European Document/God Is a French Socialist
Lilla, Mark
EUROPEAN DOCUMENT GOD IS A FRENCH by Mark Lilla H e's back. After nearly nine months of eerie silence following his re-election last year, French President Francois Mitterrand in...
...A mixed economy gives rise to opportunities for special, invidious forms of corruption that can quickly destabilize a government...
...The socialists succeeded in stonewalling (which is incredibly easy in France) until Mitterrand's own industry minister blabbed, telling a magazine reporter that he found the Societe Generale affair much more troubling than Pechiney...
...Among them was the giant bank Societe Generale...
...What makes these "affaires" and not just ordinary white-collar crimes is that someone appears to have used public institutions to commit them...
...Second, the Socialist party itself has been courting "birds of prey" into its ranks, recently selecting France's most famous self-made millionaire, Bernard Tapie, as a local candidate...
...Last November the socialist government proudly announced that a nationalized firm called Pechiney had purchased American National Can from an American conglomerate named Triangle Industries, thus making Pechiney the world's largest packaging firm...
...They also know that les affaires arose because of direct government involvement in private investment decisions, and not because of the nature of lucre...
...Mitterrand also knew that the stakes were high...
...The cabinet chief resigned, and the courts brought formal charges against the investors, including Mitterrand's friend Pelat, for receiving insider information...
...One reason is that six million ordinary Frenchmen are now making "easy money" as small investors in the market, thanks in large part to stockexchange reforms made by Beregovoy during Mitterrand's first term...
...The French decided to make their peace with that republic and, little by little, are now making their peace with capitalism...
...The issue is political...
...On Sunday night, February 12, the streets were empty for two hours as the French finally got a look at the man they re-elected last year...
...But he was not about to stand idle in the face of those who wanted to impose a "kind of jungle" on France in the name of a "backward liberalism that was already outmoded in the nineteenth century...
...It must have been quite a shock to discover that, when it comes to capitalism, Dieu is still a socialist...
...q 28 THE AMERICAN SPECTATOR MAY 1989...
...Since October his fragile government has been challenged by a seemingly endless series of public service strikes that began among nurses, then spread to train conductors, mailmen, TV reporters, teachers, prison guards—even weathermen...
...And they explicitly denied his party a parliamentary majority, to insure that he would not backslide...
...During the campaign, however, Mitterrand had promised no new nationalizations or privatizations, so Beregovoy was forced to seek indirect means of stripping Chirac's cronies of their power...
...Since the election, political commentators have recognized (whether they like it or not) the arrival of "the centrist republic," a France that seems finally to have ended its flirtation with the radical political doctrines of right and left that denied the republic's legitimacy...
...The problem is that it is only controlled a posteriori by a parliamentary commission that tends not to ask the bureaucrats too many questions, leaving plenty of room for potential scandals...
...Damage control became impossible as new clues came to light...
...But, in ideological terms, the political center is not always the economic center...
...This was brought home a few days later when the Wall Street Journal/Europe printed an interview it had done before Mitterrand's speech with Prime Minister Rocard...
...The trouble began this January when two, seemingly unrelated, stockexchange scams came to light...
...The French know this will be necessary, even if it means some dislocations and runs against the grain of their conception of the national interest...
...Pechiney raises very serious questions about corruption in nationalized French industries...
...In many ways Mitterrand is responsible for this political development, and so far he has kept his campaign promise to govern from the center...
...Scandals are inevitable, he said, as long as the French allowed "birds of prey" to speculate on the French economic patrimony, dividing it to sell to the Americans and Japanese...
...The first was a simple case of American-style insider trading...
...Pelat promptly died of a heart attack, further complicating the investigation...
...Money made on the exchange is always "easy," "suspect," "corrupting," and "promiscuous...
...But when his loose-lipped industry minister was asked to appear on a popular political show moderated by a socialist sympathizer, Mitterrand's hand was forced...
...No one believes that he encouraged his friend Pelat to use their relationship for private gain: Mitterrand is too scrupulous for that...
...M itterrand had not wanted to address "les affaires," claiming they were a matter for the courts...
...friend of Beregovoy's cabinet chief who also was recently admitted to the Legion of Honor...
...Some have seen in his attack on business a strategic move to outflank the Communist party in upcoming local elections, which is no doubt true...
...Among the investors was one of Mitterrand's oldest friends, Roger-Patrice Pelat, said to have bought 50,000 shares...
...The socialists rightly condemned this as cronyism, not economic liberalism, but were unable to touch the "hard core' until Chirac's government was defeated last year...
...But soon after the announcement the SEC informed its smaller French counterpart that the deal looked fishy, and asked for clarifications...
...Further investigation then revealed that the private purchasers had not used just their own money, but that roughly a third of it (a billion francs) had been put up by the government itself through a mysterious, but extremely powerful, public investment agency called the Caisse des Depots...
...Unless, of course, he thought that a two-hour discourse attacking capitalism would remind them of Fidel Castro...
