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Explainer: ‘Yellow vest’ crisis exposes limits of French welfare system

FILE PHOTO: A view of the Place de la Republique as protesters wearing yellow vests gather during a national day of protest by the "yellow vests" movement in Paris, France, December 8, 2018. REUTERS/Stephane Mahe/File Photo

By Leigh Thomas

PARIS (Reuters) – France’s “yellow vest” protests have exposed a deep-rooted belief that society is not working for large swathes of the French population, especially outside major cities.

Driving the unrest is anger about rising living costs – particularly among low-paid workers – and a perception that President Emmanuel Macron is deaf to their needs as he presses on with reforms seen as favoring the wealthy.

The following graphics look at underlying economic and social indicators in France to try to explain why so many people believe the system is working against them.

IS THE FRENCH WELFARE SYSTEM GENEROUS?

Without welfare transfers, poverty and inequality in France would be among the highest in developed countries belonging to the Organisation for Economic Co-operation and Development, the Paris-based group estimates.

While many protesters rail against what they see as a gulf between them and the upper echelons of French society, OECD data suggests that the wealth divide is not as bad as in many other rich countries.

France’s extensive welfare system keeps the poverty rate at 14.3 percent, below the 18 percent OECD average and on a par with Scandinavian countries known for their egalitarianism.

Without tax and welfare payouts, nearly 42 percent of the population would be living in poverty, the highest rate among OECD countries for which recent data is available.

Likewise, France’s Gini coefficient, a gauge of income inequality, is slightly below the OECD average whereas without welfare transfers it would be among the highest, just behind Italy, Portugal and Greece, according to OECD data.

While a progressive tax system and generous welfare help narrow the wealth gap, it comes at a price as French taxpayers also bear the highest tax burden in the world.

Tax cuts on wealth and financial assets early on in Macron’s five-year term have added to middle-class taxpayers’ frustration and he has been criticized as being a president of the rich.

WHY DO MANY FEEL LEFT BEHIND?

Unlike Scandinavian countries, France’s poor have little hope of improving their lot in life despite the billions of euros the government spends on them, according to OECD data.

The OECD estimates it would take six generations for a person from a low-income family in France to reach an average income compared with only two generations in Denmark and an OECD average of 4.5.

“There are no rungs anymore on France’s social ladder,” Finance Minister Bruno Le Maire, a conservative, said on Monday.

While six generations is on a par with its neighbor Germany, the French have a deep attachment to the idea that state institutions, from schools to courts to government, are supposed to offer the same chance of success to all.

But despite income support for those on low incomes, they have little chance of doing better than their parents, according to a study last year by France Strategie , which is linked to the prime minister’s office.

The study found that a person whose father was a senior white-collar worker was 4.5 times more likely to belong to the wealthiest fifth of the population than someone whose father was a manual worker – largely because social origin correlates closely with one’s level of education.

While France is close to the average in international education comparisons, it has a bigger gulf between the scores of the lowest and highest performing upper school students, the OECD’s director of social affairs Stefano Scarpetta said.

WHY DO PEOPLE FEEL UNDER FINANCIAL PRESSURE?

The protests originally erupted in November over higher fuel taxes, that have since been scrapped, and general frustration about the high cost of living, sparking the worst street violence Paris has seen in decades.

With people on low incomes surviving on welfare handouts and the lower middle class squeezed by the tax burden, the French are highly sensitive to pressure on their daily budgets.

That helps explain a national obsession with purchasing power and French politicians are frequently judged on whether people are getting more spare cash.

While protesters largely ignored new tax breaks to boost purchasing power, official data lends credence to their claims that budgets are getting squeezed.

The pressure is increasingly coming from housing costs, which now absorb 23 percent of their budgets compared with 10 percent a generation ago, according to the official French statistics agency INSEE.

Meanwhile, a lack of jobs, deindustrialization and dwindling public services mean that discontent is highest in smaller towns cut off from the economic opportunities of bigger cities.

In towns of 5,000-10,000 people, 21 percent report below average life satisfaction compared to 14 percent in the capital Paris, INSEE said in a study this week.

(Reporting by Leigh Thomas; editing by David Clarke)

French police prepare for fifth wave of yellow vest protests

A protester wearing a yellow vest holds a French flag as the authorities dismantle their shelter at a traffic island near the A2 Paris-Brussels motorway in Fontaine-Notre-Dame, France, December 14, 2018. REUTERS/Pascal Rossignol

PARIS (Reuters) – France will deploy tens of thousands of police nationwide and around 8,000 in Paris on Saturday to handle a fifth weekend of ‘yellow vest’ protests, although the movement appears to be losing steam after concessions by President Emmanuel Macron.

The chief of police in Paris said concerns remained about violent groups infiltrating the protests. Anti-riot officers will protect landmarks such as the Arc de Triomphe and prevent people from getting close to the presidential palace.

