France after the referendum. Dominique to the rescue

Political prospects for a new French government

IT WAS a wake-up call for Europe - and for France. The polls had predicted a no in the French referendum on the European Union constitution, but few expected it to be so big: 55-45%. This result was a humiliation for President Jacques Chirac, the first president of the fifth republic to lose a referendum on Europe. The question is whether Dominique de Villepin, the prime minister he chose two days later, can defuse swelling popular discontent.

The political fringes formed part of the French no vote: over 90% of the extreme right and extreme left. But it also included Philippe de Villiers's nationalist right (75%) and the mainstream left: 56% of Socialist voters, 60% of Green voters and 98% of Communist voters, says Ipsos, a pollster. Only voters from the ruling UMP (80%) and centrist UDF (76%) said yes. More striking still, the vote followed unemployment and income. The leafy suburbs of Paris, along with the capital itself and rural Brittany, voted yes. The industrial towns of northern France (69.5% in Pas-de-Calais), and the high-unemployment south, voted no. Fully 79% of blue-collar voters said no; among occupational groups, only professionals and executives voted yes.

This pattern shows that the vote was only partly a rejection of Europe. It was also a rebellion against the failure of the political elite. Unemployment, now 10.2%, was the single biggest reason for a no, said an exit poll by TNS-Sofres. Exasperated by out-of-touch leadership in hard times, intoxicated by the chance to rebel, and encouraged by populist no campaigners, the French revolted. It was, said Serge July, editor of Liberation, an “electoral riot”.

Mr Chirac responded as all unpopular French presidents do: he sacked his prime minister. But his choice of successor to Jean-Pierre Raffarin left many baffled. The aristocratic Mr de Villepin, graduate of the Ecole Nationale d'Administration, France's top civil-service college, is an energetic and passionate former diplomat - but he is also the incarnation of the French elite that voters have just rejected. He served for seven years as Mr Chirac's chief of staff, when he advised the calling of early parliamentary elections in 1997 that the Socialists won, and two as his foreign minister. He has never held or even stood for elected office.

His appointment is best explained by internal politics. The more logical candidate was Nicolas Sarkozy, the UMP head. Mr Chirac distrusts the man who so badly wants to succeed him, but Mr Sarkozy is popular both with the party and with voters. On referendum night, Mr Sarkozy made an open plea for the job, urging “a break with the pensee unique [single way of thinking] and recipes of the past”. In contrast, Mr de Villepin this week called for more action on unemployment, but also defended France's social model, which tends to dampen job creation.

Faced with a choice between continuity and change, loyalty and tension, Mr Chirac plumped for the man he trusted - but with a twist. He unexpectedly recalled Mr Sarkozy to the government as its number two; he is likely to return to the interior ministry, a job he had in 2002-04. There was some surprise that Mr Sarkozy was prepared to serve in the government (although he is retaining his post as UMP boss too). But it gives him the chance to grab headlines as an action hero, addressing popular concerns such as immigration and security, and winning support among police and gendarmes. With Mr Chirac enfeebled, Mr Sarkozy's chances of emerging as the UMP's presidential candidate in 2007 look stronger than ever.

What does all this mean for policymaking? In a word: confusion. By appointing a two-headed government - Liberation calls the pair “the president's crutches ” - -Mr Chirac has refused to arbitrate, leaving two would-be successors to fight it out. Mr de Villepin will be in charge of economic policy, yet has no known views on the subject. The man who keeps a bust of Napoleon in his office and writes poetry is more at home with destiny and grandeur than fiscal policy. He is best known for his rousing speech to the United Nations against the war in Iraq, and for his ability to irritate America - yet foreign policy is not the prime minister's domain.

Bold structural reform is unlikely. Mr Chirac declared that the new government would “respect our French model” which was “not the Anglo-Saxon type”. Even if Thierry Breton stays on as finance minister, there is little scope for tax cuts, given the public finances. There may be more subsidised jobs for young people, but deregulation of the labour market is not on the agenda. Mr de Villepin will have enough on his hands facing down his first street protests and strikes.

Mr Chirac is not the only leader humiliated by the referendum. The Socialists are in disarray. Francois Hollande, their boss, who won the party's backing to say yes to the constitution in an internal vote, has taken a severe knock. By contrast, the gamble taken by Laurent Fabius, the party's number two, to fight against the treaty has paid off. When he first aired his opposition, it looked like suicide; today, Mr Fabius can scarcely disguise his satisfaction.

Can the Socialists reconcile their bitter differences, which erupted so violently during this campaign? A “clarification” congress is planned, probably this autumn, to settle the future direction of the party. Should it continue to modernise, as Mr Hollande wants, or should it follow Mr Fabius's new hard-left friends down a path to an anti-capitalist utopia? Should it reach out to the discontented left, or should it sanction Socialist rebels? And who should be its leader?

All this will sorely test the party's unity, as well as Mr Fabius's presidential chances. He said this week that he was ready to prepare the left for 2007 “with anybody who wants to”, hinting that he might do this outside the party. If he tries to seize control of the party, plenty of Socialist heavyweights will do their utmost to thwart him. In short, the power struggle between pretenders on the left promises to be no less intense than that between the two rivals in government on the right.