France Sets Fire Under Euro-Unity

New Socialist leader, citing joblessness, hits at German insistence on a unified currency

When Europe's two big powers talk of rupture in their relationship, those with memories of 20th-century wars listen.

The current rift, created by France's new leftist government trying to redirect Europe's drive for unity, has made Germany growl.

"Those who delay, delay forever," warned German Chancellor Helmut Kohl June 8. He has staked his political future on a single European currency, the euro.

But even before new French ministers had working phones in their offices following the June 1 election, Socialist Prime Minister Lionel Jospin warned that European unity and a single currency cannot come "at any price." Cutting social spending in the face of 12.8 percent French unemployment just to meet targets for the euro is not acceptable, he said.

On June 9, new Finance Minister Dominique Strauss-Kahn shocked his 14 European Union counterparts by calling for a "period of reflection" on a "stability" pact that had been expected to be signed at next week's EU summit in Amsterdam.

The pact, negotiated in Dublin last December, was pushed by the Germans to ensure budgetary restraint after the single currency is adopted in 1999. It slaps stiff penalties on countries that run deficits higher than 3 percent of gross domestic product and commits all EU governments to balancing their budgets every year.

During his campaign, Mr. Jospin said he would not be bound by the Dublin agreement, which would cost France about $3 billion in penalties to the EU if it were in effect for this year's budget cycle.

Chancellor Kohl hopes to change Jospin's mind at a Franco-German summit in Poitiers, France, on June 13, so that France will not block signing the accord during the June 16-17 Amsterdam summit.

But the political and economic fundamentals of Europe have shifted dramatically since Kohl and his French counterpart, then-Socialist President Franois Mitterrand, first proposed the idea of political and economic union to their European partners in April 1990, when the dust from the collapse of the Berlin Wall was still settling. Back then, all but two of Europe's governments were conservative, and unemployment stood at 7.9 percent.

Now all but two of Europe's governments are left or center-left. Conservatives are governing only in Germany and Spain, and unemployment across Europe has topped 11.4 percent, representing some 18 million Europeans out of work.

"Europe without the support of the public will not work, and unemployment is at the core of European concerns," says Dominique Mosi of the Paris-based French Institute for International Relations.

"This conflict shows that France and Germany are in the same bed but with different nightmares. The nightmare for Germany is inflation; the nightmare for France is unemployment.... Nearly two-thirds of French are still favorable to Europe, but not at any cost," he adds.

On June 10, tens of thousands of European trade unionists and other protesters marched through the streets of Paris to call for more job creation in Europe.

Jospin's coalition partners are also keeping up the pressure on the new prime minister to ensure that campaign promises to put jobs at the top of the European agenda are kept. French Socialists need the support of the 38 Communist deputies in the new National Assembly for their majority, and three Communist ministers have been appointed to the new government.

On June 9, Communist Party leader Robert Hue announced a grass-roots program to ensure that citizens have a voice in holding the government to its promises. "The French people ... expect clear signals that this government is turning the page on social regression....," he said.

Communist Party leaders are a far cry from the hard-liners of the 1950s and '60s, who welcomed the Soviet takeovers in Eastern Europe as a "great victory of democracy" and did not repudiate Stalin's gulags until 1975.

Today's Communists still call each other "comrade," and opted to keep their old name, but now call for jobs, higher salaries, and social progress instead of a "dictatorship of the proletariat."

When Socialist leader Mitterrand won the presidency in 1981, he took four Communists into his government. But those ministers resigned in 1984, after Socialists abandoned leftist programs in favor of a politics of austerity, and the party slipped back into single digits in the polls. Now on a rebound, Communists won nearly 10 percent of the vote in the recent legislative elections.

For Prime Minister Jospin, the commitment to jobs instead of austerity is more than a campaign promise. In a 1994 report to his party, he argued that the party's future depended on a "break with liberalism" and a focus on growth and employment.

But it is not clear that good intentions will be enough to come up with a compromise that will both satisfy German concerns for stability and urgent calls on the French streets for jobs and growth.

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