“We need to be prepared for worst-case scenarios,” police chief Michel Delpuech told RTL radio.

He expected businesses in the capital to be less affected this weekend after heavy disruption over the past three weeks when major stores shut, hotels suffered cancellations and tourists stayed away during the usually busy run-up to Christmas.

Nicknamed “Acte V” of the protests, the yellow vest demonstrators will take to the streets this weekend as France recovers from an unrelated attack on a Christmas market in the eastern city of Strasbourg on Tuesday when a gunman shot and killed three people and wounded several others.

Hundreds of police officers were redeployed to Strasbourg to search for the gunman, who was shot dead in an exchange of fire on Thursday evening.

Interior Minister Christophe Castaner said it was time for the yellow vests to scale down their protests and accept they had achieved their aims. Police officers also deserved a break, he added.

“I’d rather have the police force doing their real job, chasing criminals and combating the terrorism threat, instead of securing roundabouts where a few thousand people keep a lot of police busy,” he said.

TOLL ON THE ECONOMY

Attractions such as the Louvre museum and Opera Garnier will be open this weekend, as will luxury department stores like Galeries Lafayette and Printemps. Last Saturday they were closed as thousands of sometimes violent protesters tore through the city. The previous weekend the Arc de Triomphe was vandalized, cars were overturned and torched and businesses smashed up.

The protests have taken a toll on the economy, with output in the last quarter of the year set to be half initial projections, while Macron’s concessions are likely to push the budget deficit above an EU agreed limit.

The yellow vest movement, which began as a protest against fuel taxes and then grew into an anti-Macron alliance, appears to have calmed since the president announced a series of measures to help the working poor.

However, many people wearing the high-visibility motorists’ safety jackets which are the symbol of the protests were manning barricades outside cities on Friday.

After heavy criticism for not being seen to respond to the protesters’ complaints, Macron made a TV address this week during which he said he understood their concerns and acknowledged the need for a different approach.

As well as canceling fuel tax increases that were due to kick in next month, Macron said he would increase the minimum wage by 100 euros a month from January and reduce taxes for poorer pensioners, among other measures.

Since the first yellow vest protests on Nov. 17, supporters have kept up a steady stream of dissent, although the numbers joining marches have steadily fallen.

(Reporting by Inti Landauro; editing by Luke Baker and David Stamp)

Police hunt through eastern France for Strasbourg Christmas market attacker

French soldiers patrol past the traditional Christmas market in Nice, France, December 12, 2018. REUTERS/Eric Gaillard

By Vincent Kessler and John Irish

STRASBOURG, France (Reuters) – Police searched through eastern France on Wednesday for a man suspected of killing at least two people in a gun attack on a Christmas market in Strasbourg and who was known to have been religiously radicalized while in jail.

Witnesses told investigators the assailant cried out “Allahu Akbar” (God is Greater) as he launched his attack on the market, the Paris prosecutor said.

The prosecutor, Remy Heitz, also suggested the suspect may have chosen his target for its religious symbolism.

“Considering the target, his way of operating, his profile and the testimonies of those who heard him yell ‘Allahu Akbar’, the anti-terrorist police has been called into action,” Heitz told a news conference.

Police identified the suspect as Strasbourg-born Cherif Chekatt, 29, who is on an intelligence services watch list as a potential security risk.

An investigation had been opened into alleged murder with terrorist intent and suspected ties to terrorist networks with intent to commit crimes, Heitz said.

Two people were killed and a third person was brain-dead and being kept alive on life support, he said. Six other victims were fighting for their lives.

France raised its security threat to the highest alert level, strengthening controls on its border with Germany as elite commandos backed by helicopters hunted for the suspect.

French and German agents checked vehicles and public transport crossing the Rhine river, along which the Franco-German frontier runs, backing up traffic in both directions. Hundreds of French troops and police were taking part in the manhunt.

Deputy Interior Minister Laurent Nunez said he could not rule out that the fugitive had already crossed the frontier.

SERIAL CONVICT

The gunman struck at about 1900 GMT on Tuesday, just as the picturesque Christmas market in the historic city was shutting down.

He engaged in two gunfights with security forces as he evaded a police dragnet and bragged about his acts to the driver of a taxi that he commandeered, prosecutor Heitz said.

No one has yet claimed responsibility, but the U.S.-based Site intelligence group, which monitors jihadist websites, said Islamic State supporters were celebrating.

French and German security officials painted a portrait of Chekatt as a serial law-breaker who had racked up more than two dozen convictions in France, Germany and Switzerland and served time in prison.

“It was during these spells in jail that we detected a radicalization in his religious practices. But we there were never signs he was preparing an attack,” Minister Nunez said.

One German security source said the suspect was jailed in southern Germany from August 2016 to February 2017 for aggravated theft but was released before the end of his 27-month sentence so that he could be deported to France.

