Chirac’s bold gambit to defuse euro time bomb

Date: 15/05/1997

A RISKY move that might easily go wrong is how some observers have described President Jacques Chirac's decision to call a snap election in late spring.

Those same observers portray it as a gamble creating fresh risk for the move to the euro and one which confirms the French leader's innate lack of caution.

Yet a closer look at France's political geography and Europe's political calendar for the next 12 months immediately reveals that these pundits have missed the point.

Far from raising an unnecessary threat to the single currency, the rationale behind the president's decision to send parliament packing one year ahead of time was to minimise an existing one and defuse an electoral time bomb.

If anything, the move confirmed the conversion of the tepid Euro-believer Chirac to an ardent defender of the European faith, a fact which the president's partners in Bonn grasped immediately.

And as it happens, the snap election also suits the president's own domestic agenda, allowing Chirac to justify it to the less-than-enthusiastic sections of his unruly majority.

The key point overlooked by some observers is the enormous risk which would have been involved in calling French voters to the polls just a few weeks before European leaders met to take the final decision on the first wave of economic and monetary union participants.

As the 1992 referendum on the Maastricht Treaty demonstrated, popular French support for further European integration can rest on a handful of votes.

Since then, five years of soaring unemployment and comparative fiscal austerity have done little to strengthen ordinary people's faith in the Maastricht process.

Euroscepticism, while not as stridently nationalistic and xenophobic as its English version, is an active and powerful force in French politics, a fact to which foreign commentators often fail to give sufficient weight.

Fierce opponents of further integration, such as left-wing Jean-Pierre Chevènement and right-wing Philippe de Villiers, seceded respectively from the Socialist Party (PS) and the centre-right UDF to form their own political groups, while anti-European barons of the Gaullist RPR have to be placated with prestigious posts such as the presidency of the parliament.

On the fringe of the political establishment, the National Front and the Communist Party - representing a quarter of the electorate between them - lobby fiercely for a repeal of the Maastricht Treaty.

Thus, French participation in European integration rests entirely on two factors: the three big parties' success in keeping their own Eurosceptics sidelined and the pro-European persuasion of the country's ruling caste, the hugely influential class of bureaucratic mandarins spawned by grandes écoles such as the Ecole Nationale d'Administration (ENA).

Yet the élitist origins of much French support for the EU mean that even at the best of times, putting European policy to a popular vote involves a considerable political risk.

Under such circumstances, having a general election in March next year would have amounted to a recipe for potential political disaster.

The imminence of the final political decision on the switch to a single currency would have made Europe the election campaign's dominating and possibly only issue, with the Socialist opposition compelled to raise the stakes and adopt anti-Maastricht positions in order to propose an alternative to the Conservative government's policy.

At the same time, the Gaullist RPR's leadership would have been hard put to restrain its own Eurosceptics, many of whom would have seized on the election as a unique chance to inflict a fatal blow to the single currency project.

At best, such an election scenario would have stirred up fresh angst in Bonn and renewed unrest in the currency market.

At worst, it might have delivered a result making the switch to the euro as good as impossible.

Once the implications of all this sink in, the decision to call a snap election now comes across as a clever and cautious move, involving a calculated and very limited strategic risk this year in order to avoid a much bigger one in 1998.

As the first weeks of the election campaign have shown, Europe is indeed one of the main issues, but one overshadowed by others such as unemployment, taxation, competitiveness, working time and social benefits.

Much of the debate focuses on the question of whether increased global competition means that benefits and workers' rights have to be melted down to 'Anglo-Saxon' proportions, or whether the existing level of protection against market forces can be safeguarded without continuing or rising mass unemployment.

And while the Maastricht Treaty's austerity provisions for EMU have been subjected to verbal attacks from the Socialist Party, a close look at its programme reveals that the party leaders have carefully chosen their words so as to keep the single currency on course, should the electorate unexpectedly vote them into government.

Opinion polls, while still predicting a victory for the ruling RPR-UDF coalition (which would see its parliamentary majority slashed but salvaged after the second round of voting on 1 June), put the outcome of the two rounds of majority voting close enough to allow the opposition some hope of success.

The somewhat 'wooden' Socialist leader Lionel Jospin can also take heart from the enormous unpopularity of Prime Minister Alain Juppé, who has been careful to stress that he might “not be a candidate” for his own succession, in order to avoid turning the election into an anti-Juppé vote.

In a bid to avoid a repeat of their crushing defeat of 1993, which yielded the Conservatives an enormous parliamentary majority, the Socialists have struck up a somewhat awkward electoral alliance with the Communist Party, which opinion polls credit with 10&percent; of the vote.

The Communists' clear anti-Maastricht stance has contributed to infusing Socialist rhetoric with Eurosceptic overtones.

This has led some observers to conclude that an electoral victory for the left-wing alliance might imperil the move to the euro and deliver a government coalition which would put such conditions on its agreement to a single currency as to make the project politically unacceptable for the German government.

In particular, Socialists' calls for the admission of Italy and Spain into the euro-zone, agreement on a 'solidarity and growth pact', the establishment of a 'European economic government' and an export-friendly euro-exchange rate against the dollar and the yen have raised fears that a left-wing government might effectively torpedo the switch to the euro in 1998.

Yet the known pro-European convictions of Jospin and other senior party figures, and the fact that the Maastricht Treaty was negotiated under the presidency of the late Socialist leader François Mitterrand and with fellow Socialist Jacques Delors heading the European Commission, mean that much of the election campaign rhetoric can be dismissed as pre-polling posturing.

In order to avoid another crushing defeat, the Socialists must persuade as many as possible of the first-round Communist voters to support a Socialist candidate in the second round, instead of expressing their fundamental protest by supporting the National Front or not voting at all.

Polls put the Socialists on about 28&percent; of the first-round vote, with the government coalition credited with 39&percent; and the National Front's support estimated at about 15&percent;.

The quarter of the electorate expected to register a protest vote against the policies pursued by France's ruling élites since 1983 in the first round of polling on 25 May will therefore play a key role in determining the eventual winners.

If the Conservatives are returned to government - albeit with a reduced majority - the electorate will have presented President Jacques Chirac with a political mandate to carry on with existing policies for the remaining five years of his presidential term.

A Conservative victory would also enable the government to agree on further expenditure cuts, should economic recovery fail to bring the budget deficit under or very close to the magic Maastricht mark of 3.0&percent; of gross domestic product in 1997 and 1998.

If the Socialists and their Communist allies win, the odds are that the new French government would insist on forceful pro-employment language in a new Maastricht Treaty chapter, and possibly call for the rewording of some provisions of EMU's anti-deficit stability pact.

A left-wing government including Communists would also find it more difficult to agree on fresh cost cutting after lambasting excessive 'austerity' in the election campaign, and would lobby Bonn to agree to a 'flexible' reading of the convergence criteria.

Meanwhile, Spain and more particularly Italy could count on stronger French support to bring them into the first group of EMU participants.