X
Story Stream
recent articles

Ever since last month's disclosure that ex-budget minister Jerome Cahuzac lied about stashing almost $800,000 in a secret Swiss bank account, the French have become obsessed by their politicians' money.

So as they sat down to their croissants and cafe au lait on Tuesday morning, many were gratified to be able to delve into the personal finances of their government's ministers for the first time.

That's because members of the Socialist government have been obliged to post their assets online, thanks to a political clean-up campaign by President Francois Hollande.

Among the revelations, voters discovered Foreign Minister Laurent Fabius is the richest cabinet member with $7.2 million in assets, including a Paris apartment, a house in Normandy and $1.7 million in shares. Prime Minister Jean-Marc Ayrault is the proud owner of a 1988 Volkswagen microbus valued at $1,300. And Finance Minister Pierre Moscovici has saved a mere $350,000 during his long political career.

The Cahuzac scandal may have lifted the lid on the wealth of officials Hollande had promised on taking office would be clean and "exemplary."

However, France's neighbors are far more worried about the country's finances.

"France's public sector indebtedness represents a vulnerability, not only for the country itself but also for the euro area as a whole," European Union headquarters warned last week.

As Hollande tries to extricate himself from political scandal, the economy is in deeper trouble than many had believed. And the unusually blunt language from Brussels underscores fears that unless he manages to get it back into shape, the euro zone's second-largest economic power could bring down the whole bloc.

"France is a core country in terms of its size and its geo-economic position," EU Economic Affairs Commissioner Olli Rehn told a news conference last week. "Its health has a very direct impact on the overall health of the euro zone."

Markets have generally been kind to France throughout the euro crisis, treating it alongside Germany as one of Europe's virtuous northern members.

Its "spread" - the difference between the interest Paris has to pay on key government bonds and the benchmark German rate - is just 0.5 percent.

In contrast, southern European countries have seen the markets push their borrowing costs far above the German level. Italy's spread is at 3 percent, Spain's at 3.5 percent, Portugal's at 5 percent and Greece's, 10.2.

France has never been close to levels likely to raise fears that it can no longer finance itself and might require a bailout. However, some of the country's numbers have a distinctly southern feel.

The International Monetary Fund on Tuesday forecast France would slip into recession this year after zero growth in 2012. Unemployment is rising steadily and scheduled to top 11 percent next year.

Public finances are getting worse. The government missed deficit targets last year and is expected to fail again in 2013.

At 4.6 percent, its deficit last year was 40 times higher than Germany's, way above Italy's and close to that of bailed-out Portugal. National debt has soared since the early 2000s, rising from 56 percent of economic output in 2001 to the 93.4 percent forecast for this year.