US embassy cable - 05PARIS3659

C O N F I D E N T I A L SECTION 01 OF 03 PARIS 003659 
 
SIPDIS 
 
SENSITIVE 
 
DEPT ALSO FOR EUR/WE, EUR/ERA, EUR/PPD, DRL/IL, INR/EUC AND 
EB 
DEPT OF LABOR FOR ILAB 
DEPT OF COMMERCE FOR ITA 
 
E.O. 12958: DECL: 04/07/2015 
TAGS: PGOV, ELAB, EU, FR, PINR, SOCI, ECON 
SUBJECT: FRANCE'S REFERENDUM ON EU CONSTITUTION: INTERNAL 
POLITICAL CONSEQUENCES 
 
REF: (A) PARIS 3625 AND PREVIOUS 
 
Classified By: Charge Alex Wolff for reasons 1.4 (b) and (d) 
 
SUMMARY 
------- 
1.  (C) Whatever the outcome on May 29, none of the purely 
domestic political/economic issues that have so divided the 
French electorate during the referendum campaign will have 
been resolved.  Rejection of the political class, along with 
the high unemployment, diminished purchasing power and 
economic insecurity -- all the issues that have driven the 
"high tide of 'no'" -- will still be there after the 
referendum.  Regardless of the outcome May 29, Chirac will 
probably change prime minister and reshuffle the cabinet, but 
he is unlikely to undertake significant, market-oriented 
economic and social reforms.  Chirac may well embrace a 'no' 
retroactively, positioning himself as the defender French 
people against untrammeled "Anglo-Saxon" capitalism. 
 
2.  (SBU) (Summary Continued) The "victory" of a 'no' to the 
proposed constitution on May 29 would add to President 
Chirac's difficulties in mounting a credible bid for a third 
term and give significant tactical advantage to the 
presidential ambitions of Nicolas Sarkozy, the president of 
Chirac's Union for a Popular Movement (UMP) party.  Whatever 
the referendum result, resolving the bitter, 'yes' versus 
'no' schism on the center-left will require a unifying figure 
of undeniable stature among center-left voters, such as 
former Socialist Party (PS) Prime Minister Lionel Jospin. 
Barring a last-minute, radical surprise from President Chirac 
(such as dissolving the National Assembly and calling for 
early elections in order to separate the EU constitution 
question from domestic dissatisfaction), a 'yes' victory, 
like a 'yes' defeat on May 29, largely clears the way for a 
battle for primacy within the center-right and center-left. 
END SUMMARY. 
 
CONSEQUENCES FOR DOMESTIC POLICY DIRECTION 
------------------------------------------ 
3.  (SBU) The high unemployment, diminished purchasing power 
and economic insecurity that have been the strongest engines 
of pro-'no' sentiment receive a great deal of rhetorical 
attention from leaders of both the 'yes' and 'no' camps, but 
little in the way of practical policy proposals for solving 
these persistent social and economic problems.  The 
structural reforms that would durably cut down France's high 
unemployment and make the economy more competitive, if 
undertaken right after the referendum, would require at least 
eighteen months of belt-tightening and dislocation before 
taking hold.  The presidential election of 2007 is eighteen 
months away.  The recent experience of his close ally 
Chancellor Schroeder in Germany is not lost on President 
Chirac: the medium-term pain required to effect long-term 
reform has immediate consequences at election time.  Whatever 
the referendum result May 29, it is unlikely President Chirac 
will change his administration's policy direction in the 
social and economic sphere.  If anything, Chirac has become 
more statist in his orientation and more solicitous of the 
constituencies likely to support him -- for example, 
conservative rural folk -- who in different ways are 
dependent on the French social model and its state handouts 
of various kinds. 
 
SHORT-TERM POLITICAL CONSEQUENCES 
--------------------------------- 
4.  (SBU) In the last days leading up to the referendum, 
press and TV commentary has been rife with speculation about 
who Chirac will choose to succeed Prime Minister Rafferin. 
Unlike in the many prior rounds of speculation about the end 
of his tenure, this time Rafferin himself has indicated that 
his days in office may be numbered.  Chirac clearly has to 
reckon with and react to the rejection and dissatisfaction -- 
the high tide of 'no' -- that makes the referendum a 
plebiscite about him and his leadership.  However, none of 
his options for changing prime minister in order to breathe 
new life into his second term particularly recommend 
themselves to him. 
5.  (C) All the leading candidates have serious drawbacks for 
Chirac, not least long-time Chirac rival and president of the 
ruling Union for a Popular Movement (UMP) party Nicolas 
Sarkozy.  Sarkozy, should Chirac ask him to take the job 
(most likely in the case of a 'no' victory by a large 
majority -- over 52 percent), will likely demand considerable 
leeway to enact reforms and also insist that he remain in 
control of the UMP.  A whirlwind, "hundred days" of activism 
with Sarkozy at the helm can be envisioned as the best "way 
out of the impasse of 'no'" for Chirac.  However, Sarkozy's 
response to a 'no' -- reformist policies to address head-on 
France's economic stagnation -- would likely be incompatible 
with Chirac's championing of France's social model.  Such a 
tandem, hobbled by both policy differences and conflicting 
political ambitions, is increasingly difficult to imagine. 
 