“He was banned from re-entering Germany at the same time”, the security source in the state of Baden-Wuerttemberg said. “We don’t have any knowledge of any kind of radicalization.”

BORDER CONTROLS

The attack took place at a testing time for President Emmanuel Macron, who is struggling to quell a month-long public revolt over high living costs that has spurred the worst public unrest in central Paris since the 1968 student riots.

The revelation that Chekatt was on a security watchlist will raise questions over possible intelligence failures, though some 26,000 individuals suspected of posing a security risk to France are on the “S File” list.

Of these, about 10,000 are believed to have been radicalized, sometimes in fundamentalist Salafist Muslim mosques, in jail or abroad.

Police had raided the suspect’s home early on Tuesday in connection with a homicide investigation. Five people were detained and under interrogation as part of that investigation.

At the Europa Bridge, the main border crossing in the region used by commuters traveling in both directions, armed police inspected vehicles. Police were also checking pedestrians and trains arriving in Germany from Strasbourg.

“We don’t know where the attacker is and we want to prevent him from entering Germany,” a spokeswoman for the German border police Bundespolizei said.

French Justice Minister Nicole Belloubet said there was no need for the government to declare a state of emergency.

Secular France has for years grappled with how to respond to both homegrown jihadists and foreign militants following attacks in Paris, Nice, Marseille and beyond.

In 2016, a truck plowed into a Bastille Day crowd in Nice, killing more than 80 people. In November 2015, coordinated Islamist militant attacks on the Bataclan concert hall and other sites in Paris claimed about 130 lives.

There have also been attacks in Paris on police on the Champs-Elysees avenue, the offices of satirical weekly publication Charlie Hebdo and a kosher store.

A man drove a trunk into a crowd at a Christmas market in Berlin in December 2016, killing 12 people.

(Reporting by Vincent Kessler, Geert De Clercq, Sophie Louet, Sudip Kar-Gupta, Emmanuel Jarry and Richard Lough in Paris, Vincent Kessler and Gilbert Reilhac in Strasbourg, Sabine Siebold and Andrea Shalal in Berlin; Writing by Richard Lough; Editing by Angus MacSwan)

To quell unrest, France’s Macron speeds up tax cuts but vows no U-turn

French President Emmanuel Macron speaks during a special address to the nation, his first public comments after four weeks of nationwide 'yellow vest' (gilet jaune) protests, at the Elysee Palace, in Paris, France December 10, 2018. Ludovic Marin/Pool via REUTERS

By Michel Rose and John Irish

PARIS (Reuters) – President Emmanuel Macron on Monday announced wage rises for the poorest workers and tax cuts for pensioners in further concessions meant to defuse weeks of often violent protests that have challenged his authority.

In his first national address following two weekends of France’s worst unrest for years, Macron sought to restore calm and struck a humble tone after accusations that his governing style and economic policies were fracturing the country.

But he refused to reinstate a wealth tax and to back down on his reform agenda, which he said would proceed in 2019 with overhauls of pensions, unemployment benefits and public expenditures.

“We will respond to the economic and social urgency with strong measures, by cutting taxes more rapidly, by keeping our spending under control, but not with U-turns,” Macron said in the 13-minute TV address from the Elysee Palace.

Protesters wearing yellow vests watch French President Emmanuel Macron on a computer screen in Sainte-Eulalie, France, December 10, 2018. REUTERS/Regis Duvignau

His response came 48 hours after protesters fought street battles with riot police, torching cars and looting shops – the fourth weekend of protests for the so-called “yellow vest” movement which started as a revolt against high fuel costs.

In measures that are likely to cost billions to state coffers, Macron said people on the minimum wage would see their salaries rise by 100 euros a month in 2019 without extra costs to employers.

His labor minister said this would be achieved by the government topping up small salaries.

Pensioners earning less than 2,000 euros will see this year’s increase in social security taxes scrapped, Macron said, going back on a measure that had particularly hurt his popularity with older voters.

“The effort we asked for was too big and was not fair.”

Asked whether the budget deficit would be kept below the EU limit of 3 percent, an Elysee official said France had some wiggle room on spending if a one-off tax rebate, which inflates its deficit by 20 billion euros in 2019, was not taken into account.

Macron faced a delicate task: he needed to persuade the middle class and blue-collar workers that he heard their anger over a squeeze on household spending, without being exposed to charges of caving in to street politics.

The 40-year old former investment banker was also under pressure to make amends about cutting remarks he made in the past year and a half that critics said made him look aloof and arrogant.

“No doubt over the past year and a half we have not provided answers that were strong and quick enough. I take my share of responsibility,” he said.

“I may have given the impression that I did not care about that, that I had other priorities. I also know that I have hurt some of you with my words.”

Political opponents, who have largely failed so far to tap into the discontent from the leaderless “yellow vest”, criticized Macron’s response as insufficient.

