"I Have to Survive"

By Jay D. Palmer

Mitterrand picks an austerity Premier, and the Communists walk out

It seemed at first to be just another routine visit to the Elysee Palace. But within 30 minutes of Premier Pierre Mauroy's arrival for his weekly meeting with President Franc,ois Mitterrand, the Elysee's chief of staff emerged onto the steps of the stately, 18th century presidential palace in the center of Paris with a statement that sent shock waves across the country. "Premier Pierre Mauroy has presented his government's resignation," the official noted gravely. "The President has accepted [and] named Mr. Laurent Fabius as Premier." Fabius, formerly Mitterrand's Minister for Industry and Research, will at 37 become France's youngest Premier in more than a century.

For all its dry bureaucratic tone, the announcement triggered a week of political drama that led within days to the collapse of France's fragile and often acrimonious "union of the left." After a series of all-night marathon discussions, the Communist Party announced that it was quitting Mitterrand's three-year-old Socialist administration. "We do not have the moral right to allow millions of women, men and disappointed youths to believe that we can meet their expectations within the present government," declared Communist Spokesman Pierre Juquin. "We refuse to deceive them, as we refuse to deceive ourselves."

The change comes at a critical time for Mitterrand, who was elected in 1981 on a wave of support for Socialist-led change. For the past two years, the President has been forced to administer draconian economic medicine, including higher taxes, currency controls and widespread layoffs in ailing industries. As a result, unemployment has risen to about 10% (vs. 7.2% when Mitterrand was elected), and the President's popularity rating has sunk to an all-time low of 35%. In last month's elections for the European Parliament, the Socialist share of the vote dropped to 20.8% from 37.5% in the 1981 legislative elections. Mitterrand's Communist partners fell to their lowest point in more than 50 years, with 11.3% of the vote.

For all Mitterrand's troubles, the Communist walkout bore all the signs of a craftily engineered blessing. Holding 285 of the 491 seats in the National Assembly, the Socialists do not need the Communists in order to stay in power. In one stroke, Mitterrand managed to boost his party's fortunes well before the legislative elections that must take place by June 1986, and to end an awkward situation in which the Communists were incessantly criticizing the very government of which they were a part. He decided to replace the genial but politically discredited Mauroy, 56, with a new leader who would be less tainted by the past and, as it happened, unacceptable to the Communists.

As a vocal advocate of Mitterrand's austerity policies in the previous Cabinet, Fabius was distrusted by the Communists. The son of a wealthy antiques dealer, the balding Fabius is the polished product of France's best schools. Most important, he is a close confidant of Mitterrand's. "You could not fit so much as a cigarette paper between the President's ideas and the way I carry them out," he said in 1981.

Fabius' task, he acknowledged Tuesday, was "difficult" and "exciting." Although economic conditions have improved as a result of Mitterrand's austerity policies, inflation remains at 7.7% (although down from 12% at the end of 1982), economic growth is projected at only 1.4% this year, and foreign debt has reached an estimated $56 billion, the highest of any Western industrialized nation. Contrary to Mitterrand's hopes, austerity will have to be sustained, perhaps intensified, in the months ahead.

Fabius is no stranger to controversy. In March 1983 he was promoted from Budget Minister, a junior position in the French Cabinet, to head of the Ministry for Industry and Research. His impact was immediate: he began to redirect large government subsidies away from such loss-making nationalized industries as steel, shipbuilding and coal toward new high-technology enterprises. When the government announced plans to eliminate 25,000 of the 90,000 jobs in the steel industry by 1987, ugly riots erupted in Lorraine.

Under the French system, however, the political heat of unpopular decisions falls largely on the Premier; hence Fabius remained the golden boy of the Socialist team. Although political analysts knew that Mauroy's days were numbered, most assumed that he would remain in place through the fall to act as a lightning rod for attacks on the tightfisted 1985 budget. But the left's dismal showing in the European elections forced Mitterrand to act. A fortnight ago, he withdrew his controversial legislation to bring the country's private schools under greater state control and announced that he would launch a complicated constitutional process to permit referendums on questions involving "civil liberties." As the President told TIME during a Bastille Day reception in the Elysee gardens: "I have to survive."

Initial reactions to Fabius' appointment were mixed. Said Bernard Pons, secretary-general of the neo-Gaullist party: "The Communists have just said today, down to the last comma, what we have been repeating for three years: the government's economic and industrial policy is a failure." But in a backhanded compliment to Fabius, Republican Party Leader Franc,ois Leotard noted that Mitterrand had chosen "one of the best. We must not underestimate our adversary now."

Few were caught more off balance than the Communists, who have long criticized the government not only on economic affairs but also over foreign issues like Mitterrand's support for NATO's plan to deploy intermediate-range missiles in Western Europe. After learning of Fabius' appointment, members of the party politburo met in emergency session at the Communists' fortress-like glass-and-steel headquarters. Despite three hours of deliberation, they were unable to agree on how to react. The indecision continued even after Party Leader Georges Marchais had hastily returned from his vaca tion on the beaches of Rumania. A Communist delegation met with Fabius to ask for guarantees that the fight against unemployment would receive priority over the government's austerity policy. Later, the central committee announced that it was "not satisfied with the answers that Mr. Fabius gave us."

To break the deadlock, Marchais dispatched a letter to the new Premier, demanding a clarification. It was 3:30 a.m. when Fabius received the message in his office, where he had decided to stay until the issue was resolved; he picked up the phone and invited Marchais to meet again right away. A predawn glow was rising over Paris nas Marchais's chauffeur-driven Renault pulled up to the Hotel Matignon, the graceful 18th century stone mansion that serves as the Premier's office. For 1 1/2 hours the Communist emissaries argued in vain for a commitment to full employment. After the delegation returned to Communist headquarters, the central committee voted at 8 a.m. to give up its four Cabinet seats. Said a bleary-eyed Spokesman Juquin: "The Premier's declarations did not give a positive response to our questions."

Thursday afternoon, Fabius named a Cabinet that contained few surprises. Claude Cheysson was reappointed Foreign Minister and Charles Hernu Defense Minister. Unexpectedly, Jean-Pierre Chevenement, leader of the party's left wing who quit in 1983 because he objected to Mitterrand's austerity policies, took over the controversial Education portfolio. Finance Minister Jacques Delors left to become President of the European Commission, the Brussels-based bureaucracy that administers the European Community. One reason for his defection may be that he had a strained relationship with Fabius, his former deputy at the Finance Ministry.

Among the Cabinet's first decisions was the move to fulfill Mitterrand's promise last year to cut taxes. It abolished a special 1% social security tax on income. That clearly shows that the new government has its sights set on the 1986 elections. What remains unclear is whether Fabius can create a winning formula that will restore the Socialists' fortunes and permit Mitterrand to retain control of the legislature. Austerity will continue, and so, it is likely, will the plans to restructure French industry. In that context, the extent to which the Communists continue to support the government becomes crucial. Despite their slump in the polls, the Communists retain strength through their control of several unions, including the large Confederation Generale du Travail. If nothing else, Mitterrand and Fabius must tread warily to avert the threat of greatly increased labor strife.

--By Jay D. Palmer. Reported by Thomas A. Sancton/Paris

With reporting by Thomas A. Sancton/Paris