Now for the Hard Part

By Thomas A. Sancton.

Having won the Elysee, the new President faces formidable obstacles

It was 6:30 p.m. and the stocky man in the light beige suit was talking about the weather. He had tried to take a walk, but the drizzle and the knot of well-wishers outside had scared him back into the hotel. Instead of returning to Chambre 15, the room he has occupied during his weekly visits to his parliamentary district for the past 35 years, he had wandered into a small thicket of journalists in the hotel dining room who were waiting for the early projections from sample precincts. In contrast to his usual aloof attitude toward reporters, Franc,ois Mitterrand seemed to want company during these final hours of his long vigil. Yet he is a failure when it comes to small talk and so he had avidly seized on a remark about how it always rains here in Chateau-Chinon. Forthwith, he proceeded to launch into a lecture on local meteorology.

He was beginning to wax eloquent on the "granitic formations" that absorb moisture and the "confluence of three rivers" that cool the air when a journalist for the newsweekly Le Point whispered "fifty-two to forty-eight" in his ear. Without any noticeable change of expression or vocal inflection, he continued his explanations of cloud formations.

Only after Mitterrand excused himself and disappeared into a staff workroom did the reporters learn that the 52% was for him, not for President Valery Giscard d'Estaing. When he returned a few moments later, phlegmatic as before, the questions began. "Do you believe those figures? Can they change?" They could change, he said, but not the outcome: the spread between him and Giscard was decisive. Well, then, why was he standing there talking about the weather? What was his reaction to the fact that he was suddenly President-elect of France? Tsk, tsk, he replied, he would not react until after the polls had closed at 8p.m.

Was he dazed by the results or was he really as insouciant as he seemed? Referring to the phrase that has become the motto of his campaign, he cracked, still without a smile, 'l'homme tranquille is not just a campaign slogan. "

Mitterrand must have been the only tranquil man in France last week in the wake of his stunning victory. That event had sent thousands of his jubilant supporters into the streets of Paris, singing, dancing and honking car horns to celebrate what some pundits were calling the second French Revolution. But on the Paris stock market, prices plunged and the franc hit a twelve-year low as investors paled at the prospect of Mitterrand's sweeping nationalization and economic reform plans. The major political parties began gearing up for a decisive parliamentary election that could lead to either a leftist majority or a paralyzing constitutional deadlock. Giscard and Paris Mayor Jacques Chirac, the Gaullist leader, clashed violently, endangering the survival of their strained coalition. The Communist Party, which had supported Mitterrand in the final round of the presidential contest, was clamoring for Cabinet posts as the price of past and future votes. France's allies, meanwhile, worried privately about the nation's seeming leftward lurch, even as they cabled formal congratulations to the President-elect.

No one could tell exactly where the country was headed, but one thing was clear: in turning away from a center-right presidency for the first time in 23 years, the French people had embarked on a bold adventure that would sorely test the political institutions of the Fifth Republic and--if Mitterrand has his way--transform the social and economic landscape.

How had this dramatic shift come about in a nation long purported to have its heart on the left but its pocketbook, and its votes, on the right? Why such a crushing rejection of an incumbent President who only six months ago was given 60% in the opinion polls, and whose performance had seemed so creditable in many respects? Under Giscard, after all, France had become Europe's foremost aerospace manufacturer, the largest European producer of nuclear energy, a world leader in industrial and agricultural exports and, on the whole, a more prosperous nation than when he took office seven years ago. True, his popularity had plummeted as the unemployment level rose to 1.66 million, or 7.2% of the work force, and inflation nearly hit 14%, but even those figures seem moderate compared with those of many other Western countries.

To some extent, Giscard was hurt by a weakness that plagued him since he took office in 1974: the lack of a powerful party base. His own Union for French Democracy (U.D.F.) is a small and loose-knit group that is not nearly as well organized as its troublesome Gaullist coalition partner, the Rally for the Republic (R.P.R.). Chirac, who polled a respectable 18% in the first round of the presidential voting, gave Giscard only a lukewarm endorsement in the second round. Post-election analysis indicates that only 75% of Chirac's supporters cast their votes for Giscard. The R.P.R. defections made a critical difference.

