’s for their own fiscal good. In the meantime, if spending ceilings were to impose de facto shrinkage of big welfare states, affected nations would doubtless call for an increase in minimal levels of state assistance and taxation to prevent what France has called “social dumping” by partners like Ireland. Despite the payoff of a far stronger and more stable euro zone, no one wants to surrender the autonomy serious integration would involve.

A similarly dissonant dynamic is evidenced whenever efforts are made to solve the growing divide between mainstream French society and its riot-prone suburban housing projects. French leaders demand that inhabitants of those areas adapt to and integrate into French society and culture to enjoy its benefits — a rather revealing exigence given that most project residents are French born and raised. Indeed, suggestions of willful segregation typically spark counterclaims that France actively inhibits their attempts to enter the nation’s mainstream. Banlieue residents contend that good schools, functioning public services, comfortable housing, and above all jobs, are found only in affluent city centers and are inaccessible and unaffordable where they live.

No one in France contests that a more widespread affluence would quell the eruptions of violence like the one that exploded in Amiens. But that would involve more faces from the ghetto turning up in predominantly white work places — and an educational and behavioral effort by defiant and angry project youths to qualify for and land good jobs and living arrangements. Too much change, compromise and potential loss are involved on both sides of the socioeconomic divide for that to happen, so France remains trapped in a ritual of mutual accusation of just who’s preventing the needed surge of integration.

Employment is, of course, the key to bridging France’s gap — and reversing Europe’s deepening economic slump and euro crisis. But the job outlook in both scenarios is bleak. Even before the current economic crunch set in, jobless rates in French projects flirted with 25% for all adults and nearly 50% for younger people. Those notoriously high figures for French banlieues are now rivaled by national averages in Spain (24.6%) and Greece’s (23.1%); youth unemployment rates in both countries are similarly estimated at around 50%.

That has left Europe’s southern flank looking to northern euro partners — like Germany (5.4% unemployment), Finland (7.5%) and the Netherlands (5.3%) — for help out of their deepening crisis in same the way French project dwellers have long appealed to mainstream society. In both cases, responses have been similar: short-term handouts to buy time dished out with stern instructions for the afflicted to lift themselves up by their own bootstraps.

But tough love is only effective when it’s practiced as well as it is preached. To end Europe’s interminable debt crisis and economic spiral, all 17 currency members will have to give till it hurts — and then some. Stronger nations will have to pool their debt and reserves with debt-swamped countries like Greece, Spain and Italy to give them the breathing room they need to recover and rebound. In exchange for the higher borrowing costs and greater exposure to (theoretical) default that will involve fitter nations like Germany, Finland and even France, all euro partners will have to surrender considerable budgetary and fiscal autonomy in submitting to rules and enforcement on spending limits required to turn the euro zone into a real, united European economy. The only way out of the current crisis — and future prosperity — is through mutual strength and a far closer euro union.

In the same way, to end its regular fits of urban upheaval, France must end the geographical, occupational and economic isolation of its projects by welcoming a growing number of their residents as students, employees and neighbors within mainstream French society. Simply renovating blighted housing blocks and trying to spruce up shoddy public services in suburbs are not an alternative to true integration of banlieue residents. The denizens of the projects must want to buy into the idea of France and commit to the investment, with all privileges and hardships it entails.

In seeking to end divisions plaguing both France and the euro zone, all actors must resolve themselves to surrendering significant aspects of the familiar but dysfunctional status quo to create the possibility of receiving anything lasting in return. That’s a scary leap of faith that will provoke considerable political and public resistance. But it’s also an unnerving jump promising less trauma in the long term than sticking with unworkable arrangement that have produced so much instability and suffering thus far.

