Tuesday, 11 Dec 2018
Business

Why people in yellow jackets block French roads

Since mid-November, men and women known for their yellow vests are demonstrating throughout France. They sporadically block roads, fuel depots and warehouses, and some events escalate into violence. The disruptions led to a double-digit decline in large retail sales at the weekends of November and partially contributed to lowering consumer confidence to its lowest level in three-and-a-half years. Scenes of burning vehicles and tear gas in the center of Paris led the Minister of Finance, Bruno Le Mayor, to deplore the damage to the reputation of the country. President Emmanuel Macron, perhaps facing his biggest national challenge so far, has given way.

1. Who are these 'Yellow Vests'?

These are protesters dissatisfied with Macron government's increasing gas and diesel taxes to reduce carbon emissions – an order that Macron has suspended. The yellow vests ("yellow vests") are a nod to the fate of motorists, because drivers in France are required to wear at least one such safety vest in their car. What began as an online petition became a grassroots movement organized through social media and divided into locals leading local actions. At one point, during the "Action Day" of November 17, the police counted about 2,000 separate blockades raised across the country. The movement has a more violent fringe, resulting in clashes with the police, vandalism and even death threats against members of the movement who have tried to negotiate with the government. Although political parties have enthusiastically attempted to join this movement, it is quite non-political.

2. What is the problem with gasoline taxes?

The Macron government raised the tax on hydrocarbons by 7.6 cents per liter for diesel and 3.9 cents for gasoline in early 2018; a second increase planned for early 2019 was to add an additional 6.5 cents per liter of diesel and 2.9 cents per liter of gasoline. The January 1 hikes are now delayed for at least six months. Although the initial petition and the online protests concerned taxes, the movement represents a wider anger against the power of purchase.

3. Why worry about the power of purchase?

For many people in small towns and rural areas of France, who are dependent on cars and have seen public services deteriorate, rising fuel prices are the last straw. Local protest groups have called for higher pensions, wage cuts for politicians and the reinstatement of the wealth tax that Macron abolished last year. Some went so far as to demand the dissolution of the National Assembly and its replacement by a "People's Assembly".

4. Why do these events make France tremble?

The French unions, historically at the origin of popular demonstrations, are not as formidable as before and the last national strike that really paralyzed the country dates back to 1995. The tight control exerted by the unions on their members allowed them to end strikes and demonstrations so quickly. as they started. With yellow jackets, the lack of central organization means that there is no one to negotiate with. And the movement shows no sign of either breathlessness or moderation of its demands. The organizers have called for demonstrations every Saturday in Paris. Polls show that more than three quarters of French people support demonstrations, their numbers increasing despite economic disruption and sporadic violence. Yellow jackets have taken some steps to become more formal, with eight local spokespersons forming a national committee, but some locals have challenged this decision.

5. How did the government react?

The government argues that most of the price increases felt by consumers in 2018 are due to the rising price of oil on the market, over which it has no control, rather than higher taxes. . The ministers initially downplayed the protests, saying the tax cuts on salaries and polling stations largely offset the increase in taxes on gasoline. When this line was not convincing, they promised more incentives to buy cleaner cars. They criticized the Yellow Vests for wanting both reduced taxes and more services and the violence that erupted during some of their demonstrations. The six-month suspension of new fuel taxes and higher electricity prices will allow for a three-month public debate on France's environmental policies. The initial reaction of most yellow vests was: too little, too late.

6. What is the risk for Macron?

Officially, none. Although his popularity is at the rendezvous – the voting agencies give him an approval rate of 25 to 30% – he will not be submitted to national elections before 2022. He bet that, by charging in the foreground , unpopular, but necessary, work and tax reforms, the benefits would become clear by the time he would be reelected. So far, this does not happen. This means he may be more reluctant to embark on the next round of reforms aimed at reforming unemployment insurance and unifying pension systems in France.

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the makers of this story: Ben Sills at bsills@bloomberg.net, Laurence Arnold, Flavia Krause-Jackson

© 2018 Bloomberg L.P.

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