Juppe hits back at his party critics

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The Independent Online
MARY DEJEVSKY

Paris

Prime Minister Alain Juppe has hit back against his critics following the dismissal of the French Economy Minister, Alain Madelin. In lengthy media appearances before yesterday's weekly cabinet meeting, Mr Juppe and the new Economy Minister, Jean Arthuis, both stressed their intention to persevere with economic reforms, especially of the social security system, but also to preserve "social cohesion" while doing so.

The cabinet meeting, the first since Mr Madelin was dismissed from the economy ministry last Friday, included a discussion of economic policy and the guidelines to which the new minister would work.

Speaking on a new late-night television discussion programme the previous evening, Mr Juppe moved energetically to counter criticism of his decision to dismiss Mr Madelin, presenting himself as a "Frenchman first and foremost", a "man of action" - and, crucially, a "reformer". "No one," he said, alluding to the protests of Mr Madelin, "has a monopoly on reform." To drive this home, Mr Juppe promised several changes to the tax and benefits system, including a sharp reduction on the tax paid when a business changes hands, a reform of inheritance tax and a reduction in the "social charges", akin to national insurance contributions, which are paid by employers for their employees, to come into force during 1996. Lower social charges were one of the policies Mr Madelin regarded as crucial to reducing the 12 per cent unemployment rate.

Both the content of the interview and Mr Juppe's defensive manner indicated that he had been seriously taken aback by the hostile reaction to Mr Madelin's departure - a reaction that came not just from Mr Madelin's friends, but from the international money markets and politicians of Mr Juppe's own Gaullist party, and could have damaging implications for the Prime Minister.

Any instability of the franc upsets calculations in trying to set next year's budget so that the domestic deficit is reduced. These calculations are already running into trouble because of lower than expected receipts in the first half of this year. Discontent in the Gaullist RPR party damages Mr Juppe's standing in the party less than three months before he stands for election as its president.

Mr Arthuis, who began his term last Saturday with cautious talk of sound money and social harmony, has also realised the volatility of the political mood on the right since Mr Madelin's departure. In his radio interview yesterday he chose to stress both his right-wing credentials and his concern to bring the domestic budget deficit under control.

"I am a libertarian by conviction," he said, "but I won't be a dogmatic libertarian and will try to preserve social cohesion." He noted, however, that in terms of "privileges", social and otherwise, it was "time for everyone to put their cards on the table". "Our social solidarity," he said, "has been paid for down the years on credit." It was Mr Madelin's comments about the disparity between job security and pension levels in the public and private sector which ultimately cost him his job.

Intent on showing that he has not abandoned the reform platform on which Mr Chirac was elected, Mr Juppe is now promising a wide-ranging national debate on all aspects of social security and tax reform, to take place some time before mid-November, to allow legislation to be framed in December. It is not clear, however, what form the discussion will take.

For the time being discussions on the 1996 departmental budget allocations take precedence. Mr Juppe is to present the draft budget to the cabinet on 20 September, and he meets leaders of all the main trade unions next week to prepare the ground.

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