Balladur Riding the Waves

...Seguin, however, is anxious to lead his own RPR list, "for our Europe...

...According to Franz-Olivier Gisbert, a commentator for the Center-Right daily Le Figaro, "Seguin, who to some extent leads the country's only opposition to Balladur...

...UDF leaders have no objection to Juppe and are receptive to the idea??if, as one minister put it, "we can agree on the kind of Europe we want...

...No wonder Balladur finds cohabitation with Mitterrand more pleasant than with some of his fellow neo-Gaullists...

...Social charges for apprentices, young people in their first job and workers in training courses, are fully covered by the state...

...French farmers are far from satisfied in any case...

...Nevertheless, it is a credit to Balladur's frankness that these measures have been accepted as part of the collective effort he asked for??even by the trade unions, despite some gnashing of teeth...

...Because a VAT is levied on goods and services at every level of production, firms have customarily paid this on their turnover, then waited several months for the state to reimburse the tax spent on stock, capital goods and so on...

...Pending the new budget, Balladur proposed to fill that hole with a Treasury bond issue in July, and set a target of just over S7 billion??whereupon 1.4 million subscribers rushed to buy nearly $20 billion worth of bonds...

...Family allowances, for example, will progressively be financed by the state, reducing labor costs...

...whose leader, former President Valery Giscard d'Estaing, designed the ERM with former German Chancellor Helmut Schmidt in 1978...

...industrial production slumped...

...instead, employees will be required to put in more hours when necessary without overtime pay, and less in slack periods...

...Industrial production fell in August for the eighth successive month, and unemployment rose to 11.7 per cent, approaching the 12.5 per cent rate forecast for the year's end...

...Besides encouraging devaluation and protectionism, wide bands could prove damaging for France on the agricultural front: The cost of the Common Agricultural Policy will go up if other EC moneys fall against the mark, further isolating Paris in its defense of the farming world...

...The only pointers that remained stable were the measurements of Edouard Balladur's popularity...

...Chirac scores only 20 per cent...

...Balladur's actions to date have been hard on consumers' wallets...

...Ultimately, it was extended "attacks" on the franc??as intense adverse speculation is referred to here??rather than his rivals that forced Balladur to press for a compromise...

...Whether Balladur will stay in favor...

...The wages and pensions of civil servants have been frozen, both to restrain public spending and as a gesture to the unemployed...

...As a result, Francois Mitterrand's approval rating has gone up modestly, too...

...Their militancy has forced Balladur to challenge the Blair House agreement limiting subsidies that the EC Commission reached with the United States last November to help conclude the Uruguay Round of the General Agreement on Tariffs and Trade (GATT...

...Some of this windfall returned to taxpayers' pockets in early September: The annual school allowance that two fifths of France's 12.9 million pupils qualify for jumped from $71 to $267...

...Pollsters report that 65 to 70 per cent of the voters believe he would make a good president...

...The aging Socialist President credits Balladur's blend of urbanity and firmness for the smoothness of his second cohabitation with a Center-Right government...

...Seeking to plaster it over, the Prime Minister suggested in late August that the UDF and RPR should field a joint list of candidates, headed by Foreign Minister Alain Juppe, for next year's elections to the EC Parliament...

...10 best...

...Yet that may not be enough to turn the economy around...

...Businesses large and small are also benefiting from a change in the way the Value Added Tax (VAT) is being collected...

...health benefits went down...

...or in office??that long of course remains to be seen...

...During his initial three months in the job France's gross domestic product (GDP) had zero real growth, and although Finance Minister Edmond Alphandery promises the recession should be over by January, 70 per cent of employers expect it to last another year...

...The consumer mood is cautious...

...Patients will now pay more for health care, and everyone (except, so far, civil servants) will have to work longer (40 years instead of 37.5) for lower state pensions (since these will be calculated on a worker's 25 best-paid years, rather than on the Janice Valls-Russell writes about French and Spanish affairs for the NL...

...Interest rates have floated downward only slightly...

...As the Economist observed in July, though, "much of the difference between the British and French economies has nothing to do with the ERM, but with the fact that Britain's recession started two years earlier than France's and is ending earlier...

...Remarkably, none of this seems to have undercut the public's esteem for Balladur...

...But 40 per cent threaten a change of heart about the Prime Minister if the economy is not out of the dumps by next spring...

