Franc under fire; French voters berate Socialists

The Socialist policies of French President Francois Mitterrand received a stunning setback in last Sunday's municipal elections, leading to speculation that there would be a government shakeup.

The opposition's triumph - it took about 51 percent of the vote to the left's 40 percent, and reconquered many of the large cities and towns it had lost in 1977 - does not bring down Mr. Mitterrand's government. Many of the races were presumably decided on local issues.

Nevertheless, the voting is widely seen here as rendering a strong negative verdict on Mitterrand's first 22 months in office, especially his economic policies.

''There has been an indisputable rise by the right,'' said a dejected-looking Lionel Jospin, Socialist Party first secretary who lost his Paris race. Jacques Chirac, Paris mayor and neo-Gaullist leader, termed the results ''an unequivocal warning'' to the government about its present policies.

How Mitterrand will respond to this ''warning'' remains unclear. He will probably wait until the results of next Sunday's runoffs are in before acting. But after that final round, he will have several tough political decisions ahead. They include:

* Whether to shake up his Socialist ministerial team. Six Socialist Cabinet ministers lost their mayoral posts, and several others, including Prime Minister Pierre Mauroy in Lille and Interior Minister Gaston Defferre in Marseilles, are facing runoffs.

''The fact that some Cabinet ministers have been defeated and others face runoffs raises the question of Cabinet reshuffling,'' said Jean Lecanuet, head of the opposition Union for French Democracy.

* Whether to kick the Communists out of the government coalition. Because in most cases the Communists ran in tandem with Socialist candidates, it is hard to tell whether the party suffered more than the Socialists.

But the Communists support has fallen steadily in previous national elections , and polls now put it as low as 11 percent. With the electorate clearly voting for more moderate economic policies, Mitterrand must decide whether the Communists have become more of a liability than a help.

During the campaign, the opposition vigorously argued that the country's double-digit inflation rate and its yawning trade gap were proof that the Socialists had mismanaged the economy.

But how Mitterrand reads the no-confidence vote and whether he will try to bring the economy around remain unclear. Will he follow the advice of Socialist militants and erect protectionist trade barriers? Or will he increase austerity and reduce consumer purchasing power to cut the trade deficit and inflation?

The election results argue that the public wants the conservative, austerity approach. Still, nothing is sure yet, since influential Socialists such as Paul Quiles, the party's Paris mayoral candidate, were saying nothing will change.

Perhaps as decisive as the French voters in influencing Mitterrand is the West German choice of a Christian Democrat-Free Democrat government. Reports had it here that Mitterrand watched the German results more closely than the French ones on Sunday night.

Because the French President is such a strong supporter of NATO's planned missile deployment, advisers said privately he hoped for a victory by Helmut Kohl. All the same, Mr. Kohl's administration will be looking for prudent financial management from Paris.

A stable, conservative Germany promises a stronger mark, which puts pressure on the franc. Early Monday, the franc was already reportedly faltering, and speculation is rife that a devaluation will be coming soon after next Sunday's polling.

Kohl has also been cool about helping the French out economically, either by reducing the huge bilateral trade advantage in their favor or by promoting industrial cooperation, which is at the heart of Mitterrand's vision of Europe.

Just before the elections, Bonn reportedly rejected the bid by Thomson, a nationalized French company, to take over Grundig. The French see this merger of the two consumer electronics firms as the key test venture in their plan to forge powerful pan-European companies in many high-technology fields.

Mitterrand's Socialists, however, worry less about the Germans than about next Sunday's second round of local elections. Runoffs are to be held in municipalities where the first-round vote did not give one candidate a majority of the votes.

In many crucial cities, the election is far from over. It remains unclear whether the right will recapture all the 61 large municipalities it had lost to the left in the 1977 local elections. For example, in the test city of Dreux, Socialist Mayor Francoise Gaspard faces a runoff against the neo-Gaullist Rene Jean Fontanille.

Nevertheless, to a large extent the voting is already being seen as a smashing victory for the right. Not only did it win a majority of all the votes, but it has also scored some notable individual triumphs.

In Paris, for example, incumbent Mayor Jacques Chirac won by a landslide. He polled a majority in 18 of the city's 20 districts. In the other two districts, his party retains a good chance of winning as well next week so commentators are already billing his victory as ''a grand slam.'' The victory reinforces his position as the leader of the opposition, though former President Valery Giscard d'Estaing and former Prime Minister Raymond Barre may not agree with this general assessment.

Outside of the capital, the opposition won outright majorities in such large towns as Grenoble, Nantes, Toulouse, Brest, and Reims - all cities previously controlled by the left.

The victory in Grenoble was particularly symbolic. The Socialists had controlled the city since 1965, and Mayor Hubert Dubedout was considered unbeatable because of his enviable record. But neo-Gaullist challenger Alain Carrugnon won 54 percent of the vote.

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