With a woefully unpopular Gaullist French president, economic slowdown and high unemployment levels, the French socialists ought to be in a confident mood. Moreover, in the aftermath of the inconclusive German general election, they should be heartened by the unexpected resilience of the SPD.

Instead, reports of low morale and deep divisions over the future direction of the party have dominated French newspapers. Rather than fighting the government, the socialists, who are the main opposition party, seem obsessed with fighting their own internal battles.

The main reason for the socialists’ disarray stems from their painful split over whether to back Europe’s constitutional treaty in the national referendum in May. Francois Hollande, the party’s first secretary, campaigned vigorously for a yes vote, while his deputy, Laurent Fabius, the former prime minister, was a leading spokesman of the no campaign. Most socialist voters rejected the constitution despite an internal ballot held last December that decisively backed the treaty. As a result, while Fabius may have gained in personal popularity, there are many within his own party who will never forgive this perceived betrayal.

But the divisions over Europe exposed a deeper split between the two camps. The no campaigners are principally drawn from party fundamentalists who support the anti-globalisation, anti-capitalist movement that has swept France. Fabius, one of the leading figures of this faction, argues that the alternative to the neo-Gaullist politics of President Jacques Chirac is not a more moderate but a harder left. Earlier this month, he denounced those who favour ‘a liaison between the left and centrism’, and called for a genuine left-wing alternative. Fabius portrays himself as a realist, responding to the mood of the people. His opponents accuse him of naked opportunism and disloyalty.

The yes campaigners are more likely to belong to the social democratic wing that believes in modernising the party and adopting a more reconciliatory approach towards the market economy. They are likely to learn the lessons from the SPD’s election campaign in Germany, and argue for reforms ‘with a human face’, similar to the strategy that was adopted by Gerhard Schroeder.

The party is due to elect a presidential candidate at a congress in Le Mans in November. With Hollande’s authority diminished by the continued bickering between the two camps, this is likely to be a difficult gathering. As most left-leaning voters are exasperated by its divisions, some socialists feel that a formal split is the only way the party can modernise itself. Bernard Kouchner, a popular former health minister and co-founder of Medicins Sans Frontieres, says that the time for superficial reconciliation will have passed if Fabius manages to take control of the party. ‘We need to confront the pseudo-Marxists and their worn-out utopias,’ he says.

But as Labour members will remember from the formation of the SDP in the early 1980s, splits are never as easy and clean-cut as envisaged. In Labour’s case, these undoubtedly played a huge part in keeping the party in opposition for 18 years. Similarly, the SPD in Germany undoubtedly lost votes to the Linkspartei, the alliance between Oskar Lafontaine – Schroeder’s former finance minister – and the PDS, the former Communists. Given the close outcome of the poll, it might even have cost them the election.

Additionally, in a presidential election, the decision by two heavyweight-rivals to stand could mean a split in the votes going to left-of-centre candidates, and lead indirectly to the success of far-right extremists, such as Jean-Marie Le Pen.

At the time of writing, the latest opinion polls show that neither Hollande nor Fabius would be selected. The most popular candidate among party supporters is Lionel Jospin, the former prime minister, who lost to Jacques Chirac in 2002. But Jospin has been criticised for his lack of charisma, and it is difficult to see how he would successfully fight the presidential election campaign against a more youthful and photogenic candidate on the right, such as former finance minister Nicolas Sarkozy.

On the other hand, Jospin might have the following needed to ensure the party develops a programme for 2007, refocuses its efforts on attacking an unpopular government, and exploits the divisions on the right. So far, the socialists have allowed Sarkozy and Dominique de Villepin, the French prime minister, to dominate the national debate over who should be the next French president. Perhaps a disciplined and united socialist party, with an experienced leader such as Jospin, might change this trend. But first, the party has to regain its hunger for power – just like Labour did after the painful and traumatic divisions that characterised the early 1980s.