Published daily by the Lowy Institute

Marine Le Pen and the spectre of Frexit

Le Pen says France could be a 'grande nation' again if it left the EU. Economists say it could send France bankrupt and may spark another financial crisis.

National Front Leader Marine Le Pen at a presidential campaign rally in Lyon on 26 February.  (Photo by Jeff J Mitchell/Getty Images)
National Front Leader Marine Le Pen at a presidential campaign rally in Lyon on 26 February. (Photo by Jeff J Mitchell/Getty Images)
Published 3 Mar 2017 

National Front leader Marine Le Pen is one of the top contenders in this year's French presidential elections. And a President Le Pen would reconfigure international relations for good.

Polls suggest the far-right leader will win the first round of voting on April 23 but lose the decisive run-off vote two weeks later to either independent candidate and former economics minister Emmanuel Macron, or Republican candidate François Fillon. As centrists, the left and the right of French politics traditionally join forces after the first round of voting to defeat the National Front.

The Socialist Party's Benoît Hamon and the far-left candidate Jean-Luc Mélenchon are unlikely to get through to the second round of voting. But after the Brexit vote and the Donald Trump's triumph in last year's US Presidential election, anything seems possible, even a Le Pen victory. She is obviously hoping to ride the wave of populism sweeping across the globe. And financial markets are taking the prospect seriously. Interest rates for French government bonds have been going up under the 'spectre of Le Pen', a significant event for a country with government debt close to the level of its gross domestic product.

The interest hike reflects the fear of a Frexit; an exit of France from the European Union and the eurozone. Madame Le Pen has promised to hold a referendum on EU membership to free the country from what the 48-year-old lawyer refers to as the 'Brussels diktat'.

Economists, however, maintain a Frexit would be a disaster, for both France, Europe's second-largest economy, and the rest of the economy. Olivier Pastré, economics professor at the university Paris VIII, thinks that France's poor would be hit especially hard. 'If we went back to the franc, the value of our money would plummet and we would have to pay a lot more for our imports. We are importing many basic goods such as food and petrol. And less well-off people spend a higher share of their income on these goods'.

With a weak franc, the country would also struggle to pay back its debt given a high percentage of France's government bonds are denominated in euros.

Economist and head of the research group Cercle de l'Epargne Philippe Crevel says exiting from the Euro could send the country into bankrupcy. 'We'd need to exchange our money against euros to serve our debt. But I don't think anybody would want to buy our francs.'

According to Crevel, the collapse of the French economy could trigger the downfall of the European Union and a major economic crisis. 'France harbours Europe's second-biggest bank BNP Paribas and large insurance companies such as Axa. These institutions would not be able to serve their euros debt and would go bankrupt. It would be a lot worse than in 2008, when the bankruptcy of America's Lehman Brothers helped trigger the global economic crisis Nothing would ever be the same and we would have to completely restructure international relations.'

But Marine Le Pen says leaving the EU would help the country become a 'grande nation' (great nation) again. And she thinks France is not the only country trending towards independence. For her, bilateralism is the future and multilateralism the past.

'We will live in a world of nation states, where we can assert our interests – culturally and security-wise,' the politician insisted in a recent speech on her international programme in Paris.

It was a speech strong on nationalism. She warned of the danger immigrants posed and said globalisation was diminishing French society's identity. The only way to escape that 'humiliation', as she put it, would be to regain sovereignty; to put an end to free-trade agreements and go back to a protectionist system.

Part of the plan involves leaving NATO's defence planning committee. France would gain more control over its own defence with the National Front leader planning on boosting the country's military spending.

But Jean-Yves Camus, political analyst at the French Institute for International and Strategic Affairs, says that Le Pen is clearly overestimating France's significance, economically and politically. On its own, he thinks, France would not be a major player. 'I am really proud of my country, but the world doesn't revolve around France,' he said. 'Russia would continue pursuing its plan of reconstructing the former USSR and expanding its zone of influence and China would continue its commercial expansion. No matter what we, the French, would do.”

'We have much more to lose than to win by going it alone,' he said.

For Le Pen of course, Russia stands as a model of a strong, powerful state. National Front has close ties with that country and loans from a Russian bank have helped finance its campaign. But replicating Putin's relative success in gaining more international influence would be a tough, if not impossible, task for a small country like France.

Related Content

The mendacity of Milosevic (Odd Andersen/AFP via Getty Images)

You may also be interested in