...And not just Margaret Thatcher should find that disturbing...
...In this case it appears that the Caisse allowed the government to buy inflated stock to enrich its socialist friends, all in the name of challenging the conservatives' "hard core...
...He would have preferred not to...
...The reported intermediary was a Lebanese financier named Samir Traboulsi, a close Mark LiIla a former editor of the Public Interest, lives in Paris...
...After nearly nine months of eerie silence following his re-election last year, French President Francois Mitterrand in mid-February finally appeared before the nation on prime-time television...
...They voted for him because he had turned his back on the ideological tradition of his party and had become Tonton ("Uncle"), the leader of "unified France" who promised to seek an "opening" with the centrist parties...
...For two hours he denounced the organized "gangsterism" of corporate takeovers that now threatened to "pillage" the French economy...
...Finally, everyone realizes that the European consolidation in 1992 will mean more economic liberalism and foreign investment, not less, if France hopes to compete with its European neighbors...
...These suggested that some investors had bought Societe Generale stock over a year ago and had "parked" it abroad, awaiting government encouragement of a buyout...
...The real affaires, he said, are not Pechiney and Societe Generale, but the everyday frauds of the stock market...
...He came right to the point...
...C o if the French are not about to respond to Mitterrand's call back to the faith, the question remains: What was he up to...
...At times one thought Mitterrand had exhausted the stock of vituperative French adjectives, but he always managed to find another to continue his attack on the "speculators...
...Mitterrand realizes this...
...Of course he emphasized his support for hard work and investment that "serves our country...
...So when he went before the nation in February he knew that the real question was not "les affaires" but the future of the French mixed economy...
...But no single interview on this subject is about to attract.committed votes away from the Communists— and only committed votes remain among this ever-dwindling electorate...
...Robert Reich, please take note...
...His unfortunate prime minister, Michel Rocard, working without a socialist majority in Parliament, has taken all the heat while Dieu (as the French call Mitterrand) has remained firmly cache...
...It was reported that a group of investors who had been tipped off about the government's impending buyout had bought a lot of Triangle stock through foreign intermediaries...
...But in typically French fashion the bank was not fully privatized, for fear of its falling into "foreign hands...
...When that encouragement arrived, they sold the stock at twice the price...
...Yet a series of serious financial scandals recently touched the president's inner circle, forcing him—and his ideas— into the open...
...Instead, Chirac's government created a small group of French investors who were sold privileged shares, with the understanding that this "hard core" would not be able to sell them for five years, thereby insuring French control...
...And the Societe Generale affair shows that the problem is no less severe-when the government makes "public investment THE AMERICAN SPECTATOR MAY 1989 27 decisions" or carries out an "industrial policy" through the bureaucracy...
...It is surely the largest single investor in France, directing a trillion-franc portfolio that includes shares in forests, public housing, banks, tourist parks, and Club Med—all in the public interest, of course...
...He made his availability known to the moderator, and the minister was dropped from the show (and has not been invited back...
...His heartfelt vehemence really seemed to strike a chord—and a surprising one...
...The second case is more interesting and more French...
...No, the only persuasive explanation for Mitterrand's extraordinary attack on the money changers is that he actually believes what he said...
...In 1986, when Mitterrand was forced to "cohabitate' with a conservative cabinet, Prime Minister Jacques Chirac began to privatize nationalized firms...
...Conservatives cried foul, charging the socialists with using government agencies to aid their friends in the buyout...
...In October a group of private investors, all friendly to the Mitterrand government, miraculously announced their purchase of enough Societe Generale stock to challenge the "hard core...
...The newspapers have all been highly critical—calling him "archaic," "onehundred years behind the times"—and an instant TV poll I saw had the French two-to-one against Mitterrand's attacks on "easy money" Actually, this makes sense...
...Le Monde did not exaggerate in comparing his tone to that of "a nun talking about a bordello...
...Word soon leaked, and in January the finance minister, Pierre Beregovoy, admitted that an investigation was underway...
...The French, I think, may have assumed that Mitterrand's political transformation had been accompanied by an economic conversion too...
...Before the president's attack on the robber barons he could hardly find the words to express France's commitment to open (slowly) its economic borders and to encourage investment—at home, through the stock market, and abroad...
...The Caisse was set up after Napoleon to finance public works (which it still does), but it has now become one of the most important forces shaping the French "mixed" economy...
...The French were stunned by Mitterrand's discourse, and the stock market plunged for three straight days...
...After a short, Checkers-like monologue about the humble virtues of his friend Pelat ("his mother was a washerwoman"), he turned to the real culprit: corporate capitalism...
...Now he's been forced into it to save Beregovoy's face...
...Rocard is not a bad guy, and until les affaires he had successfully prevented the government from going after the "hard cores" through legislation...
...When the French re-elected Mitterrand last year, they did so explicitly because he had renounced the disastrous political and economic policies that brought down his first socialist government in 1986...
Vol. 22 • May 1989 • No. 5
