France's New Economic Strategy

...Either rate is higher than that of France's major trading partners...

...With a few local exceptions, the Left's policy has been to stand up for the immigrants...

...Marchais' expressions of discontent have admittedly been growing more strident of late...

...The low-cost labor force, a key to the country's postwar prosperity, is today a convenient scapegoat...

...it regularized the situations of hundreds of thousands of illegal workers during 1981-82...

...Polls indicate that a majority believes the crisis to be the country's most pressing issue and is resigned to accepting some sacrifices...

...Unemployment insurance has been revamped in a way that both reduces benefits and gives better protection to first-time job seekers and early retirees...

...In January the government introduced a major industrial reorganization plan aimed at remedying the structural problems dragging down French competitiveness...

...In preparation for the legislative 1986 elections the Left must consider the impact of its industrial strategy on the voters, too...

...But predictions of the CP's imminent departure have been heard for the past two years...

...The policies of their first 18 months, designed to provide greater economic justice and stimulate growth, resulted in huge balance of payments deficits and three devaluations of the franc...

...Although Mitterrand and his ministers continue to have considerable difficulty explaining their overall strategy, they have succeeded in convincing a skeptical French citizenry of the gravity of the economic situation...

...Embarrassed, Mauroy was obliged to step in and negotiate a series of retraining programs as well as offer a special $6,000 bonus to immigrant workers willing to return home...

...Michel Albert, who headed the national planning agency, confirms that French industry reacted slowly and late to new technologies and new world market conditions...

...that 7 per cent is the level likely to be achieved this year, but the announced 5 per cent target figure is being used as leverage in salary negotiations with unions...

...But this has not been translated into renewed support for the Socialists...

...Instead, whether in reflating the economy in 1981-82 or deflating it subsequently, the government has resorted to classic Keynesian and monetarist policies...

...Moreover, it comes at a time when an attempt is being made to implement a wide-ranging industrial policy that threatens the Socialist-Communist alliance and has reopened newly bandaged wounds within the Socialist Party...

...So the Socialists have their backs to the wall...

...In February, approval of Prime Minister Mauroy dropped to 29 per cent...

...Competition among them, and their inability to discipline recalcitrant rank and file have meanwhile been responsible for prolonging recent conflicts...

...The bitterness will be all the greater if, after placing the economy on the road to recovery and moderating union demands, the Left is forced to watch helplessly as the opposition reaps the benefits in a triumphant return to power...

...In the Talbot fiasco, the company cleverly announced cutbacks in a fashion that implied official acquiescence...

...And while significant numbers of farmers voted Left in 1981, some of that support represented a calculated gamble that a change might arrest declining farm incomes...

...In the shipyards, the government softened the blow by strategically placing orders for new ships...

...Efforts to rein in Social Security spending (including retirement benefits and health care) have led to minor cuts in coverage and increased charges...

...But criticism of the current industrial policy has also been voiced within the ruling coalition...

...Unions have declined in influence and membership over the past three years...

...Production cuts in the nationalized coal mines will touch half of the remaining 57,000 miners, but there will be no layoffs...

...March saw the sprouting of additional worker discontent...

...The irony of the Socialists' position is that they have been trapped into managing the economic crisis they denounced for so long...

...Civil Service unions are caught in a dilemma, neither wishing to concede hard-won gains nor wanting to appear greedy and selfish...

...This placed France in a precarious position...

...French farmers are a well organized, powerful political force...

...French economic policy is further constrained by decisions of the European Economic Community (EEC...

...The net effect, not surprisingly, has been a profound disillusionment of all who believed in alternative economics...

...The dim prospects for such a realignment soon were symbolized recently by the mutual hostility that Socialists Michel Rocard and the centrist Simone Veil—the most popular political personalities on the Left and Right, respectively—displayed during a joint interview in a weekly news magazine...

...Civil servants (teachers, police, postal workers, all national government employees) compose 17 per cent of the French labor force and are assured complete job security...