“Emmanuel Macron thought he could hand out some cash to calm the citizen’s insurrection that has erupted,” Jean-Luc Melenchon, leader of the far-left La France Insoumise, said.

“I believe that Act V (of the protests) will play out on Saturday,” he said referring to a new round of protests planned this weekend.

One of the faces of the “yellow vest” movement appeared unconvinced as well.

“In terms of substance, these are half measures. We can feel that Macron has got a lot more to give,” Benjamin Cauchy, who met the French leader last week, told France 2 television.

(Additional reporting by Geert de Clercq, Caroline Pailliez, Richard Lough, Leigh Thomas, Pascale Denis, Jean-Baptiste Vey, Marine Pennetier in Paris and Dhara Ranasinghe in London, Editing by Mark Heinrich)

France braces for trouble, Macron to address ‘yellow vest’ anger

A trash bin burns as youths and high school students attend a demonstration to protest against the French government's reform plan, in Paris, France, December 7, 2018. REUTERS/Benoit Tessier

By Richard Lough and Sudip Kar-Gupta

PARIS (Reuters) – France hunkered down for another wave of potentially violent protests on Saturday as embattled President Emmanuel Macron planned to address the nation next week over public fury at the high cost of living, senior allies said.

Interior Minister Christophe Castaner said the three-week-old “yellow vest” revolt had “created a monster” and vowed police would have no tolerance for violence, with much of Paris in lockdown and tens of thousands of police deployed nationwide.

Named after the fluorescent safety vests that all French motorists must carry, the protesters are billing their planned action on Saturday as “Act IV” of worst unrest seen in the capital since the 1968 student riots.

Castaner warned that radicals would likely again infiltrate the protest movement – a backlash against high living costs but also, increasingly, a revolt against Macron himself, including his perceived loftiness and reforms favoring a moneyed elite.

“These last three weeks have created a monster,” Castaner told reporters. “Our security forces will respond with firmness and I will have no tolerance for anyone who capitalizes on the distress of our citizens.”

Some 89,000 policemen will be on duty nationwide to forestall a repeat of last Saturday’s destructive mayhem in exclusive central districts of Paris. Police in Paris will be backed up by armored vehicles equipped to clear barricades.

Senior allies of Macron said the president would address the nation early next week. Navigating his biggest crisis since being elected 18 months ago, Macron has left it largely to his prime minister, Edouard Philippe, to deal in public with the turmoil and offer concessions.

But the 40-year-old is under mounting pressure to speak more fully as his administration tries to regain the initiative following three weeks of unrest in the G7 nation.

“The President will speak early next week. I think this is what the French people want, they want answers,” Transport Minister Elisabeth Borne told Sud Radio on Friday.

Macron has not spoken in public since he condemned last Saturday’s disturbances while at the G20 summit in Argentina and opposition leaders accused him of turning the Elysee Palace into a bunker where had taken cover.

“Is Macron still in Argentina? He must surely have an opinion,” hard-left leader Jean-Luc Melenchon said on Twitter on Tuesday.

“The president himself must speak,” main opposition conservative Republicans leader Laurent Wauquiez told Europe 1 radio on Thursday.

Yellow vests are hung outside windows of an apartment building in support of the “yellow vests” movement in Marseille, France, December 7, 2018. REUTERS/Jean-Paul Pelissier

“FORGOTTEN FRANCE”

After the Dec. 1 riots in central Paris and sometimes violent demonstrations in dozens of other cities and towns across France, the government offered a rush of sweeteners to soothe public anger.

It started by scrapping next year’s planned hikes to fuel taxes, the first major U-turn of Macron’s presidency and costing the Treasury 4 billion euros ($4.5 billion).

But protesters want Macron to go further to help hard-pressed households, including an increase to the minimum wage, lower taxes, higher salaries, cheaper energy, better retirement provisions, and even Macron’s resignation.

But, mindful of France’s deficit and not wanting to flout EU rules, Macron will have scant wriggle room for more concessions.

The “gilets Jaunes” (yellow vest) movement remains amorphous and hard to define, with a rapidly shifting agenda and internal divisions.

One faction, which dubs itself the “Free Yellow Vests”, called on protesters not to travel to Paris on Saturday but criticized Macron for refusing to hold direct talks.

“We appeal for calm, for respect of public property and the security forces,” Benjamin Cauchy declared in front of the National Assembly. His group are seen as moderates within the broader movement.

“The forgotten France is the France of the regions and it is in the regions that France will show peacefully their anger,” Cauchy said.

Youths and high school students attend a demonstration to protest against the French government’s reform plan, in Paris, France, December 7, 2018. REUTERS/Benoit Tessier

“SMASHING THINGS UP”

The Eiffel Tower, opera house, and Louvre are among dozens of museums and tourist sites in Paris that will close on Saturday to pre-empt feared attacks by yellow vest militants.

