Sarkozy commits France to Tobin Tax

Say what you like about French President Nicolas Sarkozy, and his enemies frequently do, he doesn't pull back from controversial proposals.

He has long been an advocate of a Financial Transaction Tax, or Tobin Tax, on banks in the EU. Sarkozy's major partners in the EU are either luke warm about the idea, as in Germany, or 150 percent against it, like Britain.

Sarko has grown tired of waiting for consensus to line up behind him so he announced yesterday France would enact one on its own. A tax of 0.1 percent on trades in stocks, derivatives and computer generated high frequency trading.

In a television interview last night, Sarkozy said, "What we want to do is provoke a shock, to set an example."

The shock was felt immediately by French banks whose shares fell today when stock markets opened.

Critics point out that this is an election ploy. With the first round of presidential voting in France scheduled for April 22nd, Sarko is trailing the Socialist Party candidate Francois Hollande by between 5 and 7 percent in opinion polls. Putting himself out front in taking on the banks and hedge funds is good populist politics. Nor do I think it is cynical. Sarkozy genuinely thinks unregulated Anglo-Saxon financial services wrecked the world economy.

It is also an example of a particular French approach to acting on the international stage. The French really do see themselves as exemplars to humanity It's an attitude that goes back to the French Revolution. Americans aren't the only ones who think that their revolutionary exchange of monarchy for republicanism makes them exceptional.

Anyway, it's good politics and may help Sarko close the gap on Hollande.

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