Tending a Neglected Backyard

By Henry Muller

Tending s Neglected Backyard

Mitterrand tries to calm the critics of his new economic order

The camera panned slowly across a library of leatherbound books and a polished table to a pair of pale, manicured hands and finally to the angular, rigidly expressive face framed in a white collar and blue suit. French President Franc,ois Mitterrand was on the air, live from his study in the Elysee Palace. In an hour-long Gallic version of a televised fireside chat, Mitterrand delivered the first comprehensive defense of his leftist domestic policies since he took office seven months ago. "Those who chose us want things to change," said he. "There must be some reforms, and these reforms must be carried out at a reasonably good pace."

After devoting 43,000 air miles to international summitry in seven countries, Mitterrand was belatedly paying attention to his national backyard. The interview, conducted by two accommodating TV executives, was an attempt to cast a cloak of presidential conciliation broad enough to reassure his impatient supporters and appease his angry detractors. But it confirmed that neither worsening economic news nor mounting political pressure would deter the new President from fulfilling the sweeping promises made during his campaign.

Mitterrand acknowledged that the latest economic statistics were disappointing. Unemployment, which the Socialists had vowed to bring down, passed the symbolically sensitive 2 million mark last month and now stands at 8.2% (vs. 7.2% when Mitterrand took office). Inflation roars along untamed at 14% (vs. 12.5% last May). The country's trade balance registered a $1 billion deficit for the month of October alone. But the President predicted that the employment picture would start improving by 1983. He also pledged efforts to bring inflation down to 10%. The success of his seven-year mandate may depend on his ability to meet those targets. Warns a diplomat in Paris: "If a year goes by and the Socialists haven't turned things around, there could be serious trouble."

Signs of discontent are already evident. Leftist unions have been stepping up their demands of the government. The Communist-led Confederation Generale du Travail, for example, is holding out for an immediate reduction in the work week from 40 hours to 38; Mitterrand is offering 39. A crowd of 3,000 ecologists staged a violent demonstration two weeks ago at Golfech, in southwestern France, to charge Mitterrand with reneging on his campaign pledge to curtail new nuclear-plant construction.

The major farmers' union, meanwhile, indignantly balked at a government offer of $1 billion in subsidies. Demanding $1.7 billion, militants blocked the track of the new high-speed TGV train for one hour. Traveling salesmen got into the act with a horn-tooting, traffic-jamming demonstration in Paris' Place de la Concorde to demand new benefits, including tax-free gasoline (the current price of $2.77 per gal. includes $1.01 in taxes). Even during a generally triumphant visit to his former constituency in western Burgundy this month, there was an undercurrent of rural dissatisfaction. Said one protest sign along the way: WE WANT TO LIVE, NOT JUST SUBSIST.

Mitterrand's most important challenge comes from the French business community, which lacks confidence in his radical economic program. Mitterrand has raised taxes on business and on individuals with high incomes, increased the government's economic role by moving to nationalize large companies and private banks and boosted state spending on everything from civil servants to welfare benefits. These policies, a representative of the association of small-and medium-size employers warned last week, are "killing the goose that has been laying golden eggs." Uncertain of the future, French industries large and small have cut back on new investment.

In his television appearance, Mitterrand tried hard to mollify businessmen. While reaffirming that all promised reforms would be carried out on schedule, he pledged not to undertake further nationalizations. Justifying a controversial, although legal, decision to impose certain job-creating social reforms by decree instead of by legislation, Mitterrand declared: "Businessmen need to know the rules of the game."--* At the same time, the government has been cracking down on what appears to be an increasing traffic of money and valuables out of the country. So far, 34 people, including one former member of parliament, have been charged with illegally siphoning currency abroad.

Mitterrand also tried to close a debate that was launched by Finance Minister Jacques Delors, the most outspoken moderate in his Cabinet, who declared in a radio interview last month that he favored a "pause" in the pace of reform. Mitterrand disagreed. The President is anxious to placate important supporters within the governing coalition: the Communists, who hold four seats in the 44-member Cabinet, and a group of impatient, occasionally raucous Socialist backbenchers known as "maximalists" because they want a maximum number of campaign promises implemented.

Extensive as they are, Mitterrand's difficulties are early warning signals, not immediate liabilities. The latest polls show confidence in his administration holding steady at 57%. And for all the acrimony over economic policy, a surprising degree of harmony prevails on foreign affairs and defense. Mitterrand's request for $22 billion in military spending, up 3.6% after inflation over last year's level, passed the Senate without dissent this month. It was the upper chamber's first unanimous vote in 30 years. Nonetheless, it is Mitterrand's handling of the economy and of domestic social policy that will determine France's international strength, its uniquely firm stand on Western defense and, of course, the number of future televised reassurances the President will have to give.

--By Henry Muller. Reported by Jordan Bonfante/Paris

*Mitterrand also responded to rumors that he was suffering from a mysterious illness. Confirming that he had undergone a series of unspecified tests, he explained that he has been beset by back and leg pains, that he now "felt better" and that a full report on his health would be published this week.

With reporting by Jordan Bonfante/Paris

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