Another factor was the steady rise of Socialist strength since Mitterrand took over the party leadership in 1971, and the corresponding decline of the Communists. While Mitterrand won 25.8% of the first-round presidential votes, Communist Leader Georges Marchais took only a humiliating 15.3%, a quarter less than the longtime Communist share of the electorate. As a result of that diminished standing, it seemed safe to vote for the left, for the first time since the Fifth Republic was founded in 1958, without handing the Communists a predominant role in government. At the same time, Marchais instructed his own disciplined followers to vote for Mitterrand in the second round. An estimated 90% of them did so.

But the overriding explanation given by French political analysts the morning after was that the public was simply tired of the aloof, arrogantly aristocratic Giscard and was anxious for a change. Admitted U.D.F. Leader Jean Lecanuet: "The idea of keeping the same leadership for 14 years was a factor." Jacques Fauvet, editor of the left-leaning Le Monde, agreed. "Franc,ois Mitterrand's victory is first a victory for alternation, that is, for democracy," he wrote in a front-page editorial. "For more than 20 years the same family, in spirit, had been in power. A large part of the country, particularly the underprivileged classes and the youth, will finally feel, we hope, that it is better liked, better understood and better protected." Virtually no one, apart from Socialist and Communist idealogues, saw the leftist victory as a sign of popular support for Mitterrand's nationalization and economic reform program. Rather, as Journalist Jean-Franc,ois Revel put it, Giscard's "strange defeat was due to the most common illness among those who exercise power: the loss of contact with reality."

Reality came crashing down on Giscard at 6:30 p.m. on election Sunday with the insistent ringing of a telephone at the family's chateau de Varvasse in the village of Chanonat (pop. 850). Campaign Manager Jean-Franc,ois Deniau had some bad tidings: early computer projections showed Giscard a loser by 4%. (The final official tally: 15,714,598, or 51.76%, for Mitterrand; 14,647,787, or 48.24%, for Giscard.) By 8:20 p.m., shortly after the results were made public, the Elysc,e released a terse statement in which Giscard expressed his "wishes"--nothing warmer --to his successor. As if to say I-told-you-so, Giscard added: "I think I did everything I could to explain to the French the extent and the consequences of their choice."

One of the "consequences" Giscard had campaigned most strongly against was Mitterrand's bold plan for economic and social reform. In addition to nationalizing the country's remaining private banks and eleven basic industries, including mining, communications and aerospace, Mitterrand's program calls for the creation of 210,000 public sector jobs, a higher minimum wage, tax hikes for the wealthy and a 35-hour work week. Critics see this as a guarantee of more inflation, more balance of payments deficits and a weaker franc.

The prospect of such sweeping measures sent shock waves through the French financial and business community. On the morning after Mitterrand's election, for the first time in its history, Paris' venerable stock exchange, the Bourse, had to postpone its opening because there were no buyers to establish prices. When the doors did open at 1 p.m., there was an avalanche of sell orders from anxious investors. Stock prices fell by 9% within minutes and trading had to be suspended. Hardest hit were stocks of the industries that Mitterrand proposes to nationalize.

On foreign exchange markets, the franc plunged to 5.52 to the dollar, and was held at that level only by heavy intervention by the Bank of France. Customs agents, meanwhile, were ordered to double their vigilance against French "tourists" seeking to smuggle capital out of the country. By week's end, as the initial shock wore off, both the Bourse and the franc were showing signs of recovery. But pessimists saw the "Black Monday" fiasco as just a sample of what might come if Mitterrand attempts to carry out his programs.

In the context of France's already heavily mixed economy, Mitterrand's nationalization plans are not all that radical. He would increase the proportion of nationalized banking activity from 60% to 100%, while jacking up the share of public sector industry from 12% to about 17%. This would bring 700,000 additional workers under government control. But, in fact, the companies in question are already largely controlled by France's state-directed economy. Many of the companies scheduled for nationalization are now faltering anyway and in need of some kind of government support. Moreover, some of France's already nationalized companies, like Renault, Air France and Aerospatiale, are doing fairly well.

The real criticism of Mitterrand's economic program is not so much that it will precipitate disaster; it is rather that the whole concept of nationalization and Keynesian government intervention seems to belong to an outmoded 1960s-style of economic tinkering that has failed wherever it has been tried. Mitterrand seems to be marching to a distant and offbeat drummer and in the wrong direction. "This [nationalization] project," writes Historian Raymond Aron, "bears witness to the Socialist Party's archaic ideas." Says a prominent French banker: "The French don't do anything like other people. At the moment when all the great countries of the world turn away from socialism, the French at last sign a seven-year lease with a Socialist."

