Balladur's Chance To Restore French Glory

When he rode to power two months ago on a wave of resentment against his socialist predecessors, French Prime Minister Edouard Balladur pledged to create an economic policy that would stand as "a new French example" to the rest of the world. His plan, announced on May 26, to privatize 21 state-owned companies, including Renault, Air France, and computer giant Groupe Bull, is a major step in that direction.

France has danced with the issue of privatization before, back in 1986-88. Balladur's plan appears to go further. There will be no ceiling on foreign investment in former state-owned companies and no mercy for previously pampered sectors, such as high-tech and computers. This is the way it has to be in a brutally competitive world, and the French have long hesitated to recognize it.

Balladur certainly faces an uphill climb to privatize some $60 billion worth of state-owned assets in a climate of slight investor interest. As he proceeds, he'll have to face a growing social and political burden of French unemployment. France's jobs record, the worst in the Organization for Economic Cooperation & Development since the mid-1970s, is not getting any better. The country's 3.1 million jobless, 10.7% of the work force, could vault to 3.5 million by yearend.

As Balladur moves to cut budget deficits, privatize government-owned corporations, and create jobs, the exigencies of politics will sorely tempt him to forget his pledge to build a new French model of economic probity. But with leaders in Germany and Britain tired and listless, and with Europe adrift, Balladur has a chance to put France in the lead on the Continent. In the midst of a recession, he may have no choice but to start modestly. But if he also moves to cure the root causes of France's economic underperformance, he will be on his way to building the lasting model he promised. If implemented, Balladur's conservative program may move France back to center stage in Europe.