Reshuffle boosts EMU hopes

Date: 09/11/1995

By Elizabeth Wise

IF the news that Alain Juppé has kept his job as French prime minister were not enough to please supporters of deeper European integration, the come-back of Alain Lamassoure will surely delight them.

Lamassoure, the biggest name to enter the so-called 'Juppe II' government, takes on the post of budget minister - a good omen for economic and monetary union.

Widely known as a 'convinced European', Lamassoure served as France's European affairs minister under Prime Minister Edouard Balladur. He has repeatedly voiced firm support for a single European currency. During a speech to France's National Assembly last December, he said that currency crises in recent years “must have convinced anybody who still doubted the absolute necessity to reach monetary stability between EU nations, unless they want to destroy the single market itself”.

If the French franc and German mark had not remained bound together during the crisis, he said, there would have been “two monetary Europes which, little by little, would diverge on monetary and economic policy and, soon, on all the rest”.

As budget minister, Lamassoure will oversee the drive to reduce France's public deficit, the key element in preparing France for European monetary union by 1999, and exercise first-hand control over moves towards a single currency. “To put him in the budget post is a very clear sign,” observers say.

Lamassoure's appointment is sure to delight German Chancellor Helmut Kohl. Only a day after returning from Bonn two weeks ago, Chirac sent a signal to the Germans that he was genuinely committed to EMU by announcing on French television that he would make deficit reduction his priority. He has promised to cut France's 50-billion-ecu deficit, now at over 5&percent; of gross domestic product (GDP), during the next two years until it meets the 3&percent; level required by the Maastricht Treaty for monetary union. Lamassoure's appointment indicates he means business.

Kohl will doubtless also be pleased by the fact that Juppé - another supporter of European integration - has kept his job. Although Juppé's popularity in France has been even lower than Chirac's, at around 12&percent;, the decision to keep him on this time means he is reasonably sure to retain the premiership until at least next summer when the French parliament recesses. That Juppé weathered the storm of his housing scandal and was reappointed to the post after resigning ensures his durability there, observers say.

In forming his second government, Juppé has brought in several members of the Balladur camp. That in itself, observers say, is a good sign for pro-integrationists. Balladur, generally regarded as more pro-Europe than Chirac, was careful not to make Europe a subject for internal national debate. That put European projects, notably the free circulation of people between the Schengen accord countries, less at the mercy of domestic politics. As one observer put it: “For Balladur, Europe is a fact. It is still a question for Chirac.”

In addition to Lamassoure, Balladurians in the new government include Jean-Claude Gaudin and Dominique Perben. While Gaudin's post at regional planning is not a sensitive one, Perben's is. Now in charge of the civil service and public reform, Perben will be in the front-line as Juppé tries to trim excess fat from most state-run enterprises. Employees in the post, rail and education services are likely to lose jobs in the drive to cut spending.

The fourth new minister is considered to be a Maastricht detractor. Frank Borotra, who now holds the portfolio of industry, post and telecommunications, is a close associate of Pasqua, one-time leader of the Gaullist Rassemblement pour la République (RPR). With Pasqua and Seguin, who led the “No to Maastricht” campaign during France's 1992 referendum, Borotra helped form the alliance aimed at reinvigorating the French right against Juppé. Observers say his nomination gives Juppé a better hold on the right-wing element of the RPR. But Juppé will need to keep a tight rein on Borotra as France prepares to privatise its telecommunications industry in anticipation of the 1998 deadline for EU telecoms liberalisation.

A poll conducted by CSA for the French daily La Tribune this week showed 55&percent; of French citizens approve of Chirac's pledge to reduce the budget deficit. But 55&percent; do not believe he will accomplish that task and 52&percent; do not think France will be better off in two years.