FRANCE IN EUROPE: WHAT'S AT STAKE IN THE MAY 29

C O N F I D E N T I A L SECTION 01 OF 03 PARIS 003668

SIPDIS

E.O. 12958: DECL: 05/26/2015
TAGS: PREL PGOV ECON FR EUN
SUBJECT: FRANCE IN EUROPE: WHAT'S AT STAKE IN THE MAY 29
REFERENDUM

REF: A. PARIS 3659

B. BRUSSELS 1556

Classified By: Charge d'affaires Alex Wolff for reasons 1.4 (b) and (d)
.


1. (C) Summary: Whether they accept or reject the draft EU
constitution three days from now, French voters May 29 will
have a major effect on their country's ability to influence
the course of EU policy, and the future of the European
Union. Win or lose, Jacques Chirac is unlikely to give up
his ambitions for France in Europe. A yes would help him
maintain French credibility as a natural leader within the
EU. A no will likely see more aggressive French attempts to
force policy initiatives through by leading "core groups,"
although with less credibility than at present. Ironically,
the referendum campaign's focus on domestic politics and
voter discontent with social and economic conditions, and the
country's political elite, has diverted attention from the
vote's implications for Europe and France's self-assigned
place at its center. Ref. A explores the implications of the
May 29 vote for the French at home. End summary.

If it's yes
--------------


2. (C) If voters May 29 decide to prove the pollsters and
the majority of pundits wrong by accepting the constitution,
they will validate what European Studies professor and
commentator Sylvie Goulard describes as the historical
advance of the European project with France at its center.
More direct, President Chirac May 19, flanked by German
Chancellor Schroeder and Polish President Kwasniewski, said
that "the future of our country and of our children is at
stake" in the vote. "France must have the ambition to remain
one of the principal engines of the European construction."


3. (C) With Germany's upper house expected to complete the
ratification process on May 27, joining Spain and others in
the ranks of those who have delivered on their leaders'
commitments, France sees its principal EU partners as having
already successfully ferried across the ratification divide.
If France votes yes, Chirac can confidently take his
accustomed place beside Schroeder and Spanish Prime Minister
Zapatero, and among the EU founding six (depending on the
Dutch outcome) as the prime movers of European integration.
Moreover, France will have boosted its credibility with the
EU's ten newest members. As noted by Robert Schuman
Foundation Chairman Jean-Dominique Giuliani, the ten are
skeptical about France's commitment to EU solidarity and
scandalized by the domestic debate's fear-mongering about the
EU constitution's promotion of job flight to eastern Europe
and the eventual influx of cheap labor from the new member
states.


4. (C) A yes vote will also strengthen France's ability to
achieve its objectives in the important negotiations over the
EU's 2007-2013 budget. France hopes to preserve the
advantages its farmers derive from the Common Agricultural
Policy (CAP),eliminate the British rebate and team with
Germany and other net contributors to hold the projected
increase in spending to 1 percent of combined EU member GDP,
against the wishes of the Commission and the new member
states for a larger increase. Strengthened by a yes vote on
the constitution, Chirac could proceed confidently to enlist
his close partners' support and cut the deals necessary to
achieve his objectives, at least in theory.


5. (C) Sciences Po professor Goulard sees Turkey's presence
at the heart of the referendum campaign as more than an
expression of fears and opposition among the extreme right
over the entry of a large Muslim country into the EU. That
is certainly present, but so is a sense that Chirac and other
EU leaders went forward with the most recent, 10-member
enlargement without any recourse to voters. Chirac is thus
held responsible for the consequences of the enlargement,
real or imaginary, including "delocalization" or outsourcing
of jobs to the east, and a sense that the EU may be losing
its way and purpose with each successive enlargement. Chirac
has done what he can to address those concerns and prevent
them from translating into a no vote on May 29. He has done
this by promising an eventual referendum on Turkish
membership and enacting legislation making referendums
mandatory for any future enlargements after those of Romania
and Bulgaria in 2007. That said, the view here is that no
matter what the outcome, the referendum debate has revealed a
pervasive unease with enlargement and resentment over being
excluded from enlargement decisions. Hence, France is likely
to adopt a more skeptical stance on future enlargements and
negotiations with Turkey.

If it's no
--------------


6. (C) If, on the other hand, voters confirm the trend
toward no which the 11 most recent public opinion polls
indicate and which most analysts believe will occur,
rejection of the draft constitution by France will very
probably eliminate any chance of its coming into force in its
current form. Having chosen to put the draft to the voters
in a referendum, the French government cannot later resort to
parliamentary ratification, nor can Chirac and his government
ignore the message of a no. The EU has successfully dealt
with no votes on other treaties, for example the initial
rejection and subsequent re-votes and acceptance of the
Maastricht treaty by Denmark in 1992 and the Nice treaty by
Ireland in 2001. However, analysts agree that the fixes
found in these cases, an opt-out clause for Denmark and
assurances on its neutrality for Ireland, do not offer a
precedent for a viable solution for France. If the no
prevails, it will be for such a multiplicity of reasons in
France that neither model would suffice.


