Leading article: Wanted: a leader to pull France out of endless crisis

The first head to roll as a result of the "French Watergate" could well come from the very top. Even before this scandal exploded, Dominique de Villepin's popularity ratings were as low as any French prime minister in the past four decades. Now M. Villepin stands accused of using state institutions to pursue a private feud with a political rival. There is widespread speculation in France that his resignation is only a matter of time.

All this, of course, plays directly into the hands of M. Villepin's great rival on the centre-right, the Interior Minister, Nicholas Sarkozy. It was M. Sarkozy who was alleged to have stashed bribes in an offshore bank account. Having been exonerated, M. Sarkozy is now turning up the heat on those who attempted to traduce him. This, it would seem, included M. Villepin.

The ascendancy of M. Sarkozy is not necessarily a bad thing for France from an economic perspective. He appears to have a clear idea of the labour market and welfare reforms the French economy requires. But whether he will enjoy any success in implementing them remains highly uncertain in light of the panicked withdrawal of the government's tentative job contract reform legislation last month in the face of street protests.

Another reason for caution about M. Sarkozy's improving fortunes is his increasingly hard-line stance on the question of immigration. A recent Bill from M. Sarkozy on the rights of foreigners to settle and work in France has been widely criticised for being xenophobic and discriminatory. All this hardly projects an image of a nascent European statesman and potential president of France.

Yet M. Villepin's implosion certainly makes the battle lines clearer for the 2007 presidential election - when Jacques Chirac will, at last, retire from the political scene. On the centre-right will be M. Sarkozy. On the centre-left, the candidate looks increasingly likely to be Ségolène Royal. There has been a good deal of hype surrounding this former Socialist minister. A poll of young people released only yesterday shows a majority prefer her to M. Sarkozy.

But as with M. Sarkozy, the auguries are mixed. It is far from clear what Mme Royal actually stands for. She remains a largely unknown quantity despite an extensive publicity campaign to promote her. As well as this, the Socialist party that she hopes to lead is still traumatised by last year's split over the European Constitution. Mme Royal still has a considerable amount of work to do if she is to win her party's backing in November's nominations, and thereafter the votes of the French electorate.

The popular rejection of the European Constitution almost exactly one year ago seems to have precipitated a perpetual crisis in France. The "non" vote was a slap in the face for France's political elites, who almost unanimously backed the constitution. The three weeks of rioting in immigrant communities around the country brought into question France's much-vaunted social model. The withdrawal of the job contract law revealed a government at the mercy of the street. And all the while, high levels of unemployment and sluggish growth have continue to undermine the nation's economic self-confidence.

France badly needs new political leaders who will put the national interest above petty political squabbling; politicians who can break out of the bubble surrounding the patrician elite and reconnect with the disenchanted French electorate. Sadly, what this latest murky scandal has revealed is that it is still "business as usual" in French politics. And, as we have seen, business- as-usual is simply not good enough.