25 comments
tosty
tosty

EU is too small and it is impossible to compare with United States

I lived in both continents

The EU is a tribe union made of a modern state with a big dose of patriotism

Kontex
Kontex

Liberal magazines like this are used to sponsor massive and uncontrolled immigration, in behalf of the slave trade and black market in the receiving countries.  It is time they recognize  how much harm they have inflicted in the western societies and try to amend it.

cm6096
cm6096

This idea of more unity being the solution is really deceptive.  Its easy to believe it, but really if you examine the facts, its benefits don't hold up to scrutiny.  Take the US for instance, we have one federal gov't, one treasury, one power that prints money.  But that doesn't stop a member state, say California, from borrowing and spending itself into bankruptcy.  CA has no power to print up more dollars or to set interest rates.  To create a United States of Europe would just create a country with several states going broke...  as opposed to now a continent with several countries going broke.

Eric N Urbain
Eric N Urbain

next time you feel a kinship for these banlieue youths, take a trip to one of them.. Sarcelles or North Amiens and see if they have any redeeming qualities...

Just about EVERY person I know in France including family has been a victim of some form of aggression/attack (even grandmothers!) from these banlieue kids you seem to sympathize with...and there's no excuse for that...for beating up an old lady...or raping a girl...next time, perhaps you might consider incorporating these truths into one of your articles..Ill show you my scar if you want proof!

Belisarius85
Belisarius85

France is just the first to experience the joys of multiculturalism. I imagine the rest of Western Europe will get their just desserts soon enough. They should have never followed America in abandoning the nation-state.

Jamie S.
Jamie S.

The author says that "the denizens of the projects must want to buy into the idea of France and commit to the investment, with all privileges and hardships it entails."  But if that is the fundamental issue, then why does the article spend its entire length condemning French society for not doing enough to include those same denizens? 

It seems from my vantage point, far outside of French society, that those in the banlieues have been given everything at public expense and respond by destroying property and whining about how hard life is.  If they don't feel welcomed by the French, why don't they leave the country and go elsewhere? 

And I don't mean that flippantly: they could move anywhere within the Schengen zone, with none of the visa/immigration hardships that those of us in North America face when we ponder cross-border opportunities.  These are people who could leave.  But they stay, sucking up public euros while doing little more than complain that they have hard lives.  It  makes no sense.

Peter Edward Harrington
Peter Edward Harrington

The issue is one of ideology. Most right minded people know that if Greece, Spain et al left the Eurozone, it would be much better for them in the long run. Not only could they amend their interest rates (they can't now)  but devalue their  currency to increase exports, tourism etc.

The Eurozone leaders know this, but they can't face their dear European project failing, nor can they stomach billions of extra lending (not that there is anyone able or willing to pay for it anyway, this is all debt to pay debt) - so the crisis goes on and on without a clear end.

Meanwhile, Governments cripple the very poorest with state austerity, inflicting terrible damage on a people innocent of the very causes of the crisis - profligate state spending and unregulated banking.

tim73
tim73

75 percent of Greeks want to stay in Eurozone so where are those "right" minded people?! Some Brits, not even in the Eurozone, are almost the only ones who want some other nations to quit Eurozone. Trying to drive wedges once again into continental Europe...was  the Cold War so good for you?!

It is like UKIP party supporters in the UK, they have not managed to get even ONE representative in the UK's House of Commons but they still think they are the "right minded" and all Brits are still supporting them without voting them...ridiculous.

Jamie S.
Jamie S.

Yes, the Cold War was generally pretty good for us.  If you didn't notice.

tim73
tim73

North:

New York, GDP per capita: 57423 dollars.

Massachusetts: 58108

South:

Florida: 40106

Mississippi: 32967

2011: Spain, 32360 - Italy, 36267 - Germany, 43742.

The income variation among states is narrower in the eurozone than in the "dollarzone". Dollarzone has much larger variation even WITH federal government, federal projects and tight fiscal integration in place! Why should we build the same kind of system as in the USA when it is not even working...

Richard Schatz
Richard Schatz

 Sorry but you failed to include Greece and Portugal

Greece - 26 892

Portugal  25 444

Now include the entitlement costs  on those European figures and you can understand where a part of the European problem comes from.