...Yet it is unlikely that the Communists will quit so long as there is a remote chance of the economic program succeeding, their denunciation of it notwithstanding...

...This has now been extended to the other automakers, allowing workforce reductions to proceed without labor opposition...

...Another potential victim of the new industrial strategy is the fragile alliance with the Communist Party...

...The Left's dogged attack on inflation has led to bitter criticism that it is simply "managing the crisis" for French capitalism...

...Their austerity plan must reduce inflation a couple of more points while maintaining exports at high levels...

...The French public now recognizes the seriousness of the country's economic condition and has even shown grudging admiration for the government's efforts...

...France is also witnessing the revival of far Right parties, which have capitalized on the economic malaise by spotlighting the presence of millions of immigrant workers...

...At the same time, a prominent feature of the latest labor settlements has been an intensified repatriation program...

...In the aftermath of the truckers' strike, Mauroy reiterated the need for a "strong and responsible" labor movement if the recovery program is to succeed...

...Last December violent confrontations broke out between strikers and nonstrikers at a Talbot automobile plant...

...Half of the $1.5 billion budgeted for new investment is slated for steel alone...

...All of this poses particular political dangers to an administration of the Left since the government here plays a prominent role in labor-management relations...

...Many fear that in the process of proving its economic muscle the Left has lost its originality and attractiveness...

...Few of these programs have seen the light of day, and only as pale versions of the original proposals...

...There are strong pockets of resistance, though, notably among the steel workers...

...He will be hard pressed to find a replacement for Mauroy as skillful at retaining the backing of the Communists...

...The Socialists now believe a "cleansing" of the French economy is a necessary first step to building a new society...

...A similar approach, involving transfers, retraining and voluntary early retirement is under way elsewhere...

...Predictably, the opposition has been castigating the Socialists for costly flip-flopping...

...FACING REALITY France's New Economic Strategy by norman bowen Paris Although May 10 will mark the third anniversary of Francois Mitterrand's election to the French Presidency, the festivities promise to be as austere as the Socialist program of economic regueur...

...In February the totally unanticipated truckers' strike demonstrated a high level of dissatisfaction and a willingness to paralyze the country over relatively minor demands...

...It has turned every local election into a national test, and it has interpreted the gigantic marches in favor of Catholic education (over 500,000 at Versailles on March 4) as a referendum against the government...

...The government is currently engaged in negotiations with its own workers to end, at least temporarily, the long-accepted indexing of salaries to inflation...

...The catch is that they would undoubtedly face a full-scale rebellion on the part of the Communist-dominated Confederation Generale du Travail, whose strength is concentrated in industries touched by restructuring...

...Still, the 14 per cent inflation under former President Valery Giscard d'Estaing was down to 9 per cent in 1983...

...Laurent Fabius, Minister of Industry and Research, has complained that the reconversion plans place too much emphasis on older declining industries at the expense of advanced sectors like electronics...

...The Left therefore is correct in saying that it must undertake the painful retooling that neither the Right governments nor French capitalists were willing to risk, and one indication of the government's resolve is the expansion of the research and development budget...

...Should things go badly, they can always pull out in 1985 in time to prepare for the legislative elections...

...Along the way, the Socialists have lost their carefully cultivated image as the harbingers of a better society...

...Preservation of the Socialist-Communist alliance seems probable in the light of the widening Left-Right divisions in France...

...Steel quotas, forinstance, are set at the EEC level...

...Fighting the monetary fight, though, is not enough...

...The government has tended to take labor support for granted, prompting Edmund Maire, head of the Confederation Frangaise du Travail (CFDT), to warn against imposing an industrial policy without adequate consultation...

...European agricultural decisions are even more troublesome for Paris, as the negative reaction to the EEC's decision last month to slash milk production and cut farm prices demonstrated...

...The popularity of the Socialists in 1981 rested to a large degree on their promise of new solutions to France's economic problems, with strong emphasis on an ecological approach to energy and raw materials as well as support for return-to-the-land and artisan type activities...

