Chirac ponders election options

PRESIDENT Jacques Chirac will be pacing the halls of the Elysee Palace this weekend as he mulls over one of the most crucial decisions of his career. Should he dissolve parliament next week and announce legislative elections, to take place on June 1st and 8th?

It is a double or nothing gamble for Mr Chirac, but by yesterday, most French politicians had concluded he would risk losing his four fifths majority in the National Assembly nine months before elections are necessary.

The country began moving into election mode in advance of an announcement expected by next Thursday. Parliamentary deputies rushed home to their constituencies. Anticipating huge orders for posters and pamphlets, a printer in Lyons ordered 10 tonnes of paper.

The Paris Bourse fell 2.2 per cent in early trading, while the franc fell to its lowest rate this month against the deutschmark. But Mr Chirac's decision may do little to relieve the uncertainty. If parliament is dissolved, either the right will win and French economic policy may veer towards the British free market variety, or a left wing victory will force Mr Chirac to name a Socialist prime minister who will increase state intervention. Fear of the latter may affect French markets for the next seven weeks.

European integration is at the heart of France's political turmoil, and early parliamentary elections would amount to a second referendum on the Maastricht Treaty, particularly on monetary union.

Mr Chirac is firmly committed to EMU, but he knows that he will have to impose new taxes or make drastic cuts in government programmes to meet the Maastricht target of a 3 per cent cap on deficit spending. French taxes were raised in 1995 and 1996 and further increases would be extremely unpopular.

Before he administers the bitter pill, Mr Chirac's advisers are telling him, he would be better off having the elections behind him. Mr Chirac wants to play the role of Founding Father of Europe, alongside the German Chancellor, Dr Helmut Kohl. An election victory would enable him to attend the June 16th and 17th European summit in Amsterdam in the confidence that the French public will back him.