...civil servants rarely suffer layoffs...

...Indeed, the most serious challenges to Balladur over the past few months have come from certain members of his own party, the neo-Gaullist Rally for the Republic (RPR...

...and] against those maniacs obsessed with a single currency...

...Giscard d'Estaing feels that if the EC is to achieve monetary union between 1997 and '99, in conformity with the Maastricht Treaty, the bands must be narrowed again as soon as possible??say, to 6 per cent (the old limits for weaker European currencies, such as the Spanish peseta and the Portuguese escudo...

...Taxes on alcohol and tobacco have gone up, and the "solidarity tax" taken out of all wages has been doubled to 2.4 per cent...

...A firm supporter of the pact to advance European union, Balladur upheld his Socialist predecessors' franc fort policy of preserving parity with the deutsche mark...

...Taxes went up...

...Meanwhile the Banque de France is getting its breath back, after spending close to $60 billion in a vain effort to shore up its currency...

...the government, for now, prefers prudence to a shock treatment...

...Nearly six months after taking office, his ratings in the polls show him to be France's most popular prime minister in 23 years...

...The pro-Socialist CFDT trade union federation seems willing to go along with this flexibility, provided employers commit themselves to increased hiring and, in the long term, to gradually shortening the average work week...

...The Prime Minister's firmest support has come from the RPR's coalition partner, the Center-Right Union for French Democracy (UDF...

...His first policy speeches after taking the helm last April warned that painful and much overdue steps would have to be taken...

...The combination of an aging population, a low birthrate and unemployment had pushed France's social security and pension system to the brink of bankruptcy, making reform inevitable...

...But the monetary crisis and the farmers' fierce lobbying for protection have combined to expose the deepening fault line that developed in the RPR at the time of the Maastricht campaign...

...Those who were hostile to the treaty, led by National Assembly President Philippe Seguin, advocated letting the franc float downward from the mark and sharply cutting interest rates, to make exports more competitive and thus boost production...

...Certain changes are designed to ease the pressure on business...

...A drastic reorganization of the ERM on August 1 widened the bands of currency fluctuation from 2.25 to 15 per cent above and below the central rates, causing the franc to drop 3 per cent against the mark, although it has somewhat rallied since...

...In the case of all others, the family allowance shift notwithstanding, those charges continue to add 50 per cent to employers' labor expenditures, making France's workforce the most expensive in the European Community (EC) after Germany's...

...Spurred by this summer's sluggish performance, the RPR reopened a divisive monetary debate that had soured internal party relations during last September's Maastricht Treaty referendum campaign...

...The labor law revisions that Minister of Labor Michel Giraud is negotiating with the unions aim to compensate for that...

...Here again, he is caught between the RPR's powerful agricultural lobby (generally anti-Maastricht and pro-Seguin) and the UDF's industrialists, who are eager to see GATT ratified...

...Perhaps what the French appreciate most about their new leader are his forthright style and impeccable public demeanor...

...The currency crisis was a bitter moment for Balladur, particularly because Chirac failed to come out on his side when Seguin publicly attacked his policy...

...otherwise, there's no point in going to the elections together...

...is Chirac's best ally, since he enables the latter to pose as a herald of change...

...It is also true that in contrast to the first time around, with Jacques Chirac in 1986-88, the Elysee Palace appears quite willing to let the Prime Minister govern...

...As the end of summer rolled around, he was reminding the country that there are no miracle solutions, and calling for a surge of "national effort...

...Henceforth they will merely pay a VAT on the difference between revenue and expenditure, thus depriving the state of some S5.3 billion in free loans each year...

...Mistrustful of his affinity with the President, they see Balladur's popularity as a threat to, rather than a launching pad for, RPR chief Chirac's bid to replace Mitterrand in 1995...

...If they go through, employers will no longer be bound by the present rigid 39-hour work week...

...He has managed to break bad news and still look good by employing the manner of a politely austere family doctor who explains what is wrong with you, then sets out to overhaul your unhealthy way of life...

...The Prime Minister has pledged income tax cuts next year ranging from 2 to 15 per cent for all but the wealthiest French...

...Seguin and his friends pointed to the pound: Since Britain left the European Exchange Rate Mechanism (ERM) a year ago, its GDP and exports have been growing, while interest rates and unemployment have fallen...