PARIS, May 31 (AFP) - French President Jacques Chirac's appointment of his faithful lieutenant Dominique de Villepin as his new prime minister Tuesday is a last chance to salvage his political legacy after the disastrous referendum defeat for the EU constitution.

With two years till the end of his mandate to erase the memory of the most stinging setback in his long career, the 72-year-old president has turned to the innermost of his inner circle to reverse his dwindling fortunes.

De Villepin, 51, served as interior minister for the last year and before that was foreign minister through the period of the Iraq war. His links to Chirac go back to 1995, when he was named secretary-general at the Elysee palace after the president's first election.

As a man of unimpeachable loyalty and proven energy, he will carry out the president's directions without hesitation and - such is the prime minister's unhappy role in the French system - divert much of the political flak from his master.

The first mission will no doubt be to address the concerns of the 55 percent of the population who ticked the "no" box on Sunday.

With most of these voters telling pollsters that they were motivated by fear of unemployment or "general discontent," the president is expected to order a more "social" direction to policy - promising a new initiative on youth job creation, for example.

Chirac's calculation is that unemployment - now at over 10 percent - will start falling over the next year. Much hope is vested in a new "social cohesion" bill whose aim is to open half a million jobs in the service sector. Falls in the price of oil and the euro would help.

If the news is less disastrous in a year, then De Villepin will be the obvious choice to carry Chirac's mantle in a 2007 presidential election bid - assuming that Sunday's drubbing has extinguished Chirac's own ambitions for a third term.

But complications may spoil this scenario.

Reports are circulating that Chirac is to include the ambitious head of his ruling Union for a Popular Movement (UMP),  Nicolas Sarkozy, in the government - possibly in his old post as interior minister which he held for two years from 2002.

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