Even an economic official of Bonn's Social Democratic government, whose postal and transportation services plus a part of the banking and steel industries are nationalized, doubts the wisdom of Mitterrand's plans. "It's wrong to assume that the state can run a business any better than it could be run under the free enterprise system," he says. "Various lands have tried it--Belgium, Sweden and Great Britain, for example--and they haven't managed to make a good thing of it. France should be no different."

When Mitterrand officially takes over power from Giscard on May 21, his first act as President will be to select a Premier from a number of candidates. The new President and his Premier will then name a Cabinet, which will function as a "transitional" government. Mitterrand has stated that this first Cabinet will consist of "those who have supported" him --which Socialists say excludes the Communists, whose backing did not come until the second round.

This transitional government would be able to take some kinds of steps by decree. Initial acts would probably include several of the promised economic and social measures. Among them: raising the minimum wage by 25%, to $600 a month, and increasing family allowances. But major reforms, such as nationalizations and the reduction of the work week, would require parliamentary approval. Mitterrand would be most unlikely to get it from the present 491-member National Assembly, in which the center-right holds 274 seats, compared with 117 for the Socialists and 86 for the Communists.

Therein lies the greatest immediate challenge of Mitterrand's administration: he inherits a constitution that makes government difficult when the President and Parliament represent different political groupings. That situation, though common in the U.S., has not occurred in France since Charles de Gaulle founded and designed the Fifth Republic in 1958 to favor the center-right. The constitution gives enormous powers to the President. He can dissolve the National Assembly once a year and he has strong control over Parliament. The controversial "article 49," for example, allows the President's Premier to ram legislation through Parliament without a vote by invoking the Government's "responsibility." The Assembly can block such moves only by taking the drastic step of voting a motion of no confidence, which forces the Premier and his entire Cabinet to resign. Parliament has no power to remove the President himself; but it could make it impossible for him to govern, thus forcing him to dissolve parliament and call for new elections. Since parliament now is controlled by the right-center, this is precisely what Mitterrand intends to do. The new legislative elections will probably take place in the latter half of June.

Mitterrand is hoping his victory will create a bandwagon effect that will carry large numbers of Socialist candidates to victory. But since the Socialists have little chance of winning a majority on their own, they will probably have to come to some agreement with the Communists in order to form a workable leftist coalition. Mitterrand is no stranger to deals with the Communists: from 1972 to 1977 the Socialists and Communists were formally allied in a Union of the Left, which was shattered on the eve of the 1978 legislative elections when Communist Leader Georges Marchais suddenly upped the ante by demanding key Cabinet posts. This time, though the Communists are again calling for portfolios, the Socialists feel sufficiently strong to resist Marchais's arm-twisting tactics. After Mitterrand's inauguration, the Socialists will begin negotiations on a "government contract" with the Communists. For Mitterrand, the crucial trick will be to satisfy the Communists, perhaps by promising them some minor Cabinet posts, without alienating the center.

But Mitterrand's opponents had little cause to gloat over the left's internal bickering, for the smoldering feud between Giscard and the Gaullists exploded into an open rift last week. Without naming him directly, Giscard publicly blasted Chirac for not backing him enthusiastically. He seethingly referred to "premeditated acts of treason."

For several days after the election, Giscard toyed with the idea of forming a new centrist "liberal" party aimed at blocking Chirac's relentless drive for power. But Giscard's U.D.F. followers in parliament, anxious to hold their seats, seemed far more interested in making a deal with Chirac than in sharing the ex-President's martyrdom. Said one U.D.F. deputy: "I can understand the President's pain and recriminations. But right now we have to keep our fists in our pockets and try to save the house."

A disappointed Giscard thus shelved his plans for a new party. Instead of running for a lowly parliamentary seat, he decided to withdraw to his country estate, much as De Gaulle did in 1946. The defeated President was hoping that a taste of chaotic Socialist government would make him what he calls "the most popular man in France," and pave the way for an eventual return to power. "Giscard is like a woman who has been rejected," says a confidant. "He can't try to impose himself. He has to wait for the call."

Chirac assumed a statesmanlike pose and called for a "new majority." At midweek, Chirac and U.D.F. President Jean Lecanuet announced a new electoral "pact" of the center-right. Based largely on Chirac's own Reaganesque economic proposals, this joint U.D.F.-R.P.R. platform calls for tax cuts, reduced government spending, and more freedom for business. In short: the negation of everything Mitterrand stands for.