Luxury boutiques and restaurants in fancy neighborhoods and near the presidential palace erected barricades and boarded up windows. Department stores Galerie Lafayette and Printemps said they would not open in the capital on Saturday.

The trouble is jeopardizing a timid economic recovery in France just as the Christmas holiday season kicks off. Retailers have lost about 1 billion euros in revenue since the protests erupted, the retail federation said.

On the French stock market, retailers, airlines and hoteliers suffered their worst week in months.

Patrick Delmas, 49, will shut his “Le Monte Carlo” bar next to the Champs Elysees on Saturday, blaming hoodlums from anarchist and anti-capitalist groups, as well as the yellow vest movement’s violent fringe.

“We have lost 60 percent of business over the last 15 days,” he said. “The problem is all those people who arrive with the sole intention of smashing things up.”

(Reporting by Emmanuel Jarry, Dominique Vidalon, Sudip Kar-Gupta, Richard Lough and Marine Pennetier; Writing by Richard Lough; Editing by Mark Heinrich)

Macron administration warns of ‘great violence’ in Paris from hard core ‘yellow vests’

Trash bins burn as youths and high-school students clash with police during a demonstration against the French government's reform plan in Marseille, France, December 6, 2018. REUTERS/Jean-Paul Pelissier

By Richard Lough and Marine Pennetier

PARIS (Reuters) – French authorities warned another wave of “great violence” and rioting could be unleashed in Paris this weekend by a hardcore of ‘yellow vest’ protesters, as senior ministers sought to defuse public anger with conciliatory languages on taxes.

Despite capitulating this week over plans for higher fuel taxes that inspired the nationwide revolt, President Emmanuel Macron has struggled to quell the anger that led to the worst street unrest in central Paris since 1968.

Rioters torched cars, vandalized cafes, looted shops and sprayed anti-Macron graffiti across some of Paris’s most affluent districts, even defacing the Arc de Triomphe. Scores of people were hurt and hundreds arrested in battles with police.

French police stand guard as youth and high school students burn a trash container during a protest against the French government’s reform plan, in Bordeaux, France, December 6, 2018. REUTERS/Regis Duvignau

An official in Macron’s office said intelligence suggested that some protesters would come to the capital this Saturday “to vandalize and to kill.”

Prime Minister Edouard Philippe said 65,000 security personnel would be deployed across the country on that day to keep the peace.

In a bid to defuse the three-week crisis, Philippe had told parliament late on Wednesday that he was scrapping the fuel-tax increases planned for 2019, having announced a six-month suspension the day before.

Finance Minister Bruno Le Maire told a conference he was prepared to bring forward tax-cutting plans and that he wanted workers’ bonuses to be tax-free.

But he added: “In this case, it must go hand-in-hand with a decrease in spending.”

He also said France would impose a tax on big internet firms in 2019 if there was no consensus on a European Union-wide levy, seeking to appeal to the “yellow vests'” anti-business sentiment.

SOCCER MATCHES CANCELED

The threat of more violence poses a security nightmare for the authorities, who make a distinction between peaceful ‘yellow vest’ protesters and violent groups, anarchists and looters from the deprived suburbs who they say have infiltrated the movement.

On Facebook groups and across social media, the yellow vests are calling for an “Act IV”, a reference to what would be a fourth weekend of disorder.

“France is fed up!! We will be there in bigger numbers, stronger, standing up for French people. Meet in Paris on Dec. 8,” read one group’s banner.

Education Minister Jean-Michel Blanquer urged people to stay at home during the coming weekend. Security sources said the government was considering using troops currently deployed on anti-terrorism patrols to protect public buildings.

Several top-league soccer matches on Saturday have been canceled and the Louvre museum said it and others were awaiting word from Paris officials on whether to close their doors.

The protests, named after the fluorescent jackets French motorists are required to keep in their cars, erupted in November over the squeeze on household budgets caused by fuel taxes. Demonstrations swiftly grew into a broad, sometimes-violent rebellion against Macron, with no formal leader.

Their demands are diverse and include lower taxes, higher salaries and Macron’s resignation.

France’s hard-left CGT trade union on Thursday called on its energy industry workers to walk out for a 48 hours from Dec. 13, saying it wanted to join forces with the yellow vests. The movement, with no formal leader, has so far not associated itself with any political party or trade union.

A French riot policeman stands next to a burning car as youth and high school students protest against the French government’s reform plan, in Nantes, France, December 6, 2018. REUTERS/Stephane Mahe

STREET POLITICS

The fuel-tax volte-face was the first major U-turn of Macron’s 18-month presidency.

The unrest has exposed the deep-seated resentment among non-city dwellers that Macron is out-of-touch with the hard-pressed middle class and blue-collar laborers. They see the 40-year-old former investment banker as closer to big business.

