Can Sarkozy resolve the pensions crisis?

France has been hit by mass protests and strikes over the government's proposed reform of pension schemes. President Nicolas Sarkozy vows he will not cave in to pressure from protesters and trade unions say strike action is gaining momentum. So how de we get out this mess? Here are some of the options.

French President Nicolas Sarkozy Reuters

The French government caves in:

“I will push though the pension reforms, because my duty as head of state is to guarantee that the French and their children will get decent pensions,” said Sarkozy on Wednesday, so it seems unlikely his government will drop the pensions reform completely.

However, if the protests continue and fuel shortages bring the county to a grinding halt, the government could be driven into making some concessions, even if the reform passes trhough the Senate next week.

Sarkozy could reopen negotiations. This would delight trade unions and the opposition Socialist Party, which is already campaigning for presidential elections in 2012.

“If the government reopens negotiation, the partial paralysis of the country will be over,” says Francois Chérèque, the leader of the CFDT trade union.

The president of the ruling right-wing UMP group in the Senate, Gerard Larcher has already mentioned the possibility of adjustments for workers who have lost their jobs or who have exercised demanding trades or professions.

The government sits out the storm:

Weathering the protests is a make-or-break strategy for the Sarkozy government. If the pensions protests peter out, Sarkozy emerges as a strong leader who champions difficult reforms in a recalcitrant country. And he will have succeeded where his predecessor Jacques Chirac failed in 1995.

The inconvenience caused by the strikers and occasional violent incidents could also turn public opinion against trade unions, although the opposite has happened so far.

High school pupils take a break on Friday which means the blockades of schools will stop and it is unclear whether picket lines will arouse quite as much excitement in two weeks time.

However, this strategy is a gamble for the government as a majority of French people agree with the strikers so far, polls show. On the eve of the school break, fuel shortages mean French citizens may have to cancel their holiday plans. Will they blame the government or the unions?

Sarkozy probably expected a showdown with the unions but almost certainly did not anticipate such a deep crisis nor the drop in his personal popularity which preceded it.

So now he is fighting for high stakes. Can his presidency survive? Will he be able to win reelection? Most worrying of all, will his own party decide he is a liability before the next presidential election in 2012?