What future? France's Socialist party needs a rethink

France's Socialist party needs to rethink its identity and its strategy. Having lost three presidential elections in a row, the party needs to learn from centre-left parties not only in Britain, but also in Italy, the Netherlands, the Nordic countries and Spain. It differs from the leftwing parties in those countries in at least three ways.

First, the French socialists have been less successful. Of six presidents elected during the Fifth Republic, only one - François Mitterrand - has been from the left. In the first round of presidential or parliamentary elections, the Socialist party seldom scores more than 25%- 30% of the vote.

This is because of the second difference: the French Socialist party is essentially middle-class (and very white), with a strong base in the public sector. The party has never had much support from the industrial working class, as the British Labour party and Germany's SPD have had. France's biggest trade union, the CGT, has traditionally backed the Communist party. From the second world war until the 1980s, the communists attracted considerable support from working class voters, though more recently they have tended to vote for Jean- Marie Le Pen or far left groups, in addition to the Gaullists.

Because of its relatively small electoral base, the Socialist party cannot win power without allying with other political forces. Ever since Mitterrand created the modern Socialist party, it has made electoral pacts with the communists - and taken communist ministers into socialistled governments. But in the 1990s, as the communist vote dwindled, the socialists had to search for other left-of-centre allies.

Lionel Jospin, the socialist who lost the presidency in 1995 but became prime minister in 1997, embraced la gauche plurielle - a broad church that stretched to Communists, Greens, followers of Jean-Pierre Chevènement and the far left. Ségolène Royal maintained a similar broad-left coalition. But the disparate nature of her supporters may have damaged her credibility. In the week before the second round of the presidential election, she wooed François Bayrou's centrist voters but also publicly praised José Bové, the anti-globalisation activist.

The third difference is that the Socialist party remains under the spell of 1970s Marxism. Much more than other western European socialist parties, it views markets as bad, the state as good, big business as wicked and globalisation as a threat that is to blame for most of France's ills. Most European socialist parties have reconciled themselves to market capitalism and understood that foreign trade and investment create wealth. They have focused their energies on trying to equip their economies to succeed in global markets, for example by improving education and training, reducing inequality and providing special help for those who lose from globalisation.

The French socialists could reinvent themselves as a modern, European social democratic party by changing in four ways. First, they should move towards the political centre. Sarkozy, who is clearly - unlike Jacques Chirac - a man of the right, will vacate the centre ground. The socialists should consider an alliance with Bayrou and those centrists who have not backed Sarkozy. But they must also abandon the hard left: a party that feels the need to pander to Trotskyists will have little credibility in the centre ground.

Second, the party needs to modernise its economic programme - as plenty of its leaders, such as Dominique Strauss-Kahn, understand very well. One should not expect the French socialists to emulate the Labour party - many French people would find the UK too unequal. But they should look instead to the Nordic countries, which combine liberal labour markets with redistributive policies and strong welfare systems, for inspiration.

Third, any left-of-centre party in western Europe should have people from ethnic minorities in its leadership. But the Socialist party does not (and it also has few women leaders). The party needs to reach out to minorities by adopting procedures for positive discrimination - even though branding citizens as belonging to one group or another goes strongly against the grain of the French republican tradition.

Finally, the Socialist party needs to redefine itself as an internationalist and pro-European party - as it was in the years of Mitterrand. The divisions over the EU constitutional treaty have contributed to the fuzziness of the Socialist party's identity. A party that moved toward the centrists, who are very pro-EU, and away from the hard left, which is Europhobic, could more easily establish a pro-European identity. If, as is likely, an amending treaty - including some parts of the constitutional treaty - is approved by EU leaders this autumn, the French socialists should be able to put their divisions over the constitutional treaty behind them. Sarkozy will take an "inter-governmentalist" line on the EU, backing a leading role for the large member-states, at the expense of EU institutions and small countries. That will allow the socialists to position themselves as the party that normally backs the European Commission, and supports minimal social standards across the whole EU.

All these changes will require courageous leadership. Despite fighting what was in some ways an impressive campaign, and sometimes hinting that she would like to follow a Nordic model, Royal should probably take a back seat for now. She is not a team player and has alienated many other socialist leaders. She is young enough to reinvent herself and play a major role at some point in the future. Strauss-Kahn, whose mastery of policy is unmatched by his rivals, is probably the best person to lead the party towards a more economically liberal, pro- European position. He may well be too old and grey to be the presidential candidate in five years' time. But he stands a fair chance of winning the support of leaders such as Jospin and François Hollande (the current party leader) - and perhaps even of Royal herself - in an effort to reshape the party.

Whoever ends up leading the party will have to do for it what Neil Kinnock, Tony Blair and Gordon Brown did for the Labour party.