Europe's Conservatives Sour On the Free Market

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France's notoriously divided and ideologically marooned Socialist opposition has long struggled to find a leader capable of selling a modern leftist vision that voters will embrace. Right now, though, conservative President Nicolas Sarkozy may be doing that job for the Socialists. Following his Tuesday address to the United Nations in which he characterized international financial markets as "insane," Sarkozy Thursday sounded like an indignant leftist when he called for sweeping regulation and "moralization" of international finance, and declared that the era "of the market always being right is over."

"A certain conception of globalization has closed out: [one that] imposed its own logic on the entire economy and helped pervert it," Sarkozy said during a speech in Toulon, attacking those who had created the unfolding financial crisis. "Self-regulation as a way of solving all problems is finished. Laissez-faire is finished. The all-powerful market that always knows best is finished."

That's pinko talk for a man who came to power promising to liberalize the French economy, free up its markets, and roll back the 35-hour work week imposed by the Socialists. Sarkozy's new views may be similarly surprising to some of his closest friends, who include several billionaire businessmen and stock market titans — an elite to whom critics have accused Sarkozy of tailoring his policies.

Despite his chumminess with French business big-wigs, Sarkozy on Thursday didn't restrict his fire to Wall Street. He warned France's well-heeled CEOs to come up with rules to reel in their own sky-rocketing remuneration packages and to do away with golden parachutes for disgraced executives — or watch him do it for them.

"Either the professionals make an agreement," Sarkozy warned on soaring executive packages, "or we'll solve the problem with a law before the end of the year."

Why such rage over a U.S. provoked financial calamity that poses less threat to France than it does to countries like the U.K. that have more vigorously embraced American-style deregulation and blind faith in markets? First off, as Sarkozy warned in Toulon, because the credit crisis will worsen what had already been a darkening economic outlook, and limit the prospects for the sorts of reforms he'd hoped to pursue. Despite the fact that better-regulated French banks are less vulnerable than many U.S. counterparts, Sarkozy also assured French households that the state would guarantee the totality of their savings in event of any bank failures here.

Leftist and centrist politicians responded by accusing Sarkozy of cynically adopting their own positions in the face of a crisis that challenges the core assumptions of his more traditional free-market crusading. But Sarkozy insists he's never been a rigid ideologue. In the only private interview he gave to a foreign media as a government minister before being elected president, Sarkozy told TIME of his belief that the "rigidities of ideology limit your choices when the best solutions might involve a mix: more liberalism where best, intervention when necessary."

And conservatives and leftists alike have applauded his calls for greater regulation, echoing those of fellow conservative, German Chancellor Angela Merkel, who has long argued that increased regulation of financial markets was vital — and who bristled at the dismissive response such calls drew from her U.S. and British allies. Even Prime Minister Gordon Brown, whose British Labour Party is easily the most pro-business of Europe's social democratic parties, has called for restoring order and decency to markets that have gone wild.

"Along with a few others in Europe, Nicolas Sarkozy incarnates the new voice of a right re-centered halfway between economic liberalism and state-direction, and between odes to business and those to intervention," Laurent Joffrin, editor of the left-leaning daily Libération wrote Friday.

Still, Joffrin demands that Sarkozy's tough talk be matched by action. "As president of Europe" — France currently holds the rotating EU presidency — "Nicolas Sarkozy proposes no European-level action; eloquent in denouncing money gone insane, he announces no concrete measures for mastering it," Joffrin writes. "The sound of his speeches are good, but that's because they often resonate hollow."

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