President Nicolas Sarkozy will try to reassure anxious voters, markets and European allies that he is on top of the financial crisis on Thursday in a keenly awaited landmark speech.

"/> President Nicolas Sarkozy will try to reassure anxious voters, markets and European allies that he is on top of the financial crisis on Thursday in a keenly awaited landmark speech.

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Sarkozy to give euro crisis speech

President Nicolas Sarkozy will try to reassure anxious voters, markets and European allies that he is on top of the financial crisis on Thursday in a keenly awaited landmark speech.

The French leader will travel to the port city of Toulon where, just over three years ago, he gave a major economic address during the previous 2008 credit crunch, vowing to “re-found global capitalism”.

The speech comes as rating agencies are reconsidering France’s “AAA” debt rating and just ahead of a major European summit on December 8th and 9th billed by some as a last chance to save the eurozone from financial collapse.

Sarkozy spoke to his German and Dutch counterparts Chancellor Angela Merkel and Prime Minister Mark Rutte on Wednesday by telephone, and meets Britain’s Prime Minister David Cameron on Friday in Paris.

European leaders have vowed to contain the debt crisis spreading north from the debt-ravaged economies of Greece, Spain and Italy, but they are divided over strategy and have failed to convince bond markets.

The European Commission and the OECD have warned of a return to recession across the continent, and France is in dire straits. Growth and domestic demand has stagnated, and unemployment is at a 12-year high.

“It’s an existential crisis for Europe,” French Foreign Minister Alain Juppé said in an interview with the newsweekly L’Express.

Paris would have liked to stifle the debt crisis by unleashing the European Central Bank, allowing it to threaten to issue euros to buy primary sovereign debt and bring down the record bond yields faced by weaker states.

But Merkel has stood adamantly against the idea — anathema in a Germany still haunted by memories of interwar hyperinflation — and Europe appears to be stumbling towards some kind of IMF-led bail-out.

While French and German officials battle against each other behind the scenes, Sarkozy and Merkel have attempted to play down their differences in public, vowing to present their EU colleagues with a plan next week.

Thursday’s speech will be scrutinized for clues as to what this might be, with leaders like Italy’s prime minister Mario Monti warning that markets will punish any failure to agree a plan in Brussels on December 9th.

Sarkozy’s government spokeswoman, budget minister Valérie Pécresse, said France would be ready to support German calls for treaty changes to place EU member states’ national budgets under Brussels’ scrutiny.

“We’re working on a proposed pact, with more discipline in the euro zone,” she said. “With at the same time more solidarity within Europe, with stronger institutions that can intervene more efficiently.”

It is this “solidarity” that is proving the sticking point. Merkel has refused to countenance a broader ECB mandate to allow it to become a lender of last resort or to issue joint eurobonds to pool sovereign debt.

In Paris, officials said these discussions were ongoing and the proposed pact not “ripe”. One senior figure lamented “Merkel does not act until she reaches the precipice.”

Amid all the ongoing discussions with his partners, Sarkozy is not free to outline a final plan to end the crisis in Toulon, and will instead set out to explain the problem to his compatriots.

Previous appearances on major themes in recent weeks, in which he has posed as a dynamic captain guiding the ship of state through rough economic waters, have seen him gaining some traction in opinion polls.

But voters are not bond markets, who will prove tough to reassure, and the polling agencies still predict he will lose office to Socialist challenger François Hollande in May next year.

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Leaders Sarkozy and Juppé stumble in race for Elysée

Right-wing candidates for the French presidential election face off in the first round of a US-style primary on Sunday with former president Nicolas Sarkozy and ex-prime minister Alain Juppe fighting to avoid being knocked out by an outsider.

Leaders Sarkozy and Juppé stumble in race for Elysée
Alain Juppé and Nicolas Sarkozy. Photo: AFP

In a contest overshadowed by the election of Donald Trump in the United States, support for the early favourite Juppe has slipped and Francois Fillon, who served as prime minister under Sarkozy, has risen fast.

The right-wing nominating contest is crucial because with the French left divided, the winner is expected to go on to take the presidency in May, beating far-right leader Marine Le Pen in the runoff.

Juppe, 71, entered the two-month-long contest with polls showing him to be France's most popular politician, but his approach of playing the moderate against the fiery Sarkozy and the conservative Fillon appears to be backfiring.

Most polls now show Juppe and Sarkozy are neck-and-neck at around 30 percent, with Fillon close behind after making striking progress in recent weeks.

The two winners on Sunday will go through to the second round run-off a week later.

Two becomes three

“We were expecting a duel but in the end a three-way contest has emerged,” political scientist Jerome Jaffre said in Le Figaro newspaper on Thursday.

Many have noted that 62-year-old Fillon's rise had coincided with the publication of his latest book entitled “Beating Islamic totalitarianism”.

An often confused final TV debate of the seven candidates on Thursday offered few clues about the possible outcome, although viewers polled afterwards said Fillon had performed the strongest.

Sparks flew when Sarkozy was asked about fresh claims that he received millions in funding from the late Libyan leader Moamer Kadhafi towards his 2007 campaign.

Sarkozy called the question “disgraceful” and refused to answer.

Turning to the Trump effect, the former president said a more isolationist America created “a fantastic opportunity for France and Europe to re-establish a leadership role” on issues including border security and the reform of the UN Security Council.

“The next five years will mark the return of France and Europe to the international scene. America won't be there to put us in the shade,” he said.

Juppe meanwhile said the Trump-era heralded a triple “shock” — in the areas of trade, defence and the environment.

A return to protectionism would be “a tremendous regression”, Juppe said, while warning Europe against being “naive” in its dealings with the United States.

The three leading candidates have similar programmes, underpinned by pledges to reinforce domestic security in a country still under a state of emergency following a series of jihadist attacks.

They also share a desire to reinforce European borders and reduce immigration, while tax cuts also loom large.

The choice will come down to style.

Sarkozy has emphasised his tough-guy credentials, saying it makes him a better choice to handle Trump than the mild-mannered Juppe.

Fillon, who is popular in the business world, has promised “radical” economic measures but is the most conservative of the three on social issues.

Another unknown factor in Sunday's first round is the number of left-wing voters prepared to pay two euros and sign a declaration that they subscribe to “the values of the centre and the right” to vote in the right-wing primary.

Those who do are expected to vote against 61-year-old Sarkozy, who remains a highly divisive figure in France four years after he left office.

When the right-wing candidate is chosen on November 27, it is expected to trigger an announcement from deeply unpopular Socialist President Francois Hollande on whether he intends to bid for re-election.

On Wednesday, Hollande's former economy minister Emmanuel Macron announced he would stand as an independent.

by AFP's Guy Jackson