Trouble is also brewing elsewhere for Macron. Teenage students on Thursday blocked access to more than 200 high schools across the country, burning garbage bins and setting alight a car in the western city of Nantes.

Meanwhile, farmers who have long complained that retailers are squeezing their margins and are furious over a delay to the planned rise in minimum food prices, and truckers are threatening to strike from Sunday.

Le Maire said France was no longer spared from the wave of populism that has swept across Europe.

“It’s only that in France, it’s not manifesting itself at the ballot box, but in the streets.”

(Reporting by Richard Lough and Marine Pennetier; additional reporting by Leigh Thomas, Michel Rose and Myriam Rivet; Editing by Toby Chopra)

France dangles wealth tax review as ‘yellow vest’ anger persists

A protester wearing a yellow vest, the symbol of a French drivers' protest against higher diesel fuel prices, holds a flag near burning debris at the approach to the A2 Paris-Brussels Motorway, in Fontaine-Notre-Dame, France, December 4, 2018. REUTERS/Pascal Rossignol

By Sudip Kar-Gupta and Richard Lough

PARIS (Reuters) – President Emmanuel Macron could amend a wealth tax that critics say goes too easy on the rich, his government indicated on Wednesday, a day after suspending further fuel-tax hikes in the face of protests across France over living costs.

The Macron administration is struggling to defuse the anger driving the “yellow vest” protests, as it reels from the worst riots seen in central Paris in five decades last Saturday.

Government spokesman Benjamin Griveaux said all tax-related policies needed to be periodically evaluated and, if deemed not to be working, should be changed. He said the wealth tax could be reassessed in the autumn of 2019.

“If a measure that we have taken, which is costing the public money, turns out not to be working, if it’s not going well, we’re not stupid – we would change it,” Griveaux told RTL radio.

The unrest over the squeeze on household budgets comes as OECD data showed that France has become the most highly taxed country in the developed world, surpassing even high-tax Denmark.

Griveaux later told a weekly news conference that Macron had called on all political parties, trade unions and business leaders to press the need for calm.

Student protests and planned trade union strikes in the energy and port sectors next week underscored the risk of contagion.

A Macron aide denied that any eventual revision of the wealth tax would represent a major climb-down by Macron, a pro-business former investment banker, adding that the president remained committed to his reform drive.

Griveaux defended Macron’s decision last year to narrow the wealth tax – known in France as “ISF” – to a tax on real estate assets, rather than all of an individual’s worldwide assets, from jewelry to yachts to investments, over the value of 1.3 million euros ($1.5 million).

Those changes earned Macron the label “president of the rich” among the hard-pressed middle-class voters and blue-collar workers who criticize the president for pursuing policies that favor the wealthy and do nothing to help the poor.

Griveaux said the wealth tax reform had not been “a gift to the rich” and was aimed at encouraging wealthy individuals to invest more in France.

“This money was to be invested in our SMEs for them to develop, innovate and hire. If that is not the case … then we can reopen it for discussion.”

U-TURN

The “yellow vest” movement – so-called because of the high-vis jackets worn by protesters – began with the aim of highlighting the squeeze on household budgets caused by fuel taxes but morphed into a broader, sometimes-violent rebellion against 40-year-old Macron.

His administration’s shift on fuel tax came after rioters ran amok in central Paris, torching cars, looting boutiques vandalizing cafes and private residences and cafes in affluent neighborhoods.

Prime Minister Edouard Philippe said the six-month suspension to the carbon tax would be used to examine other measures to bolster household spending power.

It marked the first major U-turn by Macron in his 18-months in office, at a time polls show that barely one in five French people think he is doing a good job.

U.S. President Donald Trump appeared to mock Macron over the policy shift, which could make it harder for France to meet its CO2 emissions reduction target, a core element of the Paris climate agreement of 2015.

“I am glad that my friend @EmmanuelMacron and the protestors in Paris have agreed with the conclusion I reached two years ago,” Trump tweeted late on Tuesday, as U.N. climate talks take place in Poland.

“The Paris Agreement is fatally flawed because it raises the price of energy for responsible countries while whitewashing some of the worst polluters.”

Adding to Macron’s difficulties, college students are agitating and the hardline CGT trade union on Wednesday called for strikes in the energy industry and at ports on Dec. 13.

“We too want a freeze on the planned closures of coal plants,” the CGT union said in a statement.

Meanwhile, Total said a rising number of its filling stations were running dry as a result of “yellow vest” roadblocks.

(Reporting by Sudip Kar-Gupta, Richard Lough and Sophie Louet; Writing by Luke Baker and Richard Lough; Editing by Toby Chopra and Alison Williams)

Macron makes U-turn on fuel-tax increases in face of ‘yellow vest’ protests

French Prime Minister Edouard Philippe attends the questions to the government session at the National Assembly in Paris, France, December 4, 2018. REUTERS/Gonzalo Fuentes

By Simon Carraud and Michel Rose

PARIS (Reuters) – France’s prime minister on Tuesday suspended planned increases to fuel taxes for at least six months in response to weeks of sometimes violent protests, the first major U-turn by President Emmanuel Macron’s administration after 18 months in office.