Obviously a center-right majority elected on that platform would make it impossible for Mitterrand to put through his economic and social reforms. The President-elect has said that if he did not get a leftist majority, he would try to govern with whatever majority did emerge from the elections. But his room for maneuver would be severely limited. If he attempted to form a coalition with the center, for example, he would almost surely arouse the hostility or outright opposition of the Communists.

As for Mitterrand, he remains optimistic that the constitutional hurdles can be overcome somehow. Asked in a pre-election interview whether the lack of a workable majority might doom his presidency, he replied: "I believe that this time the institutions of the Fifth Republic that have barred us from power for so long will contribute to keeping us there." It is a tribute to Charles de Gaulle that one of the most bitter opponents of his constitution is now preparing to adapt it to an entirely new set of circumstances.

Mitterrand may also be expected to draw on another Gaullist tradition by pursuing an independent and nationalistic French foreign policy--albeit one that may differ from his Elysee predecessors' in some important respects. No clear-cut policy will emerge until after the parliamentary elections, but the broad outlines can be predicted from Mitterrand's stated positions:

Franco-Soviet Relations. Mitterrand is likely to take a harder line toward the Soviet Union than Giscard--despite his relationship with Moscow's most loyal European Communist Party. The President-elect strongly denounced the Afghanistan invasion and, as one senior British diplomat observed, "has no illusions about Soviet motivations and intentions." Pravda, which praised Giscard's commitment to detente and was openly rooting for him in the election, lamented last week that the Socialist leader would probably adopt the " 'tough positions' of the Western side."

Middle East. As a much stronger supporter of Israel and the Camp David process than Giscard, Mitterrand will almost certainly back off from the overtly mercantile pro-Arab policy of his predecessor. In a rare moment of agreement, both Israeli Prime Minister Menachem Begin and opposition Labor Party Leader Shimon Peres hailed Mitterrand last week as "a true friend of Israel."

Third World. Mitterrand is anxious to increase aid and trade with developing countries, and seems likely to strengthen French support for national liberation movements. He is strongly opposed to dealing with any kind of junta or authoritarian regime, no matter how pro-Western, and has sharply criticized U.S. involvement in El Salvador.

NATO. While Mitterrand talked as an Atlanticist during the campaign, he is unlikely to return France to NATO's integrated military command. He is committed to maintaining the independent French nuclear deterrent and will probably not reduce defense spending drastically.

Europe. Mitterrand's election has injected a note of uncertainty into the European Community, whose officials now expect action on such prickly questions as agricultural subsidies, fisheries and steel to be delayed as the French concentrate on their domestic situation. Perhaps the election's most significant effect on the EC will be a weakening of the predominant Paris-Bonn axis, which depended on the close personal relationship of Giscard and West German Chancellor Helmut Schmidt. The Chancellor was said to be shattered by Giscard's fall. He sent a formal congratulatory telegram to fellow socialist Mitterrand, whom he barely knows, but personally telephoned condolences to his defeated conservative friend.

Meanwhile British Prime Minister Margaret Thatcher, who never concealed her dislike for the Olympian Giscard, was hopeful that London could now strengthen its hand in European affairs with the weakening of the Paris-Bonn relationship.

Franco-U.S. Relations. The Reagan Administration, which had been building a closer relationship with Giscard over the past few months, was caught flat-footed by Mitterrand's election. Indeed, the Paris embassy had confidently predicted a Giscard victory (but not the CIA, whose analysts correctly picked Mitterrand). Briefing reporters the day after the election, an Administration official gamely stressed the "enduring quality" of Franco-American relations, but admitted to concern over the possible inclusion of Communists in the Mitterrand government.

Once the surprise wore off, U.S. officials did not seem overly worried. Indeed, at least for now, the Administration is looking on the bright side: Mitterrand's views on the Soviets, the Middle East and the Atlantic alliance are basically compatible with Washington's. But there is a strong likelihood of policy conflicts over the Third World, where the Reagan Administration has taken a much more tolerant line toward authoritarian regimes. Summing up Washington's wait-and-see attitude, one Administration analyst observed: "These people have been out of office for 23 years. Now they have to face up to reality, and that is a sobering experience." --Thomas A. Sancton Reported by William Blaylock and Henry Mutter/Paris

With reporting by William Blaylock, Henry Mutter

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