By SARAH DiLORENZO, Associated Press
PARIS (AP) — When he came to power in 2007, President Nicolas Sarkozy seemed just the man to shake up France's sclerotic economy with his promises of a break from the past. However, any optimism surrounding his victory five years ago has been replaced by cynicism and recrimination.
Socialist challenger Francois Hollande, whom polls are predicting could win the presidency by a margin of several points, hounded Sarkozy for his handling of the country's economy.
"We have fallen backward," Hollande declared, while belittling Sarkozy's claim that Socialist policies were to blame for France's poor performance in recent years. "Our unemployment has risen and our competitiveness has declined. Germany, in all areas, does better than we do."
If Hollande wins Sunday's election and embarks on a program to boost his country's economy, it will raise questions about France's commitment to reining in its spending while the rest of 17 countries that use the euro embark on a strict period of belt-tightening to convince investors that they can keep control of their debts.
It also throws into doubt the German-French partnership that has led the eurozone's response to its financial problems and was built on the personal relationship between Sarkozy and German Chancellor Angela Merkel.
There are concerns that if investors are worried the fragile eurozone solution might unravel, they could back away from Europe, sending the continent into a fresh financial crisis.
Sarkozy rode to power in 2007 on promises of sweeping economic and labor reforms that would shake France out of sluggish growth and make it competitive with the world's emerging economies. His prime minister, Francois Fillon, vowed a "shockwave of growth" and Sarkozy himself told voters to judge him on his ability to deliver on that promise.
Five years later, at the end of Sarkozy's first term, however, growth has ground to a halt, unemployment has hit 10 percent, and the national debt has ballooned to 86 percent of gross domestic product.
Some of Sarkozy's plans for reform have been affected by outside factors. First there was the global economic slowdown touched off by a financial crisis in the U.S. in 2008. But it is the debt problems of the 17-country eurozone — of which France is its second-largest economy after Germany — that have most distracted Sarkozy from his domestic agenda.
"Nicolas Sarkozy entered the Elysee (Palace) as an energetic and willing reformer," wrote the Institut Thomas More, a Paris- and Brussels-based think tank, in March.
"The crisis transformed him into a firefighter."
Europe has been dealing with a crisis of too much debt in some of its countries for nearly three years and this has raised the specter of the breakup of the single currency union. Three countries — Greece, Ireland and Portugal — have already required bailouts because of unsustainable levels of debt. There are now concerns that the much larger economies of Spain and Italy will follow them and seek a bailout — a move many fear the eurozone cannot afford.
To restore confidence and bring the borrowing costs of eurozone member countries back down to more manageable levels, 24 countries in Europe led by Sarkozy and Merkel have agreed to a "fiscal pact" designed to put a cap on government deficits. This has meant a raft of austerity measures across Europe, in the form of layoffs and pay cuts for state workers, scaled-back expenditures on welfare and social programs, and higher taxes and fees to boost government revenue.
However, there seems to be little evidence of France practicing what it has been preaching. The country has not balanced a budget in more than three decades, and, in Sarkozy's five years, its deficit increased to 5.7 percent of its gross domestic product from 2.3 percent.