A steep rise in the value of the dollar on foreign exchange markets has helped fuel leftist criticisms of the austerity program introduced in March by France's Socialist government.
Leading left-wingers within President Francois Mitterrand's Socialist Party have seized on the surge in the dollar as evidence that the austerity measures are doomed to failure. They argue that the resulting rise in France's import bill prevents the government from meeting its targets for reducing inflation and the trade deficit.
The dissidents are urging Mitterrand to adopt a radically different policy based on developing French industry behind protectionist trade barriers. This strategy, which has been described variously as "the Fortress France alternative" or "the Robinson Crusoe temptation," would have profound long-term implications for political and economic relations with the rest of Western Europe.
The leading public proponent of this strategy is the former industry minister, Jean-Pierre Chevenement, who has emerged as one of the government's leading critics since his resignation in March. In a speech last weekend, he said there was nothing "particularly socialist" about the government's present economic policies and that it was only a question of time before the franc would be devalued again--for what would be the fourth time since the Socialists came to power in May 1981.
Chevenement's analysis is tacitly shared by the Communist Party, the junior coalition partner of the Socialists. In a television interview yesterday, Communist Party Secretary Georges Marchais said that the rise in the dollar had practically "eaten up" all the savings the government hoped to make by its austerity measures.
The dollar has risen about 15 percent since the last devaluation of the franc in March and reached an all-time record this week of 7.68 francs.
The exact impact of the dollar's rise on France's balance of payments is difficult to measure, as it has contradictory effects. Economists estimate that one-third of France's imports, including essential raw materials such as oil, become more expensive as the dollar rises. But this is to some extent offset by the greater competitiveness of France's exports.
In an attempt to dampen the criticism, Prime Minister Pierre Mauroy has announced that the government may call for a vote of confidence in the National Assembly, where it has a large majority. Mitterrand has scheduled a television interview for next Wednesday, during which he is likely to put the full weight of his authority behind the austerity measures.
Mitterrand's public position is that he is firmly committed to implementing the present austerity program and opposed to protectionism as a solution to France's economic problems. In private, however, he is known to have toyed with the protectionist alternative in March, only to reject it when he was advised that such a step would result in an immediate drop of up to 20 percent in the value of the franc and a loss of confidence among France's foreign creditors.
After several days' hesitation, Mitterrand gave his consent to a financially orthodox package of measures designed to reduce imports by reducing the purchasing power of ordinary Frenchmen. The package, which was put together by Finance Minister Jacques Delors, includes restrictions on travel abroad by French tourists, a forced savings plan, higher social security charges and price increases for such basic services as water and electricity.
The original assumption was that the Delors plan would enable France to cut its inflation rate to under 8 percent from around 12 percent and halve the 95 billion franc ($12.5 billion) trade deficit by the end of this year. The government clings to these targets in public, but officials acknowledge privately that they cannot be met if the dollar remains at its present level.
The obvious question discussed daily in French political and business circles is what will happen if the Delors plan is seen to fail. Mitterrand might once again be faced with a choice of agreeing to even harsher austerity measures, in order to deflate domestic demand still further, or adopting the "Fortress France" approach of restricting imports by administrative decree.
The "Fortress France" approach undoubtedly has some short-term political attractions for a president whose standing in the opinion polls has dropped to the lowest level recorded for a head of state since the formation of the Fifth Republic. Proponents say it would enable the government to boost employment and cushion the working class from the effects of the recession.
The consensus among most French economic experts is that protectionism would be disastrous in the medium to long term, undermining the competitiveness of French exports and resulting in reprisals. France is the world's fifth-leading exporter.
France's economic difficulties have increased its dependence on its partners in the European Community. The government raised a $4 billion loan there last month and, according to banking sources, will be looking for another $4 billion before the end of the year just to pay off the trade deficit.