No question, the socialist French government's latest economic policy move--slapping a 15% surcharge on corporate profits--is a disappointment. But behind the scenes, new Finance Minister Dominique Strauss-Kahn is quietly taking steps to restructure the French economy and make it more competitive. He recently persuaded Prime Minister Lionel Jospin to accept the privatization of France Telecom, insurer GAN, and defense-electronics giant Thomson CSF. More important, his closest advisers say Strauss-Kahn appreciates the rules of the global economy and will move to cut France's budget deficit and spur the information-technology business. The new superminister, whose portfolio includes economics, industry, and the budget, said in an interview with BUSINESS WEEK: "In a modern economy, the role of the state has to shrink."
Bravo. Strauss-Kahn has an exceptionally delicate task ahead of him, trying to keep the promises that the Socialists made to their constituents, while gently trying to nudge France toward a more competitive position in the global economy. He'll try to make the state sector more efficient, and attempt to blunt the impact of leftist initiatives such as shrinking the workweek from 39 hours to 35 hours, perhaps by getting employers and unions to negotiate working hours and productivity gains among themselves. These are encouraging signs. But without a pickup in economic growth, his best-laid plans may come to naught.