6.  (C) Defense Minister Michelle Alliot-Marie is the least 
flawed of the other candidates.  She has done a commendable 
job at defense, is a Chirac loyalist and would clearly bring 
a new and energetic image to the role of prime minister. 
Interior Minister Dominique de Villepin is considered too 
easily carried away by his enthusiasms -- to the point where 
some question his judgment.  Finance Minister Thierry Breton 
has not been at his current post long enough to establish a 
track record.  In addition, another factor that may put him 
out of the running is that he is not an experienced 
politician.  Some believe Chirac's personal preference is to 
wait, putting an interim figure in the post, until former 
Prime Minister Alain Juppe's ineligibility to run for public 
office due to a misdemeanor conviction on corruption charges 
ends late this year.  The dark horse candidate for the prime 
minister's job, in many ways fitting the bill of "interim 
figure," is Social Cohesion Minister Jean-Louis Borloo.  A 
successful centrist politician from northern France, Borloo's 
appointment as prime minister would confirm Chirac's 
intention to focus on government sponsored social programs, 
rather than-market oriented reforms, during the remainder of 
his second term.  In the event of 'yes' victory in 
particular, Chirac could again confound expectations and keep 
Raffarin at his post until a change, closer to the election, 
is likelier to produce a lift in the polls for a Chirac 
candidacy in 2007. 
 
CONSEQUENCES FOR CHIRAC 
----------------------- 
7.  (C) The conventional wisdom is that a 'no' victory would 
deal a crippling blow to Chirac's re-election possibilities, 
while strengthening Sarkozy's position as the only candidate 
able to unite the center-right.  Chirac is not a popular 
figure; he received less than 20 percent of the votes in the 
first round of the last presidential election in 2002.  A 
'no' victory would discredit him even further.  Even so, his 
record of eliminating rivals and skill in positioning himself 
to end up as the figure most acceptable to the largest number 
should not be underestimated.  In addition, there is still a 
current of strong opposition to Sarkozy within the UMP. 
Sarkozy's recruitment drives for new party members and 
advocacy of primaries to designate party candidates are an 
effort to counter opposition to him among Chirac loyalists. 
A 'no' victory would make it much easier for Sarkozy and his 
allies to suppress this opposition, but it will not disappear 
entirely -- and it will always be ready to take advantage of 
any misstep or weakness on Sarkozy's part. 
 
CONSEQUENCES FOR THE LEFT 
------------------------- 
8.  (C) France's system of state financing of political 
parties will keep the Socialist Party (PS) a single entity 
despite the deep and bitter schism prompted by its 
"dissident" 'no' camp.  Whether 'yes' or 'no' wins on May 29, 
the ensuing struggle -- less for control of the party than 
for taking the role of unifying figure, able to rally the 
socialist electorate in view of 2007 -- will be intensely 
contested.  Former socialist Prime Minister Laurent Fabius, 
who believes that his having challenged the establishment by 
advocating 'no' should allow him to win the support of all 
"the people of the left," will seek to displace National 
Secretary Francois Hollande as party leader.  It is unlikely 
 
SIPDIS 
that Fabius, never popular among party members, can win a 
party election, particularly against what is sure to be the 
determined opposition of the party's mainstream leadership. 
 
...AND LIONEL JOSPIN 
-------------------- 
9.  (C) Unless last minute fear of the consequences of a 'no' 
victory prompts a surge of pro-'yes' voter turn-out among the 
undecided on May 29, and 'yes' wins by a strong majority, 
Francois Hollande will be unable to claim the role of unifier 
(and leading candidate) of the center-left.  A narrow victory 
either way will leave the party divided, unable to unite 
behind the leaders of either its 'yes' or 'no' camps.  Only a 
figure of unquestioned stature among voters across the 
spectrum of the socialist electorate could fill that unifying 
role.  Former socialist Prime Minister Lionel Jospin -- 
emerging from retirement at just the right moment -- could, 
providentially, be at hand to make himself useful in exactly 
that way. 
 
READY TO TAKE ADVANTAGE OF THE RESULT 
------------------------------------- 
10.  (C) Three days before Sunday's referendum, polls 
continue to show that, among decided voters, 'no' to the 
proposed constitution holds the lead over 'yes.'  According 
to some polls, as many as a third of voters remain undecided. 
 President Chirac, hoping the polls and pundits are wrong, 
would exploit a 'yes, casting it as an endorsement to bolster 
his battered standing with the electorate.  In the more 
likely case of a 'no' victory, President Chirac is likely to 
attempt to co-opt to his own benefit the sentiment of fear 
underlying many voters' rejection of the constitution. 
Today's Chirac, champion of the 'yes,' may well attempt to 
emerge from defeat a chastened politician ready to lead the 
electorate's desire for security in a world where 
globalization and the European drift towards an Anglo-Saxon 
model of untrammeled capitalism threaten the French way of 
life.  It would not be beyond him to make the substance of 
the 'no' cause retroactively his own.  END COMMENT. 
WOLFF