...At 10 per cent of the total population they constitute a larger group here than in most industrialized countries...

...Were the Communists to withdraw from the government, the Socialists would still be capable of governing, given their absolute majority in the National Assembly...

...The opposition immediately countered by warning the Catholic hierarchy against any compromises with the Minister of Education...

...Because they constitute a major source of the Left's electoral support, many doubted that the Socialists would follow through on the indexing issue...

...With the Right increasingly mobilized around highly emotional issues such as the future of Catholic education and an anti-monopoly press law, the government also faces direct opposition from its own working-class constituencies...

...Maire, whose CFDT has been criticized for being too close to the Socialists, was especially concerned that restructuring would simply become a euphemism for unprecedented layoffs in heavy industry...

...Communist Party chief Georges Marchais has publicly opposed any more cutbacks in nationalized industries, pointedly admonishing the Socialists to live up to their campaign platform...

...Workers' self-management and political decentralization were supposed to ignite new responsibilities and initiatives at the local level...

...It is unofficially acknowledged Norman Bowen, a new contributor, teaches political science at the A merican College of Arts and Sciences in Paris...

...Discontent has already set in, with farmers' organizations fertile territory for the far Right, whose goal is to weaken the government as much as to fight milk quotas...

...Although the Socialists' present strategy seems to vindicate the Right, France's previous rulers are vulnerable on this point: During the last 10 years of their stewardship industrial investment slipped badly...

...The far Right has won more than 10 per cent of the vote in some of the recent municipal elections, forcing the moderate Right into controversial alliances...

...The Left is paying for its untimely application of the former by an enforced dose of the latter...

...In any case, new leadership may not turn the tide...

...Many on the Right dream of a May 1968 in reverse...

...the government has to make headway with its industrial policy...

...Sensing the danger, the Socialists have made concessions on private education...

...Former Prime Minister Raymond Barre points out that before coming to power the Left constantly decried the declining role of basic industries, and after announcing ambitious expansion plans was itself sharply trimming down...

...The government is counting on this to see it through the year's negotiations, and to reduce the risks of fatal labor challenges...

...In addition, vigorous action has been taken to prevent the arrival of new clandestine workers and to indentify those continuing to live in the country...

...It calls for reduced production, a significantly smaller work force and less subsidies to basic industries like steel, coal and shipyards...

...Mitterrand was forced to choose between the Communists and those Socialists (the ceres faction of Jean-Pierre Chevenement) who favored withdrawal from the European Monetary System plus extensive protectionism, and those urging traditional remedies (Finance Minister Jacques Delors, supported by Prime Minister Pierre Mau-roy...

...Everyone is waiting to see if last spring's demonstrations, embracing small merchants, doctors and university students will recur...

...Ironically, the strike they staged on March 8, their first show of force against the Socialists, enhanced the regime's public image by proving that it was not the captive of any special interests...

...In 14 areas hit hardest by the restructuring, special reconversion plans have been established that use tax exemptions to lure new industries...

...Otherwise the franc will plummet again, leading to still another round of devaluations and a possible rendezvous with the International Monetary Fund...

...Interestingly, the recent decline of the dollar has actually led to more pressure on the franc vis-a-vis the appreciating mark...

...Paris is counting on rising price trends in other industrialized countries to help narrow the gap...

...Those within the Socialist ranks who cherished the idea of an opening up at the center and the exclusion of the Communists have seen this path blocked by the harshness of the moderate Right's stand toward the government...

...If the targets are reached, there will be more leeway in 1985 to pursue a pre-electoral strategy for 1986, although the high level of debt repayment will restrict any lavish gestures toward the Left's constituencies...

...The President, who scored 43 per cent, may shortly attempt to rebuild public confidence by reshuffling his Cabinet...

...Of greater long-range significance has been the Socialists' willingness to modify economic and social gains extracted over the years from Rightist governments...

...Nonetheless, attacks from the Right cannot be ignored...