Nathan Cline
Nathan Cline

Because how can the fascists rule the world if they don't have control over the money supply?

jambouburgess
jambouburgess

As a frenchman I see this as payback. France, like many of its neighbourghs is a former colonial power. We are today paying the price of the failure of our grand and great grand parents trying to conquer the world and its natural resources.  colonies were never for the good of its people.

Jamie S.
Jamie S.

The problem wasn't caused by the colonies' existence.  It's that your countrymen saw fit to allow its former colonial subjects to immigrate to France and hand them publically financed lives that they didn't and don't appreciate in the slightest.

swift2010
swift2010

The trouble is that you are talking about the richer countries giving money to Greece Italy Spain

it will be called loans but /they can never be paid back

but then G I S will just keep spending so forever the rich countries will be paying money into the poor /The poor countries will be on social benefits and never be able to recover 

if germany covers or guarantees this amount of money it will pull them down economically

look at it this way Greece before the Euro agriculture and tourism many people Donkey and cart or old car

join Euro cheap credit can afford to buy Porche car from Germany

now cannot pay back the loan on the Porche 

so Germany will end up having given them the money to buy the Porche in the first place

Well that sort of economics is unsustainable 

Hank Rodgers
Hank Rodgers

France and the UK, particularly, are suffering from the growing impact of the results of their centuries of colonialism. The ethnic and cultural basis for community has been badly eroded by immigration from the former colonies, and now global economics has likely helped to make this irrevocable and the problems irresolvable. Send the immigrants back to their home countries, with the education and a little financial support to improve conditions there, and break up the European Union. The distinct countries and their distinct cultures are probably more economically viable individually, and certainly more interesting than a homogenic Europe. Then, let us learn the lesson here in the U.S. before we too go too far down that road.

sgtbilko
sgtbilko

Except that, as the article points out, most of the people in the banlieues were *born and raised* in France.  Most likerly their parents were as well.  You can't send them "back to their home country"--they're already there.

It's like saying I should be sent back to Italy because my great-grandmother came from there.  My great-grandmother who, upon returning to Chicago after visiting the town of her birth, said as she walked in the door: "T'ank-a God Cristobol Coulomb discover America--I'm-a NEVER go back to [name of town] again!"

Peter Edward Harrington
Peter Edward Harrington

 Immigration has actively assisted the UK in the past few years. One of the features of our labour market is how fluid, adaptable and inclusive it is, and hence, one of the reasons we are not as economically sunk as our more inflexible Eurozone partners.

Johnny Simpson
Johnny Simpson

Not to mention if we broke up the EU I imagine we'd start recreating it again (for trade agreements, free movement since so many people live in other EU countries, etc)

My_Opinion25
My_Opinion25

What none of the Eurozone countries (even Germany) is will to admit is that when they gave up their own currencies, they gave up the right to borrow money, except in extremly limited project-specific instances. And even then they need to have a plan to pay back the loan, like a mortgage, instead of constantly rolling over the debt as it comes due. 49 and the 50 US states have balanced budget amendments, even if some must play games with their books to do it. The Eurozone states have to stop arguing about how much a deficit they can have and admit they can't have any deficit.

f_galton
f_galton

"Banlieue residents contend that good schools, functioning public services, comfortable housing, and above all jobs are found only in affluent city centers"

It's true things are nice where they aren't. 

f_galton
f_galton

Liberalism imploding. Solution: more liberalism.

vstillwell
vstillwell

Yeah, good schools and infrastructure...what a waste! Only some stupid baby boomer would think that. 

Collider
Collider

"France must end the geographical, occupational, and economic isolation of its projects by welcoming a growing number of their residents as students, employees, and neighbors within mainstream French society"

Trying to integrate these savages (like those 34 miners equipped with spears and machetes that were shot in Africa recently -the same savages who immigrate to Europe) into French society is a joke.. Europe should deport all arabs, muslims, and blacks.. These people can't integrate, this can be seen wherever they live on this planet, they either didn't evolve enough or are just culturally too different. France in the 60's, early 70's, was an amazing country, when the french people were actually french. Unfortunately, the liberal politically correct multiculti experiment turned the country into a pile of merde..