7. (C) That leaves the possibility of a renegotiation of the
treaty, which proponents of the current draft have labeled
the siren song of the no side. Superficially, the idea of a
new negotiation to address French concerns on social issues
may seem attractive, European Affairs Minister Claudie
Haignere wrote recently, but in reality, there would be
almost no chance of persuading France's partners to reopen
the text, which many of them would have approved. Moreover,
starting at a disadvantage, France would be very hard pressed
to negotiate a better deal than the one it now has. "There,
we move from the improbable to the impossible," Haignere
wrote. "If we reopen the negotiations, our partners will put
back on the table all of the concessions they had to make,"
Haignere continued. "The incorporation of the Charter of
Fundamental Rights, the pride of place of social issues and
the recognition of public services, the cultural exception,
the Council voting rules that favor large countries like
France, the secular nature of the constitution," will have to
be negotiated again, "and we will be negotiating from a
position of weakness."


8. (C) Without question, a no vote on Sunday would reduce
French influence in Europe and its ability to affect the
direction of policy for a significant period. Chirac, in
exhorting fellow citizens to avoid this fate, stated bluntly
that "France will cease to exist politically in the heart of
Europe" if the answer is no on May 29. A French no would
immediately call into question the continued viability of the
Franco-German partnership and the central position of the
founding six (possibly further to be weakened by a Dutch no
June 1). Europe Minister Haignere reminded voters that there
is nothing pre-ordained about France's place in the center of
decision-making in Europe. "This idea ... is an illusion ...
that Europe turns around France like the earth around the
sun," Haignere wrote. "Our country's role has always been
central, but France counts in Europe only as much as it is a
force for initiative." That power would be greatly
diminished by a no vote.


9. (C) Unwilling to accept a place of lesser influence in EU
councils to which a no vote would relegate him, Chirac would
very likely aggressively push small group initiatives with
France at the helm. Such core group initiatives are foreseen
by the Nice Treaty (although the constitution would make
their genesis easier). The difficulty for Chirac and France
will be that a no will greatly erode their credibility with
EU partners. And because it will remain one of the most
militarily capable and diplomatically active EU member
states, few Common Foreign and Security Policy initiatives
could successfully be mounted without France. "A no would be
catastrophic for our influence," Sciences Po Professor
Goulard summed up. "It would be immediately interpreted as
the abandonment by France of the European project that it has
promoted since its origins: that of a politically strong
entity, organized, and capable of making itself heard in the
world." Already viewed with skepticism by the EU's new
member states, a no would likely brand France an unreliable
partner in their eyes, reinforcing their tendency to see the
U.S. and NATO as the preferred guarantors of security. In
consequence, European Security and Defense Policy would be
dealt a set-back.


10. (C) It is another of the ironies of the referendum
campaign that by convincingly casting the constitution as an
"ultra-liberal" vehicle for free-marketeers, the no side may
well undermine France's ability to prevail in negotiations
that will affect subsidies to farmers and potentially raise
the cost of France's participation in the EU. Former Europe
Minister and present Socialist Party International Affairs
advisor Pierre Moscovici has noted that in addition to making
it much more difficult for France to achieve its aims in the
budget negotiation, a no from France would deprive the EU of
"a series of possibilities in terms of economic governance."
Europe needs, among other things, "a Central European Bank --
that must remain independent -- which is a real economic
power endowed with budgetary means and thus able to lead a
Keynesian policy for relaunching the economy," Moscovici
contends. "The constitution supplies the first arms for
going in that direction, notably in institutionalizing the
Eurogroup (of euro currency nations)." By attacking the
constitution as a tool for big business and free-marketeers,
anti-constitution forces in the PS are making more difficult
the kind of concerted economic policy needed to address
chronic unemployment and lack of growth, another negative
outcome of a no vote May 29. Moreover, investor confidence
in Europe will be weakened and the decline in the value of
the euro, already noticable in response to the possibility of
a French no, will be confirmed.


11. (C) Finally, one of the messages French voters will send
with a no has to do with their concern over the current
10-country enlargement, and their fear of future enlargement,
especially the entry of Turkey. That is a message that no
French government can afford to ignore, which makes it likely
that France will move far more cautiously on all future
enlargement decisions. "It is the impact of enlargement on
domestic French policy and on the EU itself that is fueling
French people's discontent," European affairs commentator
Goulard wrote recently in the Financial Times. "Some worry
about 'delocalisation' -- outsourcing -- social dumping and
unfair competition, and denounce the consequences of the last
wave of enlargement. Others fear the next waves -- Turkey
and beyond -- will make the birth of a politically coherent
European entity impossible."
WOLFF