US embassy cable - 05PARIS1230

UNCLAS PARIS 001230 
 
SIPDIS 
 
PASS FEDERAL RESERVE 
PASS CEA 
STATE FOR EB, EUR INR/EUC AND DRL/IL 
TREASURY FOR DO/IM 
TREASURY ALSO FOR DO/IMB AND DO/E WDINKELACKER 
USDOC FOR 4212/MAC/EUR/OEURA 
DEPT OF LABOR FOR ILAB 
DEPT OF COMMERCE FOR ITA 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, PGOV, FR, PBIO 
SUBJECT: FINANCE MINISTER TURNS IN RESIGNATION 
 
 
1. SUMMARY.  Intense and unabating media coverage of Finance 
Minister Herve Gaymard's extravagance in his choice of 
taxpayer provided housing, and his lying about his financial 
situation, has prompted him to turn in his resignation on 
February 25.  Despite his efforts to focus attention on GOF 
economic policy in the run-up to presidential elections in 
2007, the scandal ultimately destroyed his credibility.  END 
SUMMARY. 
 
2.  Finance Minister Herve Gaymard made headlines recently, 
but not for anything substantive.  Instead, local papers 
questioned his judgment and credibility in an affair 
involving his choice of lodging.  Ministers in France are 
entitled to have lodging provided to them at government 
expense, if they lack housing in Paris.  Gaymard's large 
family complicated his situation (he has 8 school-age 
children and his wife is head of France's investment 
promotion agency, doubling his representational needs).  His 
junior Ministers already occupied the suites provided within 
the Ministry.  So, Gaymard's wife picked out a very nice 
apartment on the local market - unfortunately too nice.  The 
apartment captured media attention both for its size, 600 
square meters on two floors, and its cost, 14,000 euros a 
month, not including renovation costs initially claimed to 
total over 150,000 euros. 
 
3.  Gaymard made things worse when he initially defended his 
choice, saying that he was a middle-class bureaucrat, the 
son of a shoemaker, with no real estate of his own.  In 
fact, Gaymard not only has an apartment in Paris, which is 
rented out to a friend, he has two other apartments plus two 
houses outside Paris.  His Ministry issued three separate 
press releases explaining his situation, but the stream of 
revelations prompted the Socialist opposition to clamor for 
his resignation, arguing that the untruths and personal 
financial irresponsibility sapped Gaymard's credibility. 
 
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COMMENT 
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4.  Gaymard's resignation puts what was a bright political 
future in shadow.  In addition, it undercuts whatever chance 
he may have had to win support for the economic reforms he 
had proposed (septel).  It is up to President Chirac to 
decide whether to accept the resignation (and begin the 
selection process for a successor, not necessarily an easy 
task).  To avoid unneeded distraction on the upcoming highly 
contested referendum on the European constitution, and the 
2007 French presidential elections, the least difficult path 
is to choose a bland substitute.  In the meantime, the press 
is sure to investigate the living arrangements of the other 
members of Chirac's government. 
WOLFF