Why Brittany's 'red caps' are a red alert for France's Hollande

An independent dukedom for centuries, Brittany in northwest France is a rugged land perched on the Atlantic coast, removed geographically and culturally from the rest of the country.

But it has stood squarely at the center of national debate on how to steer France's economy at a time of stubborn unemployment and anemic growth. It is here that the “red caps” movement emerged in protest of a new tax on heavy vehicles, gaining national attention and turning into a symbol of generalized discontent over President François Hollande's fiscal policies.

Faced with demands from Brussels to reduce France's budget deficit, President Hollande in his first year and a half in office has avoided deep structural reform in favor of raising billions in taxes. And when he sought to place one more tax on transport trucks, Bretons – 30,000 at one march – went to the streets, saying this so-called “ecotax” would unequivocally damage their already slumping food and farm industry.

These are not just tax rebels, whose red caps recall their ancestors' tax revolt in the 17th century. The small business owners, entrepreneurs, artists, and some unions that also comprise the movement are calling for a new economic direction in France, inspiring similar protests across the country.

“There is a worry about the rise of taxes, but it's not just in Brittany, it touches a lot of people throughout France. As the fiscal pressure has grown, there is a general feeling of 'stop,' that could spread to other regions in other sectors,” says Bernard Vivier, director of a French research institute on labor issues, the IST. “The taxes have grown very fast, yet the government is not doing anything about cutting public spending."

"We are not doing what we have to do, or fulfilling our European solidarity.”

'Red caps'

The first “red caps” emerged more than 300 years ago, in a protest in 1675 against new taxes that King Louis XIV imposed to fund his war effort. The modern red cap is a loose symbol, but one of the leaders of today's movement, union head Thierry Merret, calls Hollande a modern-day version of the 17th century French king.

His group's discontent can be explained in part by numbers. While Brittany's unemployment sat below the national average – now nearly at 11 percent – due to a humming agribusiness sector that had made Brittany into a top food producer, now plants are slashing jobs or closing down altogether amid competition from abroad, sowing pessimism here.

“The ecotax is the straw that broke the camel's back,” says Mr. Merret, dressed in a thick, black leather coat in the national union offices in Paris. When the tax was announced, the “red caps” tore down toll gates put in place to collect the money. They garnered national attention with their protest in Quimper, in the far west of Brittany. “Hollande, Brittany will be your cemetery,” read one protester's sign.

The fury behind their movement caused the government to back-track on the ecotax, announce that a new fiscal overhaul was on the way, and sign a new agreement for investment in Brittany. But protests are unlikely to die down.

Other groups, from horse riders to ambulance drivers, have been just as angry with Hollande over sales tax increases. Promising spectacular headlines, soccer clubs had threatened, but did not follow through on, a strike at the end of November over the “super rich” tax on earnings over a million euros. Two out of three French said they'd be ready to take to the streets over the level of taxes and unemployment, according to a poll by CSA for BFMTV.

Hollande is now officially the least popular president in the history of the Fifth Republic. He took over in the middle of the continent's biggest crisis since World War II, and deepening scrutiny of when it's becoming increasingly obvious that the hard-won model of French state protection is under scrutiny, especially its social spending to GDP ratio which is the highest of any EU country, at 57 percent.

Growing concerns

Even though France has not needed a bailout or seen any kind of widespread failure like Spanish banks or the Greek government, it has become one of the biggest worries for the EU. It refuses to grow, industry is slumping, and its credit rating was downgraded last month by Standard & Poor’s – the second time in two years.

Hollande has not tackled deep reform to the labor market or to the pension system. Instead of spending cuts like those undertaken in Italy or Greece, France has bet on tax increases to get its budget deficit to below 3 percent by 2015, according to EU obligations. In three years alone, including under Hollande's right-wing predecessor, the French have faced 70 billion euros more in taxes.

The EU Commission President Jose Manuel Barroso blasted France's fiscal direction to the BBC. "The fiscal policy in France has reached its limit of acceptability,” he said recently. “France is by far the country [in the EU] where companies pay the highest taxes and that's a problem for growth and employment."

The French have reached their limit, say some. “It's true that it's very difficult to do structural reform of the economy in this country ... we have a strong legacy of state regulation," says Christian Lequesne, a political science expert at SciencesPo in Paris. "But of course it has to be solvent. … The answer has been to raise taxes." But he adds that this policy has become unpalatable and the Socialist government must rethink the tax burden, and find a new “balance between solidarity and freedom.”

In a note leaked to local newspapers in November, the country's regional prefects warned the government that disparate protests around the country are just the beginning, as France is today “a society rife with tension, exasperation, and anger.” There is a “mixture of latent discontent and resignation” that risks “erupting” at any time, it said.

It's with that backdrop that Prime Minister Jean-Marc Ayrault pledged last month to overhaul the tax system and make it more coherent. But it's unclear if this will be enough to stem anger, and even less clear if it will be a boost to the economy.

In an Ifop poll, 91 percent of respondents said they wanted a change of Hollande's policies or government before local elections in March. Widespread dissatisfaction was measured even among the Socialist party, with 85 percent also demanding change, a worrisome indicator for the government, if even its supporters turn against it.

Brittany's significance

Brittany has been a Socialist stronghold. Nearly 56 percent of the region voted for Hollande in 2012 elections, well above the national average of 51 percent. So Hollande would be wise to take note of the red cap movement, says Ronan Le Coadic, a professor of Breton language and culture at the University of Rennes.

Here a spirit of independence runs deep. This region of France was part of the Duchy of Brittany, a medieval feudal state, for a thousand years before being annexed to France in 1532. It has retained its Celtic cultural influences. Today the Celtic language, Breton, has enjoyed a cultural revival. Traditional folk music, including Celtic harps and bagpipes, can be heard in local watering holes.

In an Ifop poll in December 2012, 37 percent of respondents from Brittany declared that they felt more Breton than French. In that same poll, 20 percent said they support independence for Brittany. But unlike the Basque separatist movement or the independence movement in Scotland, which will be put to referendum next fall, there is no significant political movement for independence or even autonomy. Regional pride is expressed as a celebration of a language, culture, and place.

But the “red caps” are raising new questions about autonomy and decentralization to which the government has responded, says Thierry Jigourel, a journalist and writer on Brittany. In December, upon signing a pact with Brittany's leaders – one that the red caps dismiss – it promised a plan for new regional autonomy.

It remains to be seen what that might look like, but the demand for more decentralization grows. Mr. Jigourel, who attended the first mega-march in Quimper, says the protest movement against taxation looks more like a regional pride protest.  From the Breton hymns being sung to the waving of Breton flags, he says locals are questioning why France has not devolved more powers to its regions, as have Spain, Italy, and Germany.

“France has an irrational, almost religious centralization,” Jigourel says. “There is a nationalism that can develop [from the red cap movement] but it is not French nationalism. It is Breton nationalism, which contests French centralization.”

This is not just a local movement that is confined to Brittany, however, says Dr. Le Coadic: Bretons, he says, are a stoic people, not prone to complaining, so when they do, something must be wrong. France, he says, is in a crisis, having lost its place in the world, its sense of identity, and the trust in its all-powerful state.

“Bretons might be the first but not the last to protest,” he says. “There is a deep social crisis in all of France.”