The French Are On A Roll

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This dramatic recovery comes against the backdrop of some very real international attainments. France is the world's fifth biggest economy; the No. 4 exporter; and a world leader in transportation (the TGV bullet train), aerospace (Airbus and the Ariane rocket, produced in France with European partners), telecommunications (mobile phones and wireless technology) and civil engineering (the dazzling new Normandy Bridge and the Franco-British Channel Tunnel). With assets like these, the country is well placed to benefit from the cyclical upturn lifting all European economies. Meanwhile, aggressive French firms are making their mark abroad. Vivendi last month announced a merger with Canada's Seagram that will give the new company control of Universal's film and music interests and make it a major player in the entertainment field.

The turnaround actually began just before Jospin's election, but the Prime Minister deserves credit for his efforts to keep it going. After dithering over adopting the euro, the new Socialist government signed the June 1997 Amsterdam Treaty, which ensured France's participation in the single European currency and tied its destiny to the 15-member European Union. Jospin then began a steady sell-off of state companies, a move that reassured the business community and international investors. Most important, and most controversial, were the 35-hour workweek and a program that offered state-subsidized jobs to 350,000 young people. These measures had a psychological function: to treat collective depression. They worked.

The twin goals of competitiveness and maintenance of a benevolent social policy lie at the heart of the challenge facing France. Competitiveness ultimately means trimming back the role of government, the overall tax burden and the size of the public sector. In short, it means that France must become more Anglo-Saxon--or more liberale, as the French put it.

Almost no French politician on the left or right will openly endorse such free-market policies. But in fact, the logic of liberalism is built into the euro, the European single market and the free-trade global economy that France has embraced. "France is indeed moving in a liberal direction, but you mustn't say it," observes Antoine Garapon, an expert on the French justice system. "What distinguishes France today is a republican hypocrisy."

Another word for that may be pragmatism. In fact, the politicians are no longer in control of the process. One reason is that political and business elites have been discredited in a decade of financial scandals. Since the early 1990s, at least 30 prominent figures of all political stripes, including former Cabinet ministers and corporate CEOs, have been investigated for offenses ranging from influence peddling and embezzlement to illegal party funding and bribery. The judicial independence evident in this sweeping cleanup is one of the most striking aspects of the new France; such investigations would have been quashed under the old system. Says Olivier Nora, head of France's prestigious Grasset publishing house: "There is a rise in the sense of ethics and a general impression of corruption."