In announcing the decision, Prime Minister Edouard Philippe said anyone would have “to be deaf or blind” not to see or hear the roiling anger on the streets over a policy that Macron has defended as critical to combating climate change.

“The French who have donned yellow vests want taxes to drop, and work to pay. That’s also what we want. If I didn’t manage to explain it, if the ruling majority didn’t manage to convince the French, then something must change,” said Philippe.

“No tax is worth jeopardizing the unity of the nation.”

Along with the delay to the tax increases that were set for January, Philippe said the time would be used to discuss other measures to help the working poor and squeezed middle-class who rely on vehicles to get to work and go shopping.

Earlier officials had hinted at a possible increase to the minimum wage, but Philippe made no such commitment.

He warned citizens, however, that they could not expect better public services and lower taxes.

“If the events of recent days have shown us one thing, it’s that the French want neither an increase in taxes or new taxes. If the tax-take falls then spending must fall because we don’t want to pass our debts on to our children. And those debts are already sizeable,” he said.

The so-called “yellow vest” movement, which started on Nov. 17 as a social-media protest group named for the high-visibility jackets all motorists in France carry in their cars, began with the aim of highlighting the squeeze on household spending brought about by Macron’s taxes on fuel.

However, over the past three weeks, the movement has evolved into a wider, broadbrush anti-Macron uprising, with many criticizing the president for pursuing policies they say favor the rich and do nothing to help the poor.

Despite having no leader and sometimes unclear goals, the movement has drawn people of all ages and backgrounds and tapped into a growing malaise over the direction Macron is trying to take the country in. Over the past two days, ambulance drivers and students have joined in and launched their own protests.

After three weeks of rising frustration, there was scant indication Philippe’s measures would placate the “yellow vests”, who themselves are struggling to find a unified position.

“The French don’t want crumbs, they want a baguette,” ‘yellow vest’ spokesman Benjamin Cauchy told BFM, adding that the movement wanted a cancellation of the taxes.

Another one, Christophe Chalencon, was blunter: “We’re being taken for idiots,” he told Reuters, using a stronger expletive.

GREEN GOALS

The timing of the tax U-turn is uncomfortable for Macron. It comes as governments meet in Poland to try to agree measures to avert the most damaging consequences of global warming, an issue Macron has made a central part of his agenda. His carbon taxes were designed to address the issue.

But the scale of the protests against his policies made it almost impossible to plow ahead as he had hoped.

While the “yellow vest” movement was mostly peaceful to begin with, the past two weekends have seen outpourings of violence and rioting in Paris, with extreme far-right and far-left factions joining the demos and spurring chaos.

On Saturday, the Arc de Triomphe national monument was defaced and avenues off the Champs Elysees were damaged. Cars, buildings and some cafes were torched.

The unrest is estimated to have cost the economy millions, with large-scale disruption to retailers, wholesalers, the restaurant and hotel trades. In some areas, manufacturing has been hit in the run up to Christmas.

CHANGE FRANCE?

Macron, a 40-year-old former investment banker and economy minister, came to office in mid-2017 promising to overhaul the French economy, revitalize growth and draw foreign investment by making the nation a more attractive place to do business.

In the process he earned the tag “president of the rich” for seeming to do more to court big business and ease the tax burden on the wealthy. Discontent has steadily risen among blue-collar workers and others who feel he represents an urban “elite”.

For Macron, who is sharply down in the polls and struggling to regain the initiative, a further risk is how opposition parties leverage the anger and the decision to shift course.

Ahead of European Parliament elections next May, support for the far-right under Marine Le Pen and the far-left of Jean-Luc Melenchon has been rising. Macron has cast those elections as a battle between his “progressive” ideas and what he sees as their promotion of nationalist or anti-EU agendas.

Le Pen was quick to point out that the six-month postponement of the fuel-tax increases took the decision beyond the European elections.

(Additional reporting by Marine Pennetier, Elizabeth Pineau and Richard Lough, John Irish; Writing by Luke Baker; Editing by Richard Balmforth)

Trump claims NATO victory after ‘go it alone’ ultimatum

U.S. President Donald Trump looks on as he holds a news conference after participating in the NATO Summit in Brussels, Belgium July 12, 2018. REUTERS/Reinhard Krause

By Jeff Mason and Sabine Siebold

BRUSSELS (Reuters) – Donald Trump claimed a personal victory at a NATO summit on Thursday after telling European allies to increase spending or lose Washington’s support, an ultimatum that forced leaders to huddle in a crisis session with the U.S. president.

