FOREIGN FOCUS

France's great leap forward

CRABRO

It is always pleasing to the layman when the experts fall flat on their faces. When

the experts are economists, who confidently assert their ability to predict the inevitable consequences of the wrongdoing of poli- ticians and the greed of the voters, the pleas- ure is compounded. So it is with France.

When M Pompidou saved the 'system' from the revolutionaries and the General last summer by bribing the trade union leaders with unprecedented salary increases for their members, the experts agreed that nemesis would swiftly follow. There would be rampant inflation plus soaring unem- ployment, and then a forced deva:uation of the franc. Well, there certainly was infla-

tion, and a great many Frenchmen. as well as many outside France, gambled on de-

valuation last autumn, and very nearly pulled it off. When Herr Strauss brashly jumped the gun and announced the devalu- ation on behalf of the French government, and thus provoked the General into veto- ing it after all, it was generally assumed that this only postponed the inevitable for a few months.

Yet today the certainty of an early devaluation, at any rate in isolation, is no longer taken for granted. The foreign trade account gives cause for concern, it is true; but France still has substantial reserves to draw upon, not to mention her credit posi- tion at the IMF. She is far removed from the obligation to accept a quarterly visitation from Mr Richard Goode. Unemployment, far from rising, has fallen steadily from a peak last August, and industrial production has broken all records. The experts freely admit they cannot understand it at all.

The truth seems to be that France. like Britain, has suffered for years from hidden underemployment. But in France it occurs in the sectors where union organisation is most ineffective: on the farms, and in the antediluvian distribution system. Hence the effect of last year's soaring wage costs, coupled with the rapid spread of more efficient techniques of farming and dis- tribution, has led to a massive shake-out of labour into precisely those sectors of the economy where it can be put to good use.

Of course the process has been. and will continue to be, a painful one. Indeed it was one of the main contributory causes of the downfall of General de Gaulle. It was the small shopkeepers, who over the past two or three years have witnessed the market values of the goodwill of their premises reduced to a tenth of what it was, who turned out en masse to vote non in the April referendum.

But these are factors of immense potential strength for the French economy. Add to them the fact that the post-war population bulge is only now, because of the prolonga- tion of schooling, coming on to the labour market, and you have the prospect of some three million additional jobs being needed in industry over the next ten years to absorb the natural growth of the industrial labour force.

This presents a formidable challenge to the new regime. For if the jobs are not available, then there are the makings of a new revolutionary situation, which the Communists or others stand ready to ex- ploit. Thinking Frenchmen recognise that the native industrial base, on its own, is un- likely to be able to meet the need. General de Gaulle himself has been forced to rec- ognise that interlopers from across the Atlantic could not always be barred, and even sometimes had something to offer. His successor is likely to be very much more forthcoming: indeed some of those con- cerned with long-term economic planning make out a case for a 'draconian' devalua- tion, not only as a means of improving the competitiveness of French industry, but still more as a way of offering a positive incen- tive to foreign investment.

Yet the implications of these policies also cause concern to some. As Le Monde re-

minded its readers in a striking editorial the other day, there is a frightening contrast between the resistance put up by European governments to industrial mergers across frontiers between European firms, and the welcome offered to American direct invest- ment. It will be time enough, one is told, to give free rein to 'European' com- panies once Europe has a common currency and a common code of corporate law. The possibility that by then there will be precious few sectors of European industry which are not controlled from the other side of the Atlantic is one about which the Gaullists and their government have shown themselves remarkably fatalistic.

By contrast the impassioned argument about the future shape of Europe's nuclear defence seems somewhat sterile. One would have thought that determination to co-oper- ate in preserving an adequate degree of European ownership of European industrial assets would rank as a more important test of the sincerity of an applicant for entry into the EEC than willingness to co-operate in establishing European control over weapons which are, one hopes, never to be used. But it is not so.

On the contrary one aspect of General de Gaulle's policies which commanded sup- port across the whole spectrum of French parties apart from the Communists was pre- cisely his insistence that Britain's abdication of effective nuclear control to the United States was incompatible with membership of the European Community. That is why M Chaban-Delmas's guarded endorsement of the scheme for a European nuclear deter- rent based in the first instance on Anglo- French co-operation, which has been ad- vanced by both Mr Heath and Herr Strauss, is important.

The new French Premier is very far from being the dominant personality in ids government, and the exact status of his re- marks in a radio interview is uncertain. Still, it was the first time that a French Minister had called publicly and specifically for Anglo-French co-operation in nuclear defence: General de Gaulle preferred to await propositions from London, which were never forthcoming. It puts Mr Wilson on the spot. Not that the chances of early negotiations with Britain are rated very high in Paris. The first step will be a summit conference of the Six, some time after the German elections. The French will clearly not oppose the opening of negotiations there- after; but they have a suspicion that both the Five and the British will then turn out to be less enthusiastic than they have claimed to be in the past. They could be right.