This report comes after two French ministers resigned after revelations were made about their extravagant spending of taxpayer money on cigars and a private jet.
The French government is struggling to regain political credibility following a string of embarrassing setbacks, amid a rising budget deficit and public debt.
The following is a rush transcript of Press TV's interview with journalist John Keating and European Affairs Analyst Peter Becket on the issue.
Press TV: France is in a lot of trouble on a wide array of fronts. How will allegations that Sarkozy's party has received illegal campaign donations actually affect his efforts for economical forms?
Keating: I think by far that is the most serious of the two allegations. The resignations on Sunday are not by French standards that huge of a deal. The private plane was used for official business but he should never have used a private plane.
The cigars are considered okay, you know, he stepped out of line…then there is this other affair, which is more serious and has thrown up in his face which is probably the most serious crisis he has faced now since he was elected in May 2007. The allegations are very clear. An accountant who worked for Madame Bettencourt, the richest billionaire in France, she earns about EUR 40 million a month. An accountant who worked for her says that, [Labor Minister Eric] Woerth, who is now one of the key ministers in the cabinet and very close to Sarkozy, took EUR 150,000 in cash in 2007 to help finance Sarkozy's campaign. Woerth has denied this and refused to step down and Sarkozy has denied it. But the press are being absolutely vitriolic and the Socialist Party are being, are being, vitriolic, they stepped out of parliament today.
So it is hard to see how he will pull back from this one, Woerth looks like he has actually gone, but he is still hanging in there trying to say that he has nothing to hide. There is a little twist, Woerth's wife worked for Bettencourt, and before the illegal party financing came up, there was a tax evasion story that went around, concerning his wife, and maybe -- Woerth was the budget minster [at the time] -- he turned a blind eye to this. So it is a very complicated and deep issue.
Press TV: Well it is complicated but I don't think it is as complicated in terms of the economic reforms that the French President and his party and his cabinet want France to conform to. So let me Ask Peter Beckett the same question. So how is this going to affect Sarkozy in terms of his efforts for economic reform?
Beckett: There are only twenty four hours in the day and this is taking up quite a lot of it. I agree with Keating, by French standards the second allegation is by far the more serious, it is kind of odd to think that by British standards this is an issue where the whole government might have to resign. You see people being prosecuted in the UK for far less recently, particularly with regard to abuses and abuses under the expenses system.
The economic reform Sarkozy is trying to pass is unpopular as they are. This will simply amplify the voices of those who are saying, you the government are trying to tell us the people, that we have to cut back on our spending and receive fewer benefits and pay more taxes and yet look at what you are doing with both arm on the money as millionaires and it is just not on. It will make the public far less likely to accept the kinds of reforms that Sarkozy is proposing at the moment.
Press TV: The tile frame for Sarkozy is pretty tight isn't it? Aside for the polls showing that he has got the lowest ranking in terms of percentage of people favoring him, I believe it is hovering at 23 percent. But then Sarkozy is facing elections in 2012 for which he needs to start preparing for in 2011. It is very tight, how to you see him climbing out of this?
Keating: Well, with great difficulty, he is the most unpopular [French] president in memory. I was at a moon poll today and he was at 33 percent which means he was at the lowest ever since they have been doing presidential polls. So, for sure, he is in trouble. He has the Unions against him because of the retirement reforms. He does not have very many people who are looking at him favorably and saying that he is doing a good job right now.
Britain is not really a case to hold up because Britain actually is a standard barer for anti-corruption pact. France is a very corrupt country and it always has been. It is an institution, which is corrupt. As you look back at past presidents that were in office here for example, Jacques Chirac. I mean Chirac left office and he had five or six cases that were under investigation and some of them were quietly put aside after a period of 5 years. But he still has one or two which are still hanging around, which vary from misuse of reforms when he was Mayor of Paris to party scams involving party housing projects and kick backs and stuff like that. I mean it is almost a national past time here, this sort of thing. However, this is coming at a very bad time as your other guest said. This is a very bad time because the recession is still biting and people are still hurting very badly. A lot of people here are living on EUR 900 a month a EUR 1,000 a month. And then they hear that this amazing amount of money has gone for tax evasions, buying islands Caribbean and it is actually quite disgusting. People are fed up.
Press TV: What are the people going to do? Won't that embolden the public? Back in 2006, you mentioned Chirac, there were protest that were held by the French which grounded an attempt to reform labor law under the presidency of Chirac.
Keating: Yes, they have, the most mobilized people here tend to be the public sector, about 20-22% of the people work in the public sector, so you are looking at transport, education, hospitals, etc.
They are already talking about a massive rally with all the seven major unions here in September. So, that will be a big protest. I think they are going to try and block the reform of the pension schemes and also prolonging the working life until 62 rather than 60. This has come to be very volatile on the one hand but people are also very beaten down after years of punishment and inflation and no salary increases and you know the morale is really bad. The mood is also quite ugly and people are complaining a lot.