OF PYRAMIDS AND PALACES. The new entrance to Paris's stately Louvre museum is creating a stir: is it an overpriced monstrosity, or a shining symbol of President Mitterrand's new France?

IN 1546, King Fran,cois I began building the Louvre. Future French kings added elegant hallways, sumptuous salons, and palatial living rooms. Napoleon I designed an entire courtyard. Napoleon III constructed two more wings. Fran,cois Mitterrand is just as ambitious.

Over the objections of horrified traditionalists and reluctant conservative ministers, the Socialist French President is putting his own grandiose and expensive mark on the former royal palace, now one of the world's great museums. As part of a long-overdue renovation project, a 66-foot-high glass pyramid designed by the American architect I.M. Pei will open in the Louvre's central courtyard early next fall. The pyramid will serve as the new museum entrance and, Mr. Mitterrand hopes, a powerful symbol for his presidential reign. Its sleek, modern shape promises to become the most famous reminder of the President's huge public building program for the French capital, which includes a new opera house, two big music halls, two new museums, and a communications center.

``We must prove that France is a modern country, a country of the future,'' says Christian Sautter, Assistant Secretary General of the presidential Elys'ee Palace. ``Former President [Val'ery] Giscard d'Estaing didn't build much. He told us that we were a small country with average capabilities. These projects will illustrate France's proper role, its greatness.''

The pyramid represents much more than a simple building project. It stands for the French nation.

``When French kings finally united France, they set up court in the Louvre,'' explains Jean-Baptiste Vaquin, a director of the renovation project. ``The Louvre symbolizes the glory of the king and of the state.''

In the United States, the rich underwrite symphony halls and museums. In France, the state is the patron. Paris always has been defined by the state-built monuments which stand along the Seine, the Concorde, the Grand Palais, the Tour Eiffel, and, of course, the Louvre.

``We need the touch of the prince,'' Mr. Vaquin hypothesizes. ``Louis XVI had his Versailles, President Mitterrand has the Louvre.''

Tampering with the soul of any nation is a touchy matter, and the Louvre always has inspired rivalry. The great French architect Fran,cois Mansart had 15 projects for redesigning the palace rejected 300 years ago. Bernini, the architect of St. Peters in Rome, was sent back to Italy when he tried to touch the Louvre.

When Mr. Pei was received by Mitterrand, one of the first things the French President told him was, ``What happened to Bernini will not happen to you.''

No one disagreed with the President about the need to renovate the museum. Nothing in the palace had changed since 1884 - not the plumbing, not the electrical system, and, worst of all, not the endless walks up and down stairs to find the Mona Lisa. These problems will be cor-rected by the museum renovation, scheduled for completion by the year 2000.

The pyramid project still provoked outrage. Traditionalists complained about the choice of an American architect. They worried that the design would spoil the palace's panorama, while obstructing the spectacular view which runs through the Tuileries Gardens up along the Champs Elys'ees to the Arc de Triomphe.

Le Figaro called Pei's plan ``a monster.'' Le Monde said the President was treating the Louvre like Disneyland. Both newspapers were flooded with letters of support and, in 1984, the Louvre's director resigned in protest.

When Conservative Jacques Chirac became prime minister in 1986, the project looked doomed. Outraged by the cost - $800 million - Mr. Chirac vowed during his campaign to cut its budget. Once in office, he changed his mind.

``He took a close look at the pyramid and was seduced,'' recalls Lydie Gerbaud, a Chirac aide. ``It was that simple.''

Well, not quite so simple. Even after the prime minister gave his approval, his finance minister, Edouard Balladur, balked. Mr. Balladur wasn't upset about the high cost. The Finance Ministry's lavish headquarters are located in one of the palace wings, and Balladur refused to move to new offices, despite the construction.

Culture Minister Fran,cois L'eotard tried to force him to leave. Prime Minister Chirac nudged him. But Balladur wouldn't budge. Nicknamed Louis XIV for his magisterial manner, he argued that his Louvre headquarters make up one part of the so-called ``sacred triangle,'' the link between the President's Elys'ee Palace and the prime minister's Matignon Palace. Bellowed Balladur: ``A finance minister should stay in the center of Paris.''

So Balladur moved back into the Louvre, which his Socialist predecessor already had vacated. He spent almost $20 million rebuilding his offices. In the courtyard, work continued.

``We made his life miserable,'' smiles Vaquin. ``The noise was horrendous.''

This ``battle of the Louvre'' is about to end. Last month, French voters reelected Mitterrand, forcing Chirac and Balladur to resign. Public opinion polls show that 80 percent of the French now approve of the controversial pyramid, and the new Socialist finance minister, Pierre B'er'egovoy, has pledged to move out by the end of the year.

``Churchill once said a house offers a picture of the mind of its inhabitant,'' reflects Andr'e Gauron, a Finance Ministry official.

``This is no democratic building. This is the Old Empire. We need a more modern, functional office, not all this golden finery.''

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