Weekly brief

Finance Minister Pierre Moscovici said on Wednesday, August 8, that the government would not modify it projected growth forecast for 2012, revised downward to 0.3 percent last month, despite an initial estimate by the Bank of France the same day indicating that the French economy will likely have contracted 0.1 percent in the third quarter of this year, as it had in the second, meaning France would likely enter an official recession by autumn, according to The Financial Times and La Tribune reported. As the nation faces economic uncertainty, a proposal by President François Hollande to tax at a rate of 75 percent a portion of the income of those earning more than €1 million per year has created unease among France’s higher earners. The New York Times and PRI The World looked at the backlash of the proposed policy and the potential for a flight of France’s rich to nations without such a burdensome tax rate.

President François Hollande drew strong criticism after police cleared two illegal settlements of Roma in Lille on Thursday, August 9, after several such raids across the nation were carried out the day before, The LA Times and Le Point reported. About 240 Roma boarded a plane to Romania on Thursday, August 9, agreeing to accept a €300 settlement to do so. A number of immigrant and human-rights organizations quickly criticized the head of state for continuing policies started under former President Nicolas Sarkozy to clear the makeshift settlements established by the Roma people of France, a population estimated at around 400,000 with about 15,000 to 20,000 from Eastern Europe. Interior Minister Manuel Valls responded to criticism and stated that all evacuations followed legal standards and were conducted to ensure public sanitation, according to 20 Minutes.

Former President Nicolas Sarkozy emerged from three months out of the spotlight on Wednesday, August 8, issuing a joint statement with Syrian opposition leader Abdulbaset Sieda, calling on France and the international community to act quickly to settle unrest in Syria, The Christian Science Monitor and La Croix reported. Sarkozy, who led France to engage in a military intervention in Libya, said the two conflicts had many similarities and criticized President François Hollande for a lack of action. Members of Hollande’s administration quickly rebutted the polemic comments, saying the two situations lacked similarity and saying that Sarkozy’s comments overlooked the geo-political sensitivities of the ongoing conflict in Syria, as covered by Reuters and Libération.  

French Agriculture Minister Stéphane Le Foll announced on Monday, August 13, that France, like the United States and Mexico, was ready to call a special meeting of the G20 to address rising grain prices, as crops in the United States and Russia are facing a disappointing season, The Telegraph and La Tribune reported. Drought has caused considerable drops in the production of U.S. and Russian grains and corn, which already caused the global price of food to rise 6 percent in July, according to the monthly report of the United Nations’ Food and Agriculture Organization on Friday, August 10, as covered by Le Figaro and 20 Minutes.  

An Ifop poll released on Saturday, August 11, showed that the approval rating for President François Hollande had dropped to 46 percent after three months in office as the nation continues to face economic difficulty, Reuters reported. The poll did show that 57 percent of those surveyed believed Hollande was following through with his campaign promises, and 82 percent felt positively about the fact that Hollande cut his own pay and that of his cabinet by nearly a third. The nation’s highest constitutional court approved on Thursday, August 9, the governmental budget proposed by Hollande with the exception of the pay cut, which the court said was the business of the executive branch. Hollande signified that he would go ahead with a 30-percent pay cut for himself and his ministers, as covered by Le Nouvel Observateur and Europe 1.

The Hellenic Statistical Authority released on Monday, August 13, official data indicating that Greece’s GDP had shrunk 6.2 percent in the second quarter of 2012, as the nation sinking deeper into recession finds meeting the requirements of international bailouts increasingly difficult, The New York Times and TF1 reported. After dropping 6.5 percent in the first quarter, economists had predicted a higher decrease in the second – about 7 percent – as Europe’s weakest economy reported its ninth straight quarter of recession, according to Bloomberg and Le Point.  

The Euro gained on the U.S. dollar for the first time in five days on Monday, August 13, as Italy sold all the €8 billion in one-year debt bonds it had planned and the decline in the Greek economy fell short of what many economists had predicted, Bloomberg reported. The European Central Bank released its monthly report on Thursday, August 8, which showed that the separation in long-term bond return rates between Europe’s highest rated nations and those receiving bailouts continued to grow further apart. The eurozone’s triple-A economies dropped about 40 points in July to an average of 1.8 percent, while nations such as Spain continue to look at rates near 7 percent, according to Les Echos. The Financial Times looked at disparities in “peripheral” Europe, where the rising effects of certain nations have not been seen.  Bond return rates have dropped recently in Poland, the Czech Republic and Hungary.  

U.S. Interior Secretary Ken Salazar announced on Monday, August 13, the government’s first comprehensive plan for the 22-million acre National Petroleum Reserve in Alaska, which will allow drilling on 11.8 million of those acres and could lead the way to the long-discussed and highly controversial oil pipeline across the northern tundra, The LA Times reported. Industry officials immediately criticized the plan, demanding the entire Petroleum Reserve, predicted to hold 896 million barrels of oil, should be available for drilling, according to Bloomberg. The area, west of the Arctic National Wildlife Refuge, was segmented into areas to be protected due to the presence of wildlife, notably seals and polar bears.  

The U.S. Treasury Department announced on Friday, August 10, that the massive bailouts to the U.S. auto industry during the height of the economic crisis in 2009 will cost more than anticipated to American taxpayers. The report raised the predicted loss on the $85-billion bailout by $3.3 billion to more than $25 billion, Le Point and The Detroit News reported. To date, the federal government has been repaid about half the funds granted to General Motors and Chrysler to save the American auto industry from bankruptcy, according to Les Echos.