The Battle for the Franc

Monday, Apr. 04, 1983 By FREDERICK PAINTON
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When Finance Minister Jacques Delors headed for Brussels, his instructions from Mitterrand called for an absolutely final fall-back position of a 5% revaluation of the mark and a 3% devaluation of the franc. Delors, who is normally a firm pro-European, arrived with all guns blazing. Referring to West Germany's reluctance to revalue, he asked, "What am I supposed to do with arrogant and uncomprehending people?" Unless the E.M.S. could be realigned to France's advantage, Delors threatened, France would withdraw, a move that would severely undermine what little European unity exists. Delors held 13 separate meetings with West German Finance Minister Gerhard Stoltenberg, some lasting hours, some just a few minutes. According to a West German insider, Delors's behavior was "beyond belief." He was said to have threatened, raged and thrown temper tantrums. Said Stoltenberg privately of the marathon negotiations: "It was an experience I would not want to repeat." But in the end, Delors's intransigence paid off. He improved on Mitterrand's "final" position by obtaining a 5.5% mark revaluation and a 2.5% devaluation of the franc.

There was no doubt in either Paris or Bonn that the West Germans had made concessions for political reasons. Kohl remembered that Mitterrand had given him much valued backing in his pro-NATO position over the issue of deploying new U.S. missiles in West Germany by the end of this year.

Mitterrand rewarded Delors for his Brussels performance by broadening his powers. In the new Cabinet, in which the number of senior ministers has been reduced from 34 to 15, Delors now ranks second only to Mauroy. Although the proportion of Communists has not changed (two out of 15, plus two junior portfolios, vs. four out of 35 before), the new team seemed designed to placate bankers, businessmen and foreign investors who will be monitoring France's economic performance.

Mitterrand's decision to reappoint Mauroy involved a careful political calculation. Whatever his disadvantages, Mauroy is perhaps the one leader who can cajole the Socialist electorate into swallowing the bitter pill of belt tightening. He pushed through the unpopular wage and price freeze last year. For Mitterrand, there is also an advantage in having Mauroy absorb the unpopularity that the stringent new economic measures will generate. If Mauroy becomes too much of a drag on the party, the President can replace him before the next legislative elections, which are scheduled for 1986. Mitterrand thus has given Mauroy two years in which to perform a healing miracle on the French economy. The next battle for the franc has begun. — By Frederick Painton. Reported by Jordan Bonfante and Thomas A. Sancton/Paris

With reporting by Jordan Bonfante, Thomas A. Sancton/ Paris