Sarkozy warned of ‘class war’

http://www.ft.com/cms/s/0/1e3dfd20-1401-11de-9e32-0000779fd2ac.html

Sarkozy warned of ‘class war’
By Peggy Hollinger in Paris
March 18 2009

France faces a “class war” that could undermine President Nicolas Sarkozy’s reform efforts and spark a period of damaging labour unrest, one of the country’s most prominent business leaders has warned.

In an interview with the Financial Times as France braced for its second national strike in less than two months, Maurice Lévy, head of Publicis, said “people are really angry” over the country’s growing economic hardship and costly bank rescues.

Mr Lévy criticised the government for fanning the discontent. The boss of the advertising group said ministers had failed to explain adequately why the state had bailed out banks while refusing to help consumers with new tax breaks or wage rises.

Unions have promised another record turnout for Thursday’s general strike, with more protests planned across the country than in January when up to 2.5m people came out on to the streets.

The public mood has worsened, with protests becoming militant amid factory closures and as the government struggles to revive the economy.

“No one understood that the vast majority [of bank support] was in guarantees and in reality the money was not yet spent. People were told the country was bankrupt and suddenly there was €340bn available for these greedy people. On top of that they are distributing bonuses. We have another class war,” said Mr Lévy.

Claude Bébéar, the honorary chairman of insurance group Axa and seen as the elder statesman of French capitalism, warned in a separate FT interview that the country risked becoming engaged in “a struggle, with each side seeking to take advantage of the other to strengthen its position”.

He urged the government, unions and employers “to play a collective game”.

Many business leaders fear that, as militancy grows, the government will make concessions on its reform programme. Mr Sarkozy has already backed down in a long-running dispute with academics and students over university reform. Medef, the employers’ group, is worried that concessions made after the January strike could impose new constraints on companies.

Mr Lévy said further compromises could encourage more protests. “Each compromise, even if reasonable, is misinterpreted as a grand victory by the strikers and the opposition,” he said.

“We have always known that reform has to be done very, very quickly. If it is not done quickly it ends in conflict,” he said.