France: À droite

Also: Germany, Sri Lanka, India, Israel, and Palestine.

Allegory of the Return of the Bourbons on 24 April 1814: Louis XVIII Lifting France from Its Ruins, Louis-Philippe Crépin, 1814, oil on canvas, Palace of Versailles.

In today’s dispatch:

• FRANCE. The government bends to public opinion.

• GERMANY. The Social Democrats come first in a crucial state election.

• SRI LANKA. Voters clap back at the creditors.

• INDIA. Separatist fears complicate Delhi’s foreign policy.

• ISRAEL. PALESTINE. Hamas’s leader is rumoured to be dead.

Geopolitical Dispatch is the daily intelligence and risk briefing of Geopolitical Strategy, an advisory firm specialising exclusively in geopolitical risk.

FRANCE. À droite

The government bends to public opinion.

Prime Minister Michel Barnier announced his cabinet Saturday, assuming personal authority for the budget and EU affairs. Barnier said Sunday he would hike taxes for high earners, setting up a possible collision with Emmanuel Macron.

INTELLIGENCE. Barnier’s cabinet has been criticised as being the most right wing in years. The New Popular Front (NFP) has staged protests and has vowed to vote against it. The hard-right National Rally has called it a “return to Macronism.” Yet by appointing prominent conservatives and going after the rich, rather than cutting more services (Macron’s alleged preference), Barnier is going with the tide of public opinion. It’s no wonder the populists are worried.

FOR BUSINESS. Economically, France doesn’t need to make things harder for entrepreneurs, which tax hikes will do (big firms are also in the crosshairs). Yet budget repair is more important, as is political stability, which would have been further eroded by emergency fiscal consolidation. Macron knows this and will likely agree to the plan if pushed. National Rally will also likely agree. Should NFP be the only opponent, it will be the one protecting France’s wealthiest.

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GERMANY. Brandenburg gated

The Social Democrats come first in a crucial state election.

Chancellor Olaf Scholz's Social Democratic Party had won 32 of 88 seats in the Landtag of Brandenburg, provisional counting showed early Monday, an increase of 7 seats. Alternative for Germany (AfD) came second with 30 seats.

INTELLIGENCE. Fears of a third AfD state victory seem to have rallied centrist voters to the SDP, despite its general unpopularity. With a 73% turnout, it's a relief for Scholz, but