PARIS — WHEN Germany signaled a hardening of its monetary policy July 16 with a moderate interest rate increase, France did its very best to appear unshaken and unimpressed.
"There is no reason to modify French monetary policy," said France's minister of the economy, Michel Sapin, in response. And that was that.
Despite the heavy role of the Bundesbank, Germany's central bank, in determining by its monetary policy France's own interest rates - and thus everything from French growth rates to unemployment figures - the French government has good reasons to strike a stoic pose and discourage emotional debate about German economic influence.
First, the government has no intentions of modifying its "strong franc" policy, which has given the country admirably low inflation rates. That policy means, however, that France has no choice but to keep interest rates in line with Germany's, or risk a weaker franc and higher inflation - the situation in which Britain now finds itself.
"Everyone is now convinced the government is not going to modify its tight monetary policy, and in fact there is a rather large consensus supporting that policy," says Francoise Milewski, an economist with the French Observatory of Economic Performance.
The "strong franc" policy has brought France numerous long-term economic dividends, many economic experts agree, but it is not always understood or supported by a public facing a stubbornly high unemployment rate.
"The man in the street doesn't understand the dividends [of tight fiscal policy], like greater competitiveness and growing market share," says J. Paul Horne, a senior analyst with Smith, Barney in Paris. "Especially when the party in power is not popular and sensitivity over unemployment is high, the government is better off not talking about it."
Another important reason for the French government's outward calm over the German rate move is the country's referendum on the European Community's Maastricht Treaty, set for Sept. 20.
President Francois Mitterrand is laying his reputation, and perhaps even his presidency, on the line in seeking a popular vote for the unity treaty. But Denmark's "no" vote in June remains a reminder of widespread European jitters over Germany's dominant economic strength.
The government as well as many economic experts agree that Maastricht, which includes steps for giving the EC a single currency and a single, jointly run central bank, would give Germany's EC partners more say in determining monetary policy than they now have in a deutsche mark-dominated Europe.
"Germany is deciding monetary policy based on its internal needs, which means the whole of Europe is financing reunification," says Ms. Milewski.