President Francois Mitterrand today tried to enlist West German support in his campaign to wring significant economic concessions out of the United States at next week's Williamsburg summit of western industrialized nations.
The French president used the occasion of a joint press conference with West German Chancellor Helmut Kohl to roundly attack U.S. economic policies, which he depicted 1s a primary cause of international instability. But he appeared to receive little encouragement from Kohl, who was making his first visit to Paris since leading the Christian Democratic Party to victory in elections in March.
Mitterrand's strong remarks, following a speech last week in which he called for an international monetary conference, set the stage for a possible confrontation at the Williamsburg meeting hosted by President Reagan. The French maintain that high American interest rates and a skyrocketing exchange rate for the U.S. dollar have delayed recovery from the recession and have created difficulties for all the economies of Western Europe.
While Mitterrand was speaking in the gilded ballroom of the Elysee presidential palace in Paris, the dollar surged to an all-time high exchange rate of 7.427 francs on European markets. This has the direct effect of increasing the amount France has to pay for its imports of essential raw materials, such as oil, and thus undermines possible beneficial effects of an austerity package designed to cut its huge foreign trade deficit.
In what appeared to be part of a prepared statement, rather than a response to a question, Mitterrand said it is "not normal" that the cost of high budget deficits in the United States should be borne by Western Europe through high interest rates. He said the U.S. policy suggests "only limited confidence in the ability to reduce inflation."
Mitterrand complained that, by pushing up the dollar, high American interest rates are "a cause of international imbalance."
The bitter language used by the French leader contrasted with the restraint shown by Kohl, who had earlier deflected a question on U.S. economic policy by saying he is "not in the habit of criticizing the policy of a friendly country in its absence." Kohl did, however, say that the rate of the dollar would be the subject of "intensive discussions" at Williamsburg.
The highly competitive West German economy is much better placed than the relatively inefficient French economy to take advantage of export opportunities opened up by a high dollar. German officials have already expressed skepticism about Mitterrand's calls for a return to more stable exchange rates--and they tend to share the American view that the real problem is much more deep-seated.
The French inflation rate, bordering on 10 percent, is more than twice that of West Germany and the United States. France's Socialist government has been obliged to devalue the franc three times since it came to power in May 1981 and the foreign debt has increased sharply.
This week the European Community agreed to extend a $3.7 billion loan to France to shore up its foreign currency reserves, which have been depleted because of the foreign-trade deficit and a run on the franc earlier this year. The political significance of this loan, in the view of economic analysts here, is that it increased France's dependence on its European partners and reduced the temptation to set off on a protectionist course of its own.
The dispute over U.S. monetary policies is potentially a much more serious source of disagreement between Europe and the United States than trade with the Soviets--the issue that helped sour the atmosphere at the Versailles summit last year. In recent days, Reagan administration officials have attempted to defuse the trade controversy, and Mitterrand today said it is his understanding that Williamsburg would not be "transformed into a conference on East-West trade."
French frustration with U.S. policies appears to have been strengthened as a result of the recent visit to Washington by Finance Minister Jacques Delors. He was reported to have returned home unhappy at what the French side saw as a lack of American understanding for France's economic problems.
France's main hope of avoiding the imposition of politically unacceptable economic sacrifices at home now appears to rest on reflation of the American and West German economies. Officials in Bonn, however, have made clear that West Germany is not obliged to act as a "locomotive" for economic growth in the rest of Europe if this means losing control of inflation at home.
French officials have also suggested obliquely that France should somehow be rewarded for its forthright support for U.S. strategic interests in Europe. Before the West German elections, Mitterrand took the lead in warning of Soviet attempts to "decouple" Western Europe from the United States and arguing in favor of the deployment of U.S. medium-range nuclear missiles if negotiations for the removal of Soviet SS20s fail.
The strongly "Atlanticist" foreign policy pursued by Mitterrand appears to have fueled a growing resentment at what is perceived by French officials as American ingratitude. At its crudest this has found its expression in rumors, reported on the front page of the right-wing Quotidien de Paris earlier this week, that France might withdraw its backing for the U.S. missiles unless something is done about the dollar.
These rumors are almost certainly unfounded. It is in France's own interest to maintain a credible strategic balance between East and West. What is true, however, is that the French government expects something in return and intends to press its case as hard as possible at Williamsburg.
"The efforts of one side must be supported by the efforts of the other. This is valid in all senses and in all areas," Mitterrand said at his press conference today.
Kohl announced that the European Community summit, scheduled for June 6-7, had been postponed until June 17-19 because of the British general election on June 9.