FACTBOX-Key political risks to watch in France

>PARIS, June 7 (Reuters) - Dominique Strauss-Kahn's exit from France's presidential race as he faces a long legal battle over attempted rape charges has thrown the 2012 election campaign into disarray. As the Socialist Party looks for a replacement for the man who was seen as its star candidate and considers a new thrust for its campaign, President Nicolas Sarkozy must feel some relief that a major potential rival is out of the game. Yet opinion polls since Strauss-Kahn's arrest in mid-May suggest the conservative Sarkozy may only gain a percentage point or two from the former IMF chief's sudden downfall. Sarkozy still faces tough competition from the left, and from the far-right National Front, and if Christine Lagarde is picked to replace Strauss-Kahn as IMF head, he will lose a respected finance minister who would have been an asset on G20 and euro zone issues in the run-up to the April election. [ID:nLDE74O13X] As he grapples with rock-bottom popularity ratings and a flock of defectors from his support base to National Front leader Marine Le Pen, Sarkozy also has big worries on the international stage, given the stalemate in the West's military campaign in Libya and escalating unrest in Syria and Yemen.

">PARIS, June 7 (Reuters) - Dominique Strauss-Kahn's exit from France's presidential race as he faces a long legal battle over attempted rape charges has thrown the 2012 election campaign into disarray"Following is a summary of the main risks for France: 2012 ELECTION CAMPAIGN LOOMS Strauss-Kahn was seen as the strongest contender to win the presidency for the left after its three terms in opposition. But a court battle over charges he tried to rape a New York hotel maid have knocked him out of the contest. His elimination has bumped up Sarkozy by a couple of points in opinion polls, which could be just enough to help the conservative beat Le Pen into a second-round run-off. That could mean a straightforward left-versus-right runoff in May 2012 where Sarkozy could benefit from being more punchy and worldly wise than the new frontrunner on the left, Francois Hollande, who is a veteran Socialist but has never even served as a government minister. [ID:nLDE74H116] Both Hollande and rival Martine Aubry, the Socialist Party leader, could beat Sarkozy on the popularity front, but neither would set the bar anywhere near as high as Strauss-Kahn would have in terms of economic prowess and international experience.

If he runs for re-election as expected, Sarkozy is likely to keep the focus of his campaign on issues like immigration and crime to curb Le Pen's rise. With his wife Carla Bruni expecting the couple's first baby in the months ahead [ID:nLDE74P1SN], he may benefit from a rosy "father-to-be" image after the Strauss-Kahn scandal raised questions over the personal lives of some politicians. Junior civil service minister Georges Tron was forced to quit after two women came forward with accusations of sexual harassment in the wake of Strauss-Kahn's arrest. [ID:nLDE74O0WV] Other issues that will dominate the campaign are France's 9.6 percent unemployment rate, a decline in purchasing power against inflation at 2.2 percent and tensions over immigration. Sarkozy has proposed making worker bonuses compulsory at profitable companies and is pushing Brussels to take more control of flows of migrants into Europe.

"As the Socialist Party looks for a replacement for the man who was seen as its star candidate and considers a new thrust for its campaign, President Nicolas Sarkozy must feel some relief that a major potential rival is out of the game"Voter discontent is high, however, and small groups of youth protesters have staged a handful of copycat protests modelled on the huge sit-in protests in Madrid. What to watch: -- Fluctuations in France's jobless rate and inflation in the months ahead. -- Opinion poll reactions to Sarkozy's efforts to win back defectors as the new Socialist front-runner emerges. -- Street protests mirroring Spain's. -- Any fall-out to the government from the Tron case.

LIBYA/MIDDLE EAST Having spearheaded the West's military intervention in Libya, where Muammar Gaddafi's army is battling ragtag rebel forces intent on ending his 41-year rule, Sarkozy's credibility is at stake if the campaign slips into a long-term stalemate. Sarkozy's G8 summit pledged at least $20 billion in aid for Tunisia and Egypt, and vowed to support other "Arab Spring" nations that embrace democracy, but the talks did not come up with any political solution for Libya. [ID:nLDE74Q087] France and Britain are now deploying attack helicopters in Libya, aimed at turning up the pressure on Gaddafi, who Group of Eight leaders said during their summit in France had "lost all legitimacy" and should leave Libya. A prolonged conflict will weigh on Sarkozy's popularity, as would any move towards sending in ground troops. Sarkozy's assertiveness on Libya has also set a precedent that will make it hard for him to take a backseat role as the Syrian government continues its crackdown against protesters in the former French colony and as Yemen inches towards civil war.

"Yet opinion polls since Strauss-Kahn's arrest in mid-May suggest the conservative Sarkozy may only gain a percentage point or two from the former IMF chief's sudden downfall"What to watch: -- Any changes in military strategy would compromise France's credibility as the face of NATO in Libya and starting ground attacks could alienate French voters. -- An escalation in diplomatic pressure on Syria, which is politically tricky given it is an ex-French colony, or hints of military intervention, which could have repercussions from groups like Hamas or Hezbollah. -- Possible new sanctions against Iran. [ID:nLDE74Q1BU] -- Growing pressure on French spending if military operations in Libya linger. DEFICIT WATCH Reducing the deficit has been one of Sarkozy's priorities and his cost-cutting efforts thus far have been ahead of target.

But it remains doubtful whether progress with the deficit -- now seen at 5.7 percent of GDP in 2011 from a earlier forecast of 6 percent -- translates into an upswing in poll ratings. France has been keen to align itself with Germany as the European Union moves towards stricter rules on budget deficits, but a government plan to write a deficit-cutting target into the constitution will likely be overruled in the divided parliament. Sarkozy's belt-tightening could falter if he unveils measures to woo voters that drain on the country's coffers. What to watch: -- Any back-tracking on spending controls that could compromise France's AAA credit rating. G20 STAKES Sarkozy has laid out ambitious goals for France's G20 presidency based on reforming the global monetary system, reducing commodity price volatility and improving economic governance.

"Sarkozy still faces tough competition from the left, and from the far-right National Front, and if Christine Lagarde is picked to replace Strauss-Kahn as IMF head, he will lose a respected finance minister who would have been an asset on G20 and euro zone issues in the run-up to the April election"While he has since tempered his expectations, the president is hoping to cash in on looking influential on top global issues in the second half of 2011. France hosted talks between ministers and officials from G20 countries this week [ID:LDE7552HS] to discuss nuclear safety in the wake of Japan's disaster and will hold a G20 agricultural ministers meeting later in June to look at issues like price volatility. What to watch: -- Whether Chinese resistance further diminishes Sarkozy's appetite for, or chances of, making the G20 a showpiece of international success that he can also market to voters at home. -- Whether world leaders can show more unity over Middle East than they have in recent weeks. TERRORISM THREATS France was already on alert for terrorist attacks, primarily due to the country's interests in the Sahel region of Africa, where al Qaeda in the Islamic Magreb (AQIM) has said it was behind the deaths of two men abducted this year in Niger.

France has never been attacked by al Qaeda at home despite being a NATO member involved in the invasion of Afghanistan, before his death al Qaeda leader Osama bin Laden had picked out France as an enemy by slamming its ban on full-face veils. France is worried that three French aid workers who disappeared at the weekend in Yemen, home to al Qaeda cells, may have been kidnapped, although it had not received any claim of responsibility. [ID:nLDE74T100] What to watch: -- Any specific threats against France or its interests abroad and the government's reaction to them. For political risks to watch in other countries, please click on [ID:nEMEARISK] (Editing by Catherine Bremer and Sonya Hepinstall) Markets