France Enters "The Enjoyable Epoch"

MUCH of Western Europe has been gripped this fall by the sudden fear of a recession. West Germany's Council of Economic Advisers, for example, last week reached the gloomy conclusion that the German economy, the Continent's most powerful, will sink to a growth rate of only 3% in 1971 --about half the increase registered last year--and predicted that still worse times were ahead for 1972. In large part because of President Nixon's defense of the dollar, which has made U.S. goods more competitive abroad and foreign-made goods more expensive in the U.S., similar setbacks have befallen Belgium, Italy, The Netherlands and parts of Scandinavia. Almost the sole exception is France. In a time of worldwide economic uncertainty, the French have managed to engineer their own economic liftoff.

French exports, few of which go to the blockaded U.S. market, jumped to $2 billion in October, an alltime monthly record. Economic growth is expected by the government to total 5.6% this year and about the same in 1972. With the help of profitable long-term deals like the ten-year trade agreement recently signed with the Soviet Union, which included a $500 million contract for the construction of a Renault truck factory 500 miles southeast of Moscow, French economists expect the nation to increase exports from 14% of production now to 19% by 1980. Per capita gross national product ($2,064) is already ahead of West Germany's ($ 1,848). Some time in the middle of this decade, according to Common Market economists and Futurologist Herman Kahn's Hudson Institute, France's total G.N.P. will surpass that of West Germany. The result would give Frenchmen the world's fourth largest economy (after the U.S., the U.S.S.R. and Japan).

Picky Palates. France's new prosperity is arriving with far less fanfare than either the "economic miracle" of West Germany or Japan's boomu. That is partly because the nation's cautious business establishment has only begun to recognize its own progress and partly because some of the economy's primary institutions have seemed to change little. The largely nationalized French banking industry remains one of the crustiest anywhere, and too many farmers are still dedicated to satisfying the world's pickiest palates rather than to modern agricultural production. Moreover, the standard of living for millions of Frenchmen remains mediocre: the last time the government checked (in 1968), for example, more than a third of Paris houses had no indoor toilet.

Nevertheless, France's leaders are convinced that the current boom is no illusion. As Finance Minister Valery Giscard d'Estaing told TIME Correspondent Charles Eisendrath: "The attitude of the French toward economic facts has become much more practical, much more realistic. The old management has practically faded away. Our aim is to bring our economic abilities to the level of our intellectual and human abilities. We will do so."

France's economic abilities are showing well now. Last year the country's auto production grew 23%, to 2,500,000 units, partly because of an aggressive export campaign that induced West Germans to buy more Renaults (154,000) than any other foreign car. The French arms industry ranks second only to that of the U.S., and has recently gained new customers in the Middle East and Latin America. French computers, which were introduced in 1960 and long regarded as one of Charles de Gaulle's empty bids for prestige, have turned into a profitable, $150 million-a-year business, growing at the rate of 25% annually.

In large part, such rosy statistics are De Gaulle's legacy. Le General recruited a group of first-rate minds to oversee French development. Among De Gaulle's economic managers was a Rothschild banker, Georges Pompidou, who became his successor as President in 1969. The economic group's most radical proposal by far was to reverse France's historic trend toward ever tighter centralization, which was begun in the 17th century when Louis XIV began holding permanent court at Versailles, thus depriving the nobility of their regional power bases.

Resort Towns. A new nobility of economic planners has been provided with government funds to oversee development outside the capital. The results are visible, for example, in rapidly expanding port facilities at Dunkirk and Le Havre. Nowhere has life changed so much as along the western Riviera, where builders are hard at work on Fos-sur-Mer, a new port that will provide entry to a vast inland shipping route. By 1980, when dredging work along the Rhone and Rhine rivers is completed, vessels will be able to reach the North Sea from the Mediterranean via Fos, thus avoiding the long trip around the Iberian Peninsula.

Located 31 miles west of Marseille, Fos has already become a major unloading point for Middle East oil, is equipped with a mile-long quay for supertankers, and has attracted some $2.5 billion in private investment. Wendel-Si-delor, France's largest steel company, is building a $1.3 billion mill to turn out 7,000,000 tons a year, about one-third of the present national output. At six other points along the same stretch of Mediterranean coastline, government-built resort towns are partially complete. Over the past year they have attracted 600,000 visitors to accommodations ranging from trailer parks to deluxe hotels, and by 1980 the tourist load is expected to triple, equaling that of the "old" Riviera east of Marseille.

Industrial expansion has been greatly aided by a generation of farm youths anxious for city jobs. Perhaps more important, their new bosses are frequently young, aggressive men trained in management. Just how sweeping the change at all levels of French management has been became clear last summer when the Patronat (national association of employers)--for generations one of the most conservative forces in the country --backed British entry into the Common Market. The government has also set up an informal economic panel that specializes in spotting overseas investment opportunities for French industry and preventing foreign takeovers of French companies; it is composed of four men, all under 40, including the personal assistants of Pompidou and Giscard. Known as the "Four Musketeers," the men have succeeded in denying the Heinz Co. control in Grey-Poupon mustard and in getting Ugine-Pechiney to invest in New Caledonian nickel facilities, thereby countering an expansion move by International Nickel Co.

Higher Station. If le boom, as the French are still reluctant to call it, continues as predicted, the inevitable result will be to reinstate Paris in the position of leadership that it more or less abdicated when De Gaulle stepped down. That era may well have begun last week, when Richard Nixon and Pompidou announced that they will meet for discussion later this month in the Portuguese-owned Azores. The President will be accompanied by Treasury Secretary John Connally and Pompidou by Giscard. Among likely topics of discussion is what adjustment France will be willing to make in the exchange rates between the franc and both the dollar and the mark. Giscard says that he is prepared to exercise further economic leadership "at the proper time" but makes it clear that there can be "no progress" until the U.S. sets forth a more specific plan for reversing its balance of payments deficit. Meanwhile, Giscard--and most of his fellow citizens--seems content to bask in the first rays of what he calls "the enjoyable epoch."

This file is automatically generated by a robot program, so reader's discretion is required.