CHIRAC GAMBLES AGAIN, ALLYING HIS PROTEGE AND HIS

C O N F I D E N T I A L SECTION 01 OF 03 PARIS 003813

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E.O. 12958: DECL: 06/01/2015
TAGS: PGOV ELAB EU FR PINR SOCI ECON
SUBJECT: CHIRAC GAMBLES AGAIN, ALLYING HIS PROTEGE AND HIS
RIVAL IN NEW GOVERNMENT

REF: PARIS 3722

Classified By: Charge d'affairs Alex Wolff for reason 1.4 (b) and (d)

SUMMARY
--------------

1. (C) In choosing former Foreign and Interior Minister and
long-time collaborator Dominique de Villepin to head his new
government, and center-right rival Nicolas Sarkozy to be its
number two, President Chirac is attempting to unite the main
factions that divide France's center-right in response to the
resounding rejection of his policy in the May 29 referendum.
The haughty and flamboyant Villepin epitomizes France's
technocratic elite; he embodies the nationalist, Gaullist
tradition committed to the state-centered, French social
model. The entrepreneurial and dynamic Sarkozy, who will
remain president of Chirac's Union for a Popular Movement
(UMP) party, is more of a self-made-man, projecting the
possibility of more egalitarian, opportunity-centered success
in a market-driven society. The new government's priority
will be tackling France's high unemployment. It remains to
be seen how well the Villepin-Sarkozy duo (with Chirac
standing over them to referee) will fare. The difficulties
the new government faces -- daunting social and economic
problems, clashing visions for social and economic policy, a
largely hostile public and a particularly uncompromising
political opposition -- may prove true the adage that
politics makes strange bedfellows. END SUMMARY.

REACTING QUICKLY TO TAKE BACK THE INITIATIVE
--------------

2. (SBU) President Chirac has reacted quickly to May 29's
massive referendum loss (reftel). In a carefully scripted
and crisply executed set of moves on May 31, Chirac accepted
the resignation of Prime Minister Jean-Pierre Raffarin, named
Interior Minister Dominique de Villepin his successor, and --
to the surprise of France's jaded chattering classes --
convinced UMP president and long-time rival Nicolas Sarkozy
to join the new government as Minister of State (effectively
the number two position in the government) and Villepin's
successor at the Ministry of Interior. In a brief ceremony
on the afternoon of May 31, Raffarin turned over the Prime
Minister's Office ("Matignon") to Villepin. The new
government's top priority will be tackling France's
endemically high unemployment, currently at about 10 percent
of the workforce. In a televised address to the nation on
the evening of May 31, Chirac called for a "national
mobilization" against the economic failings and lack of
confidence that undermine France's national strength. In his
remarks, Chirac was careful to insist that, though all
approaches to solving social and economic problems were on
the table, restructuring France's social model was not.

DRAMATIC GESTURE UNDER THE DURESS OF POPULAR DISAVOWAL
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3. (SBU) Details of the deal-making that brought about a
government led by Villepin, but with Sarkozy as number two
are not yet known. Most observers agree however, that it
would never have happened had not the referendum signaled
such a massive rejection of France's political class by
ordinary people. In the days following the May 29 referendum
there is a palpable sense of crisis in political circles.
France's political class feels its legitimacy is under attack
-- by the onslaught of popular disavowal expressed through
the referendum.


4. (SBU) The dramatic gesture of putting France's two most
effective, high-profile and popular, but rival, center-right
politicians to work repairing a widening "trust gap" is a
calculated gamble on Chirac's part with no guarantee of
success. He has attempted to minimize chances of a fallout
between his two ministers by assigning Sarkozy responsibility
for a non-economic affairs ministry, perhaps foreseeing that
Sarkozy's free-market approach and Villepin's more statist
solutions to unemployment would have inevitably produced a
clash. To the question many observers are asking about why
the ambitious Sarkozy agreed to accept Chirac's offer,
Sarkozy himself suggested an answer. In an exchange with
parliamentary supporters who were advising him not to join
the government, he reportedly asked them, "How would you feel
about me if I just stood by while the ship sank?"

ARBITER BETWEEN TWO BIG PLAYERS
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5. (C) The referendum, to the extent it was a plebiscite on
Jacques Chirac and his leadership, further weakened Chirac's
already tenuous hold on the public's esteem. By assigning
himself the role of arbiter between France's two most visible
political figures, Chirac regains some lost stature. In
addition, for Chirac, a hyperactive Sarkozy struggling with
immigration policy, ethnic tensions and crime is better than
a hyperactive Sarkozy occupied only with planning his run for
the presidency in 2007 against Chirac (or a successor).
Villepin would like to be that successor. Villepin, like
Chirac, is at heart a Gaullist, intent on preserving France's
national power, and with it, France's social model. Sarkozy
is ever more overtly advocating a market-oriented approach to
social and economic policy. For example, in remarks
following the announcement of referendum results, Sarkozy
directly linked France's social model to France's
under-performing national economy. This division between
more statist "Chiraquists" and more pro-business "Sarkozists"
has long been present in the UMP, and involves much more than
personal, partisan loyalties.

TACKLING UNEMPLOYMENT AND LACK OF CONFIDENCE
--------------

6. (C) In his first public declarations as Prime Minister,
Villepin has let be known that he will give himself 100 days
to "re-instill the confidence of Frenchmen and women." A
crash program to tackle unemployment is clearly the new
government's primary mission. In his first TV interview as
prime minister, Villepin called for "action and more action"
-- true to form, Villepin was long on inspirational rhetoric
and short on convincing programs and details. All
indications are that the two key social and economic affairs
ministers, Jean-Lois Borloo (Social Affairs) and Thierry
Breton (Economy),will remain in place. To them will fall
the lead responsibility for devising, executing and figuring
out how to pay the for the government's initiative against
unemployment. In his TV interview June 1, Villepin promised
he would personally manage his government's attack on
joblessness.

NO QUARTER FROM THE OPPOSITION
--------------

7. (SBU) The Villepin-Sarkozy government-to-be is already
under harsh criticism from the center-left Socialist Party
(PS) and the centrist, Union for French Democracy (UDF). The
consensus among PS leaders seems to be to mask their own deep
divisions engendered by the referendum by pitilessly
lambasting the new government before its composition is even
known. (The new line-up will only be announced sometime
before the new government's first cabinet meeting, scheduled
for June 3). The pro-Europe UDF, led by Francois Bayrou,
sees Chirac's recourse to Villepin as a wholly inadequate
response to the demand for change from the voters. Bayrou,
in statements high in political fire and brimstone and low in
operational specifics, has called for a "refoundation of
national policy" in response to the "fracture" revealed by
the referendum.

COMMENT
--------------

8. (SBU) It remains to be seen if Chirac's most recent
gamble will work any better than many of his previous ones
(French commentators point to his dissolution of the National
Assembly in 1997 and his agreeing to put the EU constitution
to a referendum as examples of decisions that backfired in a
big way). However, whatever their shortcomings (including
short tempers and outsized egos) Villepin and Sarkozy are
also both uncommonly talented, energetic, hardworking and
able. The grudging consensus among the political elites is
that Villepin and Sarkozy are about the only really
exceptional figures on the French political scene. The
daunting problems facing the new government, however --
institutional ineffectiveness; social and economic problems
that are structural; clashing visions for social and economic
policy; a mistrustful public; and a particularly
uncompromising and partisan (although divided) center-left
opposition -- are not the kinds of problems that yield to
dramatic gestures and quick fixes. END COMMENT.
WOLFF