Trump emerged declaring continued commitment to a Western alliance built on U.S. military might that has stood up to Moscow since World War Two.

People present said he had earlier warned he would “go it alone” if allies, notably Germany, did not make vast increases in their defense budgets for next year.

“I let them know that I was extremely unhappy,” he said, but added that the talks ended on the best of terms: “It all came together at the end. It was a little tough for a little while.”

German Chancellor Angela Merkel, who called the summit “very intense”, and other leaders including French President Emmanuel Macron, played down the extent to which they had pledged to accelerate spending plans as fast as Trump wanted.

“He said they must raise spending by January 2019 or the United States would go it alone,” one person said of the clash at NATO headquarters when Trump spoke in a debate that was meant to move to other matters after rows over spending on Wednesday.

Macron and others said they did not interpret Trump’s words as a direct threat to quit the alliance Washington founded in 1949 to contain Soviet expansion. Trump, asked if he thought he could withdraw from NATO without backing from Congress, said he believed he could but it was “unnecessary”.

Others say Congressional approval would be required — and would be unlikely to be forthcoming.

Trump hailed a personal victory for his own strategy in complaining loudly that NATO budgets were unfair to U.S. taxpayers, and the emergence of what he said was a warm consensus around him.

Several diplomats and officials said, however, that his undiplomatic intervention — including pointing at other leaders and addressing Merkel as “you, Angela” — had irritated many.

As the drama unfolded, a day after Trump launched a virulent public attack on German policy, NATO Secretary General Jens Stoltenberg cleared the room of many officials and the invited leaders of non-members Georgia and Afghanistan so that the other 28 leaders could hold a closed session with the president.

SPENDING TARGETS

NATO members have committed to spending at least two percent of their national income on defense by 2024, though the terms allow for stretching that in some cases to 2030. The United States, far the biggest economy, spent 3.6 percent last year, while Germany, the second biggest, paid out just 1.2 percent and only a handful of countries met the 2 percent target.

Trump told leaders he wanted them all to hit that target by January, prompting consternation. Many have already settled their 2019 budgets and the sums involved are immense — even if they wanted to, many would struggle to make useful purchases.

Merkel told reporters there followed a discussion with assurances to Trump that spending was increasing — something he later acknowledged was happening at an unprecedented rate.

“The American president demanded what has been discussed for months, that there is a change in the burden sharing,” Merkel said. “I made clear that we are on this path. And that this is in our own interests and that it will make us stronger.”

Asked when exactly the allies would now reach their two percent of GDP target, Trump said it would over the coming years. Macron said France, which last year spent 1.8 percent on defense, would meet the target by the 2024 deadline.

Spanish Prime Minister Pedro Sanchez, who like the summit host, Belgian Prime Minister Charles Michel, was singled out in the room by Trump for spending less that 1 percent of GDP on defense, said Madrid would also meet the target by 2024.

“We have a very powerful, very strong NATO, much stronger than it was two days ago,” Trump said. “Secretary Stoltenberg gives us total credit, meaning me, I guess, in this case, total credit. Because I said it was unfair.”

(Additional reporting by Robin Emmott, Alissa de Carbonnel and Humeyra Pamuk in Brussels, John Walcott in Washington, Writing by Robin Emmott; Editing by Janet Lawrence and Jon Boyle)

Far-left anarchists smash windows in Paris during May Day rally

A masked protester walks near a car that burns outside a Renault automobile garage during clashes during the May Day labour union march in Paris, France, May 1, 2018. REUTERS/Christian Hartmann

PARIS (Reuters) – Hundreds of hooded protesters held up an annual May Day demonstration in eastern Paris on Tuesday, with some smashing the windows of a McDonald’s restaurant and hurling petrol bombs inside, Reuters television images showed.

French police warned on Monday of possible clashes with far-left anarchist groups, known as Black Blocs, after a call on social media for a “Revolutionary Day”.

Authorities said some 1,200 hooded and masked protesters had turned up on the sidelines of Tuesday’s planned demonstration by labor unions.

People hold a banner which reads, “Students, Employees. Everyone in the Street. General Strike” during the traditional May Day labour union march in Paris, France, May 1, 2018. REUTERS/Christian Hartmann

Images also showed the smashed windows of a Renault garage on a road near the Austerlitz station and a construction vehicle in flames.

The protesters moved towards riot police chanting anti-fascist slogans, waving Soviet flags and anti-government banners and throwing firecrackers. Some started to build barricades. The police used water cannon against some of the protesters.

President Emmanuel Macron, elected last May on a promise to shake up France’s creaking economy and spur jobs growth, is locked in a battle with the trade unions over his plans to liberalize labor regulations.

Railway staff have begun three months of nationwide rolling strikes in a dispute over the government’s planned overhaul of state-run railway SNCF.

(Reporting by John Irish; Editing by Gareth Jones)

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