Un peu trop radical for Chirac

After only three months, a resignation crisis has revealed a deep split in France's new government

The resignation (read dismissal) of Alain Madelin as French minister of economics at the end of last week has been followed in France with much the same incredulous fascination as greeted the resignation in 1989 of Nigel Lawson as British Chancellor of the Exchequer, even though Mr Madelin, and the government he served, have been in office for barely three months.

The sin the minister committed was his questioning, on a widely heard radio programme, of the perks and pension benefits enjoyed by the public sector. This unleashed a clamour of fury from the powerful state sector just when the prime minister needed its co-operation over plans to overhaul the social security system.

But neither that, nor even the undoubted clash of personalities and wills between Mr Madelin and the prime minister, Alain Juppe, fully explains the frisson of this incident. The fact is that Mr Madelin and Mr Juppe between them seem to have proved President Jacques Chirac's many critics right - and far sooner than anyone imagined. The critics had said that Mr Chirac's twin policy priorities - creating jobs and cutting the domestic budget deficit - were irreconcilable. Within three months it seems to have become clear that one of these projects had to take precedence: Mr Juppe thought it should be social cohesion and job creation; Mr Madelin thought it should be cutting the deficit. Mr Juppe won.

There is room for different interpretations of what happened and why. The kindest view is that Mr Juppe always intended, and still intends, to change the way the French labour market operates, but believes that everything could be lost if the public sector and the unions get wind of what he really has in mind. According to this view, Mr Madelin's only fault was to be too frank. As one French commentator put it, he acted like a "bull in a china shop", while Mr Juppe moves "like a cat with velvet paws".

That theory might have some substance had Mr Madelin appeared to be quietly getting at least some of his own way on the deficit - but patently he was not. In preparations for the 1996 budget he had mooted cuts in employers' contributions to social provision for their employees, cuts in the top rate of income tax, a swingeing reduction in defence procurement and a reduction in the number of people employed directly by government. The draft budget allocations show that all his preferences were overruled by the prime minister's office.

Yet Mr Madelin was far from being an unknown quantity when he was appointed. He made no secret of his views, either during the campaign or afterwards. Indeed, a number of them figured in Mr Chirac's manifesto, which Mr Madelin helped to write.

They included the overriding need to cut the deficit, reductions in higher rates of income tax and better conditions for small and medium-sized businesses. As Mr Madelin said with heavy irony after his dismissal: "I doubt that people voted for Mr Chirac in the expectation that he would implement the policies of the trade unions."

What may have been underestimated, however, by Mr Chirac and by Mr Juppe, was the essential difference between themselves and Mr Madelin. He is radical and ideological by temperament; they are pragmatists - in both the best and worst senses of the word. The policy differences that result are very similar in nature to those that in Britain have divided Thatcherites from old-style Tories.

During the election campaign this crucial distinction was blurred, perhaps deliberately. Mr Chirac was advised by his daughter, Claude, that "change" was the ticket on which the young would be prepared to elect him, and that "social cohesion" was a desired element of that change. Against the old establishment candidate Edouard Balladur, Mr Chirac was able to present himself successfully as the outsider, the "radical" candidate, the personification of change.

Once in power, however, things became more complicated. Mr Madelin continued to believe that if the country could pay its way, many of its other difficulties would solve themselves automatically. The franc would be firm, interest rates would come down, lower employers' contributions would reduce the cost of labour, curbs on state benefits would encourage people to take work, and the whole unwieldy edifice of the state would contract to the point where it was helping, not hindering, individual enterprise and responsibility.

Mr Chirac appeared to have some sympathy with this view, which is doubtless one reason he gave Mr Madelin the key economics ministry he wanted. But he also has sympathy for the view that only the state is powerful enough to organise job creation on the scale he thinks France needs if it is to reduce unemployment. He also wanted to foster the all-important "social cohesion".

How you define social cohesion, however, depends to a large extent on how you define the "social fracturing" to which Mr Chirac repeatedly alludes. Mr Chirac and Mr Juppe seem to share a very traditional perception of social division: between haves and have-nots; "capitalists" and "workers". This is the gap they think should be narrowed.

Mr Madelin sees the social fracturing in different - his advisers contend, more "modern" - terms, as between those who are "protected" and those who are "exposed". In the first group are not so much the "bosses" as the bosses of state-protected enterprises and those in secure (often public sector or state subsidised) employment. In the second are entrepreneurs, small businessmen, as well as those who cannot penetrate the establishment world of "secure" work.

Mr Madelin's idea of social cohesion would entail not only improving the conditions of those in the "exposed" sector, but challenging some of the advantages enjoyed by those in the "protected" sector - and paid for by the taxes of those outside it. This was the taboo he challenged - not for the first time - in his broadcast last week.

Mr Juppe would probably not see himself as an "establishment man" or as an ideological defender of the status quo. His origins are only a little less humble than Mr Madelin's - Alain Juppe's father was a small-time rural politician; Alain Madelin's father was a mechanic at Renault.

But Mr Juppe benefited throughout his career from the establishment fast-track to which he won early access by virtue of his brilliance at school. As his recent defence of his subsidised flat in Paris showed, he now treats these advantages as rights that accrue to a justified elite.

Mr Madelin's curriculum vitae includes none of these signal advantages. He qualified as a lawyer and made his way into mainstream politics through a marginal political grouping, against the political tide. He still considers himself an outsider, but had clearly hoped to pursue his egalitarian aims from the inside, and hoped equally that Mr Chirac would support him.

Now he finds himself on the outside again, challenging a vast establishment which links the academic, media and business worlds, as well as politicians. This time, though, there are whispers of support from the wings. It will be a long time before the establishment's hold on France is broken, but the first cracks may have just appeared.