CHÂTEAUNEUF-SUR-ISÈRE, France — Jean-Luc Mélenchon has a radical idea to help solve France’s financial challenges: “set fire” to a large chunk of its public debt. The far-left presidential contender would essentially have the European Central Bank agree to waive interest payments on a massive tranche of French bonds. Coming from a top presidential hopeful, it has triggered a flurry of criticism from leading economists and politicians, who have denounced it as irresponsible and dangerous for the economic stability of the country and the entire European Union.
Prime Minister Sébastien Lecornu called it a “scam in its purest form.” Jordan Bardella, president of the far-right National Rally, slammed the proposal as “nonsense.” Former European Commissioner Thierry Breton penned an op-ed against it. Mélenchon’s rivals can hardly dispute the subject’s importance: With public debt amounting to more than €3.5 trillion, or 117.5 percent of GDP, the issue has become a top concern for voters. The country’s indebtedness is already threatening to derail Lecornu’s efforts to rein in its deficit.
France is among the countries hardest hit by a global surge in borrowing costs. A loss of confidence in the government's ability, or willingness, to repay its bonds could make investors shun them, making it impossible for Paris to raise the cash needed to run the country. As the race for next year’s presidential election heats up, Mélenchon’s debt proposal has driven the country’s political conversation.
It has also underscored something his rivals are painfully aware of: The leftist veteran is ready for battle, when most of them are still trying to gather their armies. The leader of the far-left France Unbowed party launched his presidential bid months before his rivals. He’s now surging at 17 percent in a Toluna Harris Interactive poll published on Monday.
That puts him neck and neck for second place with the top centrist contender, former Prime Minister Edouard Philippe, and in a strong position to make it to the second round of voting, where he would presumably face off against the far-right leader Marine Le Pen. A Mélenchon-Le Pen runoff would guarantee that the next president of France would be elected on a platform openly hostile to the economic orthodoxy that has shaped Europe's currency union for the last 27 years. On Thursday, Mélenchon and Le Pen will be grilled alongside five other leading presidential candidates at a highly anticipated debate organized by France's leading business lobby Medef.
Public finances — including Mélenchon’s proposal — are likely to come up. But, she added, “the issue of debt, like everything else, calls for a nuanced approach.” During a fiery speech on Sunday morning, Mélenchon slammed the “incompetents” in government who he said led the country to “ruin and chaos.” Speaking on a stage set above water at a lakeside conference center in Châteauneuf-sur-Isère, on the outskirts of the city of Valence, the France Unbowed leader struck a prophetic tone as he fired up thousands of his supporters with a subject more often associated with grey suits and glass corridors than tub-thumping rallies: the European Central Bank and its holdings of France’s public debt. The Eurosystem, which comprises the ECB and the currency area's national central banks, owns around one-sixth of French debt, totaling some €600 billion.
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