French Leaders Risk Wrath Of People As Belts Tighten
PARIS — HE promised to break away from traditional ways of thinking, to favor the reduction of unemployment over the reduction of the budget deficit, to increase consumer spending and investment, and to lower taxes. ''Too many taxes kill taxes'' became one of his favorite campaign slogans.
But just six months after finally reaching the French presidency, events have forced Jacques Chirac to face reality. The absolute priority now is to reduce the country's growing $65 billion budget deficit. The immediate goal is to lower interest rates, not unemployment. Taxes have been increased and may go even higher as wages for public service employees are frozen.
The international financial markets, the object of Mr. Chirac's scorn during the campaign, are now seen as a key element in the effort to reduce the deficit.
''We live in a world in which a great democracy must not only have the confidence of its citizens but also the international confidence as reflected in market movements,'' Chirac said Wednesday in remarks to the new, streamlined government named the day before to carry out the new policies.
Not that Chirac and Prime Minister Alain Juppe failed to deliver on some of the many and frequently contradictory campaign pledges. The minimum wage was increased by 4 percent, about double the annual inflation rate. An expensive program to help the long-term unemployed approved last summer appears to be bearing fruit. Those seeking to buy a new house or apartment can do so at a 0 percent interest rate.
But the budget and social-security deficits drove down the French franc in relation to the German mark recently. The deficits, as well as the social programs approved during the first weeks after Chirac's inauguration, forced the government to raise sales, gasoline, and other taxes despite the promise not to do so. Unemployment, which stands at 11.5 percent, rose in September after almost a year of steady decline.
As if this were not enough, Chirac and Prime Minister Juppe were put on the defensive by the worldwide protests against the resumption of France's nuclear testing in the South Pacific. The government has had to deal with a wave of terrorist attacks by Algerian fundamentalist extremists that have killed seven people and injured 160 others since mid-summer. Finally, a housing scandal involving Juppe added to a national sense of listlessness.
The effects were clearly reflected in the public-opinion polls. Both Chirac's and Juppe's popularity ratings dropped to the lowest levels ever recorded for a president and prime minister since Gen. Charles de Gaulle founded the Fifth Republic 37 years ago.
''I was not elected to be popular,'' Chirac replied laconically recently when asked about his 14 percent approval rating in one recent poll.
The root of the government's problems, according to most French analysts and politicians of both the left and right, lies in the inherent contradictions of the Chirac campaign.
Chirac has been forced to face the same stark choice between austerity and bankruptcy that confronted his archrival and predecessor, Francois Mitterrand, 12 years ago.
Both men opted for austerity and the benediction of the international financial markets they had once criticized. But Chirac has a further complication: He must take account of the 1992 Maastrict Treaty, which requires European Union countries that want to be part of a single currency on Jan. 1, 1999, to reduce their budget deficit to no more than 3 percent of gross domestic product. The French deficit now stands at 5 percent of GDP.
The immediate task facing the new French government is to push through the National Assembly a deficit-reduction plan for the social-security system. It must also deal with fierce opposition from public-sector labor unions against the plan to freeze wages. The unions have called a general strike Nov. 14 to show their discontent, the second such strike in two months.
The new government named this week fulfills many of Juppe's wishes. But now that he has the team he wanted, Juppe must produce results fast. If he does not, there is little doubt that the next government will be headed by a new prime minister.