France, US hope to avoid summit clash

It may turn out that the apparently imminent collision between France and the United States is only a game of chicken. Serious differences over economic policy separate France's Socialist government and the Reagan administration. But top French officials and American diplomats here emphasize that the two sides are not heading for a violent clash at the seven-nation summit at Williamsburg, Va., this weekend.

At one point, a confrontation appeared unavoidable. Various French ministers, including President Francois Mitterrand himself, criticized the US budget deficit and the high value of the dollar on foreign exchange markets. They saw these as the principal causes for continued recession.

The criticisms followed US rejection of Mr. Mitterrand's recent call for fixed-currency exchange rates to control the rise of the dollar.

''It is not normal that American budget deficits be paid by us,'' an angry Mr. Mitterrand declared at the close of a joint press conference last week with Chancellor Helmut Kohl of West Germany.

''It is not normal that this considerable budget deficit keep interest rates high,'' Mr. Mitterrand asserted, claiming that these high interest rates draw cash needed to revive faltering West European economies.

The French officials said May 20 that the budget deficit remains a genuine source of anger here, and that they plan to raise the issue at Williamsburg. But they insisted that they understood Mr. Reagan's policy constraints and that they expected little immediate action to be taken at the summit.

The officials also said that President Mitterrand realizes much study has to be done before calling an international monetary conference modeled after the 1944 meeting in Bretton Woods, N.H., which set up a fixed currency exchange system.

Finally, the French emphasized that great progress had been made on the issue of East-West trade which raised tempers last year at the Versailles summit. Differences remain, primarily over the level of export subsidies, the French said, but the subject should not be terribly divisive at Williamsburg.

American diplomats here agreed with the French conclusion that despite the differences, there is enough agreement between Paris and Washington to avoid a nasty split at Williamsburg. They noted that Mr. Reagan also considers the budget deficit too high, and that administration officials have hinted that some type of currency intervention might be acceptable.

Moreover, the Americans do not believe Mr. Mitterrand is ready to play for too high a stake on these issues by, as some press reports suggested, linking them to his support for deploying US nuclear missiles in Europe.

Above all, the Americans view Mr. Mitterrand's blasts against US economic policy as motivated by domestic politics.

''There's a lot of domestic content,'' one American said. ''He's trying to hold the outside world responsible for France's current economic difficulties.''

Other West European countries have not followed Mr. Mitterrand in putting such an emphasis on the dollar's role in Europe's economic difficulties, though to a certain extent they share the French concern. At last week's press conference here with Mr. Mitterrand, Helmut Kohl said that ''the problem of the dollar's value will be the subject of intensive discussions at Williamsburg,'' but he added that he would not engage in public criticism of a friendly country.

The West Germans, as well as all the other West Europeans, have reacted skeptically to the French proposal for establishing a fixed currency system. West German Economics Minister Otto Lambsdorff, for example, called the idea ''interesting but unattainable.''

To avoid being isolated at Williamsburg, Mr. Mitterrand last week assembled here the leaders of Western Europe's five other socialist-run countries: Spain, Portugal, Greece, Sweden, and Austria.

The leaders agreed with the French criticisms of the Reagan administration's financial and monetary policies. They released a statement saying that reduction of the US budget deficit was ''an indispensable condition'' for sustained international recovery, and calling for intervention to stabilize the dollar's ''erratic movements.''

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