Defeat threatens French economic reforms

29th March 2004, Comments 0 comments

PARIS, March 29 (AFP) - The landslide defeat for President Jacques Chirac at France's regional elections raised serious doubts Monday about his government's programme of social and economic reform.

PARIS, March 29 (AFP) - The landslide defeat for President Jacques Chirac at France's regional elections raised serious doubts Monday about his government's programme of social and economic reform.

As a major cabinet reshuffle appeared imminent, Prime Minister Jean-Pierre Raffarin led a concerted effort to convince France's economic partners that the government will not be knocked off track by its unexpectedly stark rejection at the hands of the electorate.

Speaking as the extent of the ruling Union for a Popular Movement's (UMP) losses became clear Sunday night, Raffarin said: "I am sure the French do not want a return to immobility. Reforms must be continued very simply because they are necessary."

"We have launched a number of projects; we still haven't seen the results. Two years is the toughest time for a government, but to stop the reforms would be suicide for our country," added government spokesman Jean-Francois Cope on Monday.

However, the scale of the opposition Socialists' victory - taking 20 out of 22 metropolitan regions with 50 percent of the national vote - prompted speculation that Chirac will be tempted to take a less divisive course during his, and the government's, remaining three years in office.

Since taking power in 2002 Raffarin's government has pursued a policy of gradual reform of the country's economy - overhauling the pensions system, introducing some tax cuts, paring back parts of the large state sector and liberalising employment laws.

But the policy sparked a series of public sector protest movements over the last year, and was mercilessly attacked by the left in the run-up to the regional elections as a cave-in to "Anglo-Saxon" pro-market ethics.

A raft of controversial new reform programmes are already scheduled for the months ahead, and the government could find its hand fatally weakened if it tries to push them through against invigorated political and union-based opposition, analysts said.

"In this context the choice of immobility will be highly tempting," said the conservative daily Le Figaro.

Among the most pressing dossiers is the reform of the social security system, which is now running at an annual deficit of EUR 11 billion (USD 13.3 billion). However, Bernard Thibault of the hardline CGT union has promised "a readiness to react that will be much more significant than (during the protests) on pensions."

Other sensitive issues include the opening to private capital of state-owned energy concerns EDF and GDF - required by EU rules but vigorously opposed by unions; plans to introduce minimum service rules during public sector disputes; and a new labour law to simplify hiring and firing.

With Raffarin's own future as prime minister open to question, Chirac was expected to give the new cabinet a "social" spin to encourage the view that he is aware of the degree of public unhappiness - with possibly a new super-ministry to take charge of poverty, labour and other issues.

The question was whether this would replace or mask a continuing commitment to reform.

Commentators in the financial press urged Chirac not to back away, warning that the easy path of buying off discontent was fraught with dangers for the future.

"The government could choose to temporise and 'go social,' as we are so good at in France, promising money that we do not possess ... That way France could hope to bind its wounds for a time. But the moment of truth, ever more weighty, would merely be delayed," said Les Echos newspaper.

© AFP

                                         Subject: French News

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