An emergency meeting of the European Community's finance ministers to resolve a monetary crisis was suspended abruptly here today when France's Jacques Delors rushed back to Paris amid rumors of an imminent government shuffle following Foreign Trade Minister Michel Jobert's resignation.
The finance ministers plan to resume discussions early Monday and intend to reach an agreement before the European Community's heads of government confer later in the day.
Despite two days of talks, however, the 10 countries' finance ministers have not reached agreement on ending the crisis that threatens the four-year-old currency float of the European Monetary System.
In order to prevent chaos in monetary markets Monday, it was announced that official foreign exchange trading in the eight European system currencies would be suspended temporarily.
All Common Market currencies except the British pound and the Greek drachma are in the system. Besides the French franc and West German mark, they are the Dutch guilder, the Belgian and Luxembourg francs, the Irish pound, the Danish krone and the Italian lira.
The European Monetary System links its members' currencies within narrow fluctuation margins and in a joint float against nonmember currencies such as the dollar.
France and West Germany appeared locked tonight in a test of wills over currency values that threatens to undermine the political honeymoon between France's Socialist president, Francois Mitterrand, and West Germany's conservative chancellor, Helmut Kohl.
A strong mutual desire to strengthen the West's defense alliance prompted Mitterrand to welcome Kohl's electoral triumph two weeks ago. Since then, however, their diverging needs to protect national economic interests have aroused serious new tensions.
In a bid to stave off a third devaluation of the franc in 18 months, Paris is urging Bonn to revalue the mark, which has soared since the recent elections. But the West Germans, fearful that such a move would curtail exports and damage hopes for economic recovery, insist that France must share the burden and accept another cut in the franc's value.
Delors is being touted as a possible successor to Prime Minister Pierre Mauroy, who has been blamed for the government's troubled economic program.
Despite sharp differences in ideology, Mitterrand and Kohl have continued the close working relationships of their predecessors that is rooted in the perception of mutual defense and economic interests between Paris and Bonn.
Both governments have stressed that unless arms control talks between the United States and the Soviet Union succeed, West Germany must deploy modern U.S. nuclear missiles later this year to counter Moscow's medium-range rockets.
In Bonn in January, Mitterrand chided some West German Social Democrats for their neutralist tendencies and warned against any "decoupling" of Europe from the United States. His visit to Bonn, marking the 20th anniversary of the French-German friendship treaty, was largely viewed as a warm endorsement of Kohl's election campaign.
West Germany has intervened often to support the franc during currency crises because France is its most vital trading partner. But in recent weeks Kohl's conservative government has indicated that it will emphasize more national interests in the conduct of economic policy.
France has expressed annoyance over Bonn's reluctance to press for U.S. concessions in a dispute over agricultural trade subsidies. The United States has retaliated against the community's efforts to dispose of surplus farm goods on world markets by shipping its excess wheat, butter and poultry to markets traditionally served by France.
Several finance ministers today took the attitude that their countries were virtually forced to resolve the monetary dispute because failure to do so would split apart the joint currency float and drive foreign exchange markets into chaos.
West German Finance Minister Gerhard Stoltenberg introduced a compromise proposal today that offered to revalue the mark upward by 5 percent if France would devalue the franc by 2.5 to 3 percent. He also indicated that minor adjustments in other Common Market currencies would be necessary.
Before his return to Paris, Delors refused comment on whether his government was inclined to go along with the plan. But there was widespread speculation that France would support such a compromise, if only to clear the air for a more harmonious summit on Monday.
In recent days French officials have accused their West German counterparts of stubborn arrogance for refusing to revalue the mark and thus spare them the humiliation of another steep devaluation of the franc.
But Bonn's conservative government, which rode to victory on the promise of an imminent economic upswing, contends that France's currency troubles stem from its huge trade deficit and lingering high inflation.
After hitting 14 percent last summer, France's inflation rate has dropped to about 9 percent. That is still well above West Germany's current level of 3 percent, a crucial difference that has accelerated the speculators' rush to buy marks.
Washington Post correspondent Michael Dobbs reported from Paris:
The resignation today of Michel Jobert as foreign trade minister, a post he had held since the Socialists came to power in May 1981, may foreshadow a thorough reshuffling of the government.
Political analysts say that Jobert may have made his resignation public in an attempt to avoid being made the scapegoat for the dramatic rise in France's foreign trade deficit, particularly with West Germany. Jobert told the press he had not been given the necessary means for "coherent and efficient action" to reduce the deficit.
His resignation is politically significant because he was the only government minister who did not belong to President Mitterrand's left-wing coalition of Socialists and Communists. As foreign minister under Georges Pompidou, he acquired a reputation for favoring protectionist measures to cut imports.
The issue of how to reduce the foreign trade deficit, which was nearly $13 billion last year, is closely connected with Mitterrand's economic plans. In an apparent attempt to pressure West Germany into revaluing the mark, French officials last week hinted at consideration of taking the franc out of the European Monetary System.
A presidential spokesman said today that the Cabinet reshuffle will probably not be announced until after Monday's meeting of the European heads of government. Mitterrand is due to speak on television Wednesday, when he will outline the economic course he intends to follow for the rest of his term in office.
Delors is known to favor avoiding unilateral protectionist measures if possible and keeping the franc in the European Monetary System. He is a respected economic technocrat with a relatively good reputation in the banking community.