PARIS (Reuters) - Just when Emmanuel Macron thought he had regained the upper hand over the yellow vest protest movement with his “great debate”, the latest flare-up of violence reminded the French leader that putting his reform agenda back on track won’t be easy.

French President Emmanuel Macron attends a debate with intellectuals at the Elysee Palace in Paris, France March 18, 2019. Michel Euler/Pool via Reuters

Town hall meetings across France launched two months ago to defuse the unrest helped Macron reconnect with voters, boosting his popularity and lifting the gloom in the Elysee, even if some participants felt the encounters were a pointless talk shop.

But images of burning banks and ransacked restaurants on the famed Champs-Elysees in Paris this past weekend have put Macron back on the defensive - just as he mulls new policies to appease the “yellow vest” protesters.

“Saturday’s images of the Champs-Elysees threaten the early signs of appeasement that national debate seemed to have created,” Bernard Sananes of polling institute Elabe said.

Organizers of Saturday’s protest called it an “ultimatum”, seeking to intensify pressure on the 41-year-old president as he digests hours of facetime with mayors, high school students, workers and stay-at-home mothers, as well as 1.4 million online contributions.

“His debate may be finished but we are still here on the streets,” 43-year old unemployed Agnes told Reuters TV during the yellow vest march in Paris. “And if he does not satisfy our demands, we will take back the roundabouts, we will go and block everything.”

Whether it was a protesters’ swansong, as his interior minister suggested, or sign of an “endless crisis” as newspaper Le Monde put it in its editorial, Saturday’s destruction pointed to the tense environment in which Macron must make decisions that will shape the rest of his five-year mandate.

Aware of the dangers of high expectations and the limited wiggle room French public finances allow, Macron had visibly instructed his ministers to play down the scope of the announcements he said he would make before mid-April.

“Will we be able to implement all the recommendations and meet all expectations? No, because politics is about making choices,” government spokesman Benjamin Griveaux said.

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But Macron’s aides acknowledge he will have to change both his style - critics say he is too controlling while voters have been angered by his perceived loftiness and arrogance - and allow for more participatory democracy.

RISK OF DISAPPOINTMENT

The option of a referendum - which has the advantages of appealing to those nostalgic for Charles de Gaulle’s taste for plebiscites while responding to the yellow vests’ key demand for more people’s votes - remains on the table. But the policy issues that could be put to a plebiscite are yet to be decided.

“The worst thing would be to end up with a great disappointment,” one presidential adviser said. “The president was clear, he does not want the post-debate period to be like the one before the debate.”

Less than three months before European elections that anti-establishment nationalists want to use as a show of force across the continent, a lost referendum could also backfire and offer Macron’s opponents an opportunity to challenge his legitimacy.

The anti-government protests have shown the French crave less inequality, between Paris and the poorest parts of the country as much as between the poor and the rich in general.

That’s why the worst violence since November has targeted the Champs-Elysees boulevard and its boutiques, symbols of an opulent, successful, bourgeois Paris that those who struggle to make ends meet in the provinces resent.

Reducing territorial inequalities and “making work pay” for the poorest was an integral part of Macron’s 2017 manifesto, his aides say, and they are confident households will start to feel the benefits of measures put in place in the last 22 months.

He gave priority early in his presidency to pro-business tax cuts over measures to help low-income workers, and that angered left-leaning voters.

With France having one of the world’s highest tax burdens, financing costly measures to reduce the sense of isolation in small towns and the countryside by adding more hospitals or re-opening closed schools would be difficult, Macron’s aides say.

That means his response is more likely to be a mix of symbolic measures meant to give more say to people and changes to education and training systems.

“We’ve reached the limits of spreading wealth,” one adviser said. “But the potential is huge for tackling the roots of inequalities. So we may have lost sight of some of our goals initially, but we’re firmly back on track now and accelerating.”