But to bring out a law dating back to 1955 means sending the kids in the banlieues an incredibly violent message: 50 years later, France will treat them like their grandparents. The prime minister should remember that this spiral of misunderstanding, nervous toughness and powerlessness had led our Republic to dire consequences.

Dire consequences indeed: the Algerian crisis precipitated the end of the 4th Republic:

The instability and ineffectiveness problems of the Fourth Republic came to a head in 1958, when the current government suggested that it would negotiate with the Algerian nationalists. Right-wing elements in the French Army, led by General Jacques Massu seized power in Algiers and threatened to conduct a parachute assault on Paris unless Charles de Gaulle, the WWII hero, was placed in charge of the Republic. De Gaulle did so under the precondition that a new constitution would be introduced creating a powerful presidency. These changes were introduced and the Fifth Republic was born.

When a government cracks down on a protest by a significant part of the population (what fraction of the French population are Banlieu youths? And, more importantly, what fraction is sympathetic to their plight even if disapproving of the riots?) it can cause a crisis of legitimacy. I hope de Villepin knows what he's doing, but apparently even Le Monde does hot think he does.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman