Commentary: Entente loses its cordiality

For 20 years there has been a consensus among French politicians that the franc must be defended at all costs, that virtually nothing can justify devaluation. With the franc under constant attack and a change of government almost certain after elections in 11 weeks time, that consensus has cracked.

The main division is among the conservatives who can expect to take over government after the second round of voting on 28 March. It is a split that alarms bankers and industrialists while bringing only small comfort to the embattled Socialist government.

For months Philippe Seguin - who, at odds with the leadership of his Gaullist RPR party, led the anti-Maastricht campaign in last September's referendum on European union - has been a proponent of decoupling the franc from the mark, in effect taking it out of the European Monetary System. His argument has been the classic one that a resulting devaluation would boost exports and help to bring down unemployment.

Alain Madelin, one of the leaders of Valery Giscard d'Estaing's Union for French Democracy and the industry minister in the 1986-88 'cohabitation' cabinet, argues that decoupling the franc and mark could lead to a rise in the French currency. With inflation at zero - a sure sign of deflation, say the detractors - France's economy is stronger than that of a neighbour beset with the problems of unification. Free of the mark, the Bank of France could then cut interest rates.

However, the Madelin approach has been attacked by his allies - notably Mr Giscard d'Estaing, the former president, who stands by a policy of maintaining the value of the franc and its presence within the EMS, and Rene Monory, the centrist President of the Senate, who argues that now is not the moment to demolish the EMS and deal a death blow to economic union.