25 April 2017 15:33:26 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

Why May 7 could be a do-or-die day for globalisation

The kind of rhetoric used by Trump and May has only strengthened Marine Le Pen’s case for France

As expected, on April 23, French voters chose Emmanuel Macron and Marine Le Pen to go to a presidential election run-off on May 7, a date that could finally decide the globalisation debate like never before.

It is sometimes hard to believe how far and how rapidly the world has changed. It was just 10 months ago, on June 23, 2016, that the Brexit referendum won 52-48, dealing a critical blow to the integrity of the EU. Just over five months ago, Americans surprised the world by electing Donald Trump, an avid nationalist, over the pro-globalisation Hilary Clinton. And now, Le Pen, a close avatar to Trump, won more votes than she did in 2012, to head to the run-off.

French presidential elections are different from US presidential elections in two key ways. They are conducted on the principle of popular vote majorities, irrespective of party, and they do not follow the US electoral college method.

The electoral college

In the US electoral college system, a complicated state-by-state award of electors based on a winner-takes-all principle, a person elected president simply needs to win the majority vote in each state leading to 270 total electoral college votes.

A state with more people has more electoral votes, for example: California has 55, Texas has 38 and Wyoming has 3.

This is how Trump won. Clinton actually had more popular votes than him, with the overage coming all from one state, California. Clinton won California’s 55 electoral votes the instant she had more votes than Trump in the state. She actually won a few extra million votes in the state, but the result was the same — she still carried the state, no bonus points.

The second difference is that, in France, there are no primaries. This is the process where people within each political party run against each other to win their party’s nomination, and then, each nominee goes to the general election. In the US in 2016, Trump, Clinton, Stein and Johnson represented the Republican, Democratic, Green and Libertarian parties, respectively, in the general election.

In France, everyone is roped into an election regardless of party. Whoever wins 50 per cent of the vote wins the election outright. If no one reaches this threshold, the top two candidates go to a run-off election.

In this past Sunday’s French election, nine candidates competed. No one got 50 per cent of the vote. In fact, the person with the largest vote share was Macron, who won just 24 per cent of the total vote, with Le Pen, at 21.5 per cent. Put differently, the majority of the country was against these two candidates.


In the run-off on May 7, however, supporters of the others vanquished in this weekend’s election are bound to vote for one of the two leading contenders. Or they may feel disgusted and stay home. What they do will determine the future of France, the EU and indeed the world.

If Le Pen wins, she has said she will go to the EU in Brussels demanding that France be given back four sovereign rights: Legislative (which means France gets to decide its laws and not the EU); Territorial (which means France gets to decide its immigration policy); Economic and Banking; and Monetary (which means France returns to the French franc and will go back to its own central bank). These demands are no different from when Shylock was allowed to take his pound of flesh from Antonio but not shed a drop of blood. The EU would likely dismiss Le Pen instantly. Le Pen has said that if this were to happen, she would call a ‘Frexit’ referendum to pull France out of the EU.

If this happens, that would be the end of EU as we know it. The Euro would collapse and each country will scramble to set up its own central bank and currency, as was the situation in the mid 1990s. That would be a significant step against globalisation, including against open borders, visa-free travel and trade. Global trade rules would be replaced with bilateral agreements between individual countries, a position Trump is in favour of. This would further strengthen the US’ position atop the world and fulfil Trump’s campaign promise of “Making America Great Again”.

Le Pen’s supporters are, naturally, older French voters who want to see France reclaim its “old colonial glory.” Surprisingly, large numbers of young voters have also been drawn to Le Pen’s nationalist themes. These are people who can’t find jobs in the country’s chronically troubled economy. Unemployment is at 10 per cent because outsourcing and uncontrolled immigration are taking jobs from the country’s youth. Additionally, technology is also killing jobs that are repetitive, manual and do not require as much skill.

Fate of the EU

If Macron wins on May 7 — as most polls predict he will — it would be a resounding vote for continuing the EU experiment. A centrist, he has argued that the EU is central to France’s existence but he has also rallied against France’s unemployment and its lack of international competitiveness saying that structural reforms are necessary. But Macron would have to govern over a highly fractured country and will have to address concerns expressed by Le Pen’s voters or risk becoming unpopular. The current president, Francois Hollande, decided not to run for re-election because his approval ratings are in the single digits.

How does of all of this affect India? In the short term, India’s prospects are excellent even if the world takes a slow U-turn from globalisation. With demonetisation woes buried, the world is looking at India as a strong economy to build trade ties with. FDI to India has returned with a bang, propping up the rupee.

The new protective visa policies of the US, the UK and Australia are forcing Indian companies to innovate and seek newer markets. The Financial Times reported recently that “TVS’s Apache motorcycles can be found in showrooms from Bogotá to Jakarta, while TVS’s three-wheeled autorickshaws ply the streets of Cairo and Addis Ababa.”

India has been putting its head down and working hard, and this will pay dividends down the road.