Jean-Claude Trichet has decided this afternoon to keep the ECB key interest rates unchanged. George Friedman of Stratfor Strategic Forecasting has an excellent, objective piece on Sarkozy’s recent attacks on the ECB, and the ECB’s dilemma over what to do about the new French president’s economic policies. “Sarkozy sees his vision for France being undermined by the ECB, whose policies are in many ways more important to the French economy than anything Sarkozy might plan,” says Dr.Friedman. The implication is that in Europe individual states cannot simply break with the past and change their ways, as Sarkozy wants to do. They have to take into consideration and work alongside their partners. France is bound into an especially close economic relationship with Germany: “If Germany and France undertake fundamentally different approaches to economic development, how can both be contained in a single European structure?” In other words “How do you have multiple sovereign states within a single central bank…..someone must always be hurt. What is of great significance is that Sarkozy has made it clear that it is France that is being hurt – to the benefit of its partner Germany.” The Germans are more than happy with the way the euro is performing, France is not.

This has long been the cry not only of the eurosceptics, but of many economic realists, that one size cannot fit all. When François Mitterrand, shocked by the implications of Germany’s unification, began pressing for a single currency, it was to bind the two founding members of the economic community in closer harmony. Their frequent bi-national summits, religiously continued first by Chirac and Kohl, then by Chirac and Schroder, were to make sure their thinking and their policies remained in synch. Sarkozy’s “rupture” could break that harmony – indeed already has: his attempts to reinforce his ties with Germany have only served to irritate many Germans, including, apparently, their Chancellor. “It is not clear,” says Friedman, “how the ECB can harmonize the diverging policies and interests of Germany and France. But in the long run this is no minor affair….Sarkozy is a serious man and should not be dismissed. The logic of what he is saying leads [either to an agreement to drop national sovereignty in favour of a federal power, or] to a crisis that cuts to the heart and future of the European Union.”

It’s good, bracing stuff, that Sarkozy may take the EU to the brink. But it does look as if this business of having to work alongside one’s economic partners has taken the French president by surprise. He, and many of his compatriots on the right, have been inspired by the economic policies of Britain, Denmark and Sweden. The flaw in that argument is that, unlike France, none of those countries has the euro – each decided to keep its sovereign currency. Freedom to act as he sees fit seems to be one hallmark of Mr. Sarkozy - the one size fits all strait-jacket is not his style.

It’s strange returning to this blog after an absence of a couple of weeks – I haven’t physically been away, but I have been otherwise occupied and now as I take up the keyboard to re-start regular blogging I get the strong feeling that during the last few weeks attitudes towards the new president have evolved.

Ever since Sarkozy’s election in May we have been promised a “hot September”, meaning that as people woke from their summer holidays to the reality of reforms, there would be massive revolt in the streets. In fact rather than heat, I sense a chill falling back over France. Not the apathetic chill which accompanied Chirac’s last years, but a gradual disappointment that the new dawn many believed would come if they placed an X next to Sarkozy’s name on voting day is not quite as close as they were led to believe. It has nothing to do with promises not kept or the length of time it takes for reforms to kick in, more to do with the simple realisation that Sarkozy may not be as good as he makes out.

The chill does not come from the left, in which case it could be easily dismissed, rather it comes from abroad, from outsiders’ reactions to what Sarkozy says and does, and for that reason is a tad more serious. When European allies tell journalists that the French president’s grasp of economics is severely limited or even non-existent, his compatriots gulp in surprise – their president says things with such assurance they assume he must know what he’s talking about. Ordinarily, economic problems pass unnoticed, but the current turbulence in international banking has focussed attention on the world of finance, so that talk of France’s debt and public deficit, of rigeur and national bankruptcy ring louder-than-usual alarm bells. When the president’s assurances that he will manage the debt during the next five years are met with frank and openly expressed doubt by France’s European partners, it is obvious that Sarkozy’s famous powers of persuasion do not extent beyond his frontiers. His populist blaming the ECB for France’s ills is greeted not, as he hoped, as a call to arms by other members of euroland, but with icy silence. Sarkozy’s electorate is starting to understand that being on TV 224 times in four months, while perhaps being a world record, is not synonymous with providing the right answers.

But the criticisms cover a wide area: when Angela Merkel lets it be known she does not like Sarkozy embracing her in public and throwing his arm round her shoulder, which he clearly sees as part and parcel of his winning Gallic charm, doubts  at home grow about Sarkozy’s manner. A president who acts in a surly manner to American journalists come to interview him, and says things like “It has been more than 20 years that the US Secretary of State has not been an American, or rather has been an American from outside”, is showing remarkable lack of judgement. His meaning is quite clear: Colin Powell and Condoleeza Rice are either non-Americans, or Americans from outside. Does he make the same distinction about Rachida Dati? A president who, we have now been told, often complains that “J’ai beaucoup de nuls et de cons au gouvernement“, who thinks of one ambassador as “un couillon”, calls another “a cretin”, adding “I dislike all of them, they’re cowards” is not endearing himself to any of them. “Je me fous des Bretons”, he says and there is no reason to suppose that it is only the Bretons whom he thinks of as “connards”. It seems as if the president has a low opinion of many of his compatriots, which if true makes his actions unbearably cynical, and that cynicism will produce an echo in his voters, just as the journalists who are with him every day now know what he says about them behind their back are no longer so respectful. That’s what I mean by a chill moving over the country. A tiny sign, but perhaps indicative: in the June Prospect I spoke to my local mayor about the official portrait of the new president: now I see at least one rural mayor has refused to hang it, an unprecedented act. Having deliberately broken down the stuffiness of the presidential institution, he now finds he does not command the same respect as his more aloof, palace-bound predecessors.

Sarkozy’s popularity is dropping fast. More interesting, while a majority say they approve of the way he is reforming France, 60% of that majority do not believe those same reforms will improve their lives. In other words they see the reforms as necessary for the country (because the press has told them they are), but their personal outlook is still gloomy, their expectations low. Sarkozy’s bet was that by making people feel better, by giving them confidence, he would re-energize his country. Instead it feels to me as if they are losing confidence again. In the meantime the revolt in the streets is being prepared. By delaying their strikes until the end of this month and November, the unions may have hit upon a good strategy – Sarkozy had hoped that when the inevitable strikes happened, his support would be so robust they would fizzle out, but if the erosion of confidence in him continues, that may not be the case.