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France's new leader Hollande has tough to-do list

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[May 15, 2012]  PARIS -- Francois Hollande campaigned for the French presidency with some pretty radical promises. But his carefully worded agenda and his political record suggest that after he takes over Tuesday, he's likely to revert to the moderate consensus-building that has characterized his career.

The first smoke signal will come when he names a prime minister. Not-very-subtle whispers in Hollande's campaign team and the French media predict the job will go to center-left Jean-Marc Ayrault, a Germanophile and longtime legislator with not a whiff of revolutionary spirit about him.


Hollande has a tough but crucial first appointment: jetting off to Germany to meet with Chancellor Angela Merkel -- who had endorsed his conservative rival and predecessor, Nicolas Sarkozy. Those two were so close that some dubbed them "Merkozy." Many analysts wonder what type of relationship Hollande and Merkel will have, but some say they will find a way to get along because they have to. France and Germany see themselves as the twin pillars of the euro zone. Merkel and Sarkozy took a leading role in drafting a euro-zone fiscal treaty to curb government overspending, and she has staked out a firm position in favor of austerity. Hollande, the first Socialist to lead France since 1995, wants to renegotiate that treaty to inject a call for growth measures.


High on Hollande's task list is an easy one: Cutting the president's salary and that of government ministers by 30 percent. It's a symbolic gesture that won't make a dent in France's 1.33-trillion euro debt but it reinforces Hollande's aims of redistributing wealth and being a more "normal" president than his predecessor, who followed his 2007 election with three days on a billionaire friend's yacht.


Public anger is flaring over gasoline prices nearing 2 euros per liter ($10.40 per gallon). During his campaign, Hollande promised to freeze prices for three months and suggested that oil companies -- like Total SA, one of France's biggest taxpayers -- and gas distributors will have to eat the losses from such a cap. As a longer-term solution, he wants a floating gas tax, so that as the price of gas rises, the tax rate falls. But some economists worry that could hurt government revenues too much.


Hollande's most eye-catching campaign pledge was to make people making 1 million euros ($1.3 million) or more a year hand over 75 percent of that in income tax. Despite fears that wealthy people will flee to Britain, Belgium or Switzerland, instead, the returns from this tax are not expected to be huge. And tax lawyers say the real problem is not the top tax rate but France's highly complicated and ever-changing tax laws -- and Hollande wants to add new rules to the mix.

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Sarkozy fought with unions to raise the minimum retirement age from 60 to 62, a reform that may economists say is crucial to lowering France's debts. Hollande had said he wants to revisit that but he has quietly scaled back. Now he says he will only lower the retirement age for people who started work at 18 and paid into the pension system for the next 41 years straight -- a modest change not seen as undermining the overall reform.


Hollande has pledged to speed up the withdrawal of France's 3,400 troops from Afghanistan, pulling them out by the end of 2012. But he recently acknowledged that a fast-track withdrawal might force the French to leave behind some military gear. Spain's defense minister thinks Hollande won't go through with the plan so as not to leave the allies high and dry. Some defense watchers say Hollande is likely to find himself some wiggle room, such as by pulling out all "combat troops" but then leaving behind "advisers" instead.


Gay rights advocates celebrate Hollande's steadfast commitment to legalizing gay marriage and adoption, and are encouraged by President Barack Obama's recent embrace of the issue. But gay rights were eclipsed during a French campaign that focused intensely on the economy and immigration, and legalizing gay marriage has dropped near the bottom of the new president's priority list. Some conservative Catholic groups in the resurgent far right are also vocally opposed.


Because of France's unusual power structure, Hollande's whole five-year term hinges on who wins parliamentary elections next month. He needs the leftists to take control of the National Assembly to be able to push through much of his agenda. But if Sarkozy's conservative UMP party and others on the right retain a majority, then not only does Hollande face a hostile legislature but the prime minister's job goes to a rival on the right. If he is stuck with a conservative-run government, the Socialist Hollande may be hamstrung on domestic affairs.

[Associated Press]

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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