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Mélenchon
tosses a debt bomb into France’s presidential debate
The
far-left leader wants the ECB to cancel Paris’ debt. His rivals say it’s
madness.
August
25, 2026 6:32 pm CET
By Marion
Solletty and Geoffrey Smith
CHÂTEAUNEUF-SUR-ISÈRE,
France — Jean-Luc Mélenchon has a radical idea to help solve France’s financial
challenges: “set fire” to a large chunk of its public debt.
The
far-left presidential contender would essentially have the European Central
Bank agree to waive interest payments on a massive tranche of French bonds.
Coming
from a top presidential hopeful, the proposal has triggered a flurry of
criticism from leading economists and politicians, who have denounced it as
irresponsible and dangerous for the economic stability of the country and the
entire European Union.
Prime
Minister Sébastien Lecornu called it a “scam in its purest form.” Jordan
Bardella, president of the far-right National Rally, slammed the proposal as
“nonsense.” Former European Commissioner Thierry Breton penned an op-ed against
it.
Mélenchon’s
rivals can hardly dispute the subject’s importance: With public debt amounting
to more than €3.5 trillion, or 117.5 percent of GDP, the issue has become a top
concern for voters.
The
country’s indebtedness is already threatening to derail Lecornu’s efforts to
rein in its deficit. France is among the countries hardest hit by a global
surge in borrowing costs. A loss of confidence in the government's ability, or
willingness, to repay its bonds could make investors shun them, making it
impossible for Paris to raise the cash needed to run the country.
As the
race for next year’s presidential election heats up, Mélenchon’s debt proposal
has driven the country’s political conversation. It has also underscored
something his rivals are painfully aware of: The leftist veteran is ready for
battle, when most of them are still trying to gather their armies.
The
leader of the far-left France Unbowed party launched his presidential bid
months before his rivals. He’s now surging at 17 percent in a Toluna Harris
Interactive poll published on Monday. That puts him neck and neck for second
place with the top centrist contender, former Prime Minister Edouard Philippe,
and in a strong position to make it to the second round of voting, where he
would presumably face off against the far-right leader Marine Le Pen.
A
Mélenchon-Le Pen runoff would guarantee that the next president of France would
be elected on a platform openly hostile to the economic orthodoxy that has
shaped Europe's currency union for the last 27 years.
On
Thursday, Mélenchon and Le Pen will be grilled alongside five other leading
presidential candidates at a highly anticipated debate organized by France's
leading business lobby Medef.
Public
finances — including Mélenchon’s proposal —
are likely to come up.
“The
subject is here to stay,” said Aurore Lalucq, a member of the European
Parliament and a top ally of Mélenchon’s leading center-left rival, fellow MEP
Raphaël Glucksmann. But, she added, “the issue of debt, like everything else,
calls for a nuanced approach.”
Driving
the debate
During a
fiery speech on Sunday morning, Mélenchon slammed the “incompetents” in
government who he said led the country to “ruin and chaos.”
Speaking
on a stage set above water at a lakeside conference center in
Châteauneuf-sur-Isère, on the outskirts of the city of Valence, the France
Unbowed leader struck a prophetic tone as he fired up thousands of his
supporters with a subject more often associated with grey suits and glass
corridors than tub-thumping rallies: the European Central Bank and its holdings
of France’s public debt.
“The
French economy was teetering on the brink of recession; now it is about to
plunge,” Mélenchon said.
“The
European Central Bank can and must freeze [European] governments’ debt,
starting with the debt incurred during the Covid-19 pandemic,” he added,
doubling down on an idea he first floated earlier this summer with another
temperature-themed metaphor, when he promised to “set fire” to debt held by the
Eurosystem — the overwhelming majority of which sits with the Bank of France.
The
Eurosystem, which comprises the ECB and the currency area's national central
banks, owns around one-sixth of French debt, totaling some €600 billion.
The
leftist leader was addressing a 10,000-strong crowd gathered at a rally meant
to set the tone for the months-long marathon of the 2027 election campaign. By
contrast, the center-right and the center-left have yet to decide who is best
placed to represent them, with a dozen contenders in the running.
Still,
Mélenchon’s rivals all seem to agree on one thing: His proposal would only
aggravate France’s fiscal woes.
“This is
absolutely not the right time, from both a macroeconomic and a political
standpoint,” to discuss canceling public debt, said Lalucq, an economist by
training, who highlighted the same criticism many of her peers have raised.
While
she, along with leading economists, advocated for such a measure at the end of
the Covid crisis, circumstances have radically changed, she said. Inflation is
now a key concern, and such a measure would worsen the problem.
Going
rogue
Then
there is the legal issue. The EU treaties forbid the ECB from bailing out
eurozone countries — even if the bank has found ways to intervene at the height
of the eurozone crisis, when its then-President Mario Draghi pledged to do
“whatever it takes” to preserve the euro, and again during the Covid crisis.
A
unilateral move by France — “disobedience” was how Mélenchon’s top lieutenant
Manuel Bompard put it during an hour-long conference on the subject on Saturday
— would not only freak out investors, critics argue, but call into question the
fundamentals of the eurozone.
“He does
it brilliantly, but he's talking nonsense,” Economy Minister Roland Lescure
said on the France television channel BFM TV. Tampering with the Bank of
France's balance sheet, he argued, would amount to “leaving the euro because
you're saying you no longer respect the rules of the common home.”
Not
everyone agrees. Among the participants at the France Unbowed gathering over
the weekend was Matthieu Pigasse, a star banker who advised the Greek
government during the financial crisis and recently landed a much-coveted
contract to restructure Venezuela's debt.
Pigasse
endorsed the proposal during an hour-long video conference on the subject,
throwing his business credentials behind the unorthodox idea. He has been
sparring over the subject with former IMF Chief Economist Olivier Blanchard on
the social media platform X ever since.
"Proposing
false solutions, raising false hopes, is, I believe, irresponsible,"
Blanchard posted on Tuesday.
According
to German economist Carsten Brzeski, ING's global head of macro research, the
problem is that Mélenchon wants the perks of the eurozone without the hard
work.
France
has breached the EU’s deficit rules in almost every year over the past two
decades, shown little appetite for structural reforms such as pension reform,
and often ignored the European Commission’s fiscal recommendations, Brzeski
said.
“Whatever
you want to call it, Mélenchon’s comments suggest that he would like the ECB to
restate its ‘whatever-it-takes’ position and actually bail out governments that
are unable and unwilling to bring their public finances onto a sustainable
footing.”
For
Mélenchon and his allies, whether or not his proposal flies is perhaps not the
main issue. He has succeeded in putting fiscal orthodoxy itself up for debate.
"We
are very happy there is a controversy on debt," said Antoine Léaument, a
member of France's National Assembly with France Unbowed, on the sidelines of
the rally.
"Debt
is the excuse used to roll back social rights,” he added. "We'll take
whatever comes our way. We're game."
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