Word: franc
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Dates: during 1980-1989
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...misguided. The crisis fizzled with a whimper, euphemistically dubbed a "minor realignment" of the exchange rates crucial to European trade. Yet the image lingers: French Finance Minister Jacques Delors attacking the "arrogance and insensitivity" of his German colleagues while threatening to leave the European Monetary System (EMS), float the franc, and follow a franc and jolt France's trading posture into chaotic disrepute...
...bluff worked. And bluff it was. Abandoning the EMS for isolationism would have been as close to collective suicide as France could engineer. Delors, a free trader, realized this. Going its own way in the delicate world of European trade would only ravage the franc and jolt France's trading posture into chaotic disrepute. It would be costly, as well. Artificially propping up its currency would deplete already dwindling French foreign reserves. The franc would turn soft; the French economy would strangle itself...
Delors' threat now seems hypothetical in a world increasinglycolored by European economic interdependence. The question follows: Why the pluck, the French brinkmanship? German displeasure with France's economic direction had been the initial bone of contention. France's 1982 trade deficit with the German Republic--some $5.5 billion dollars--caused more than a little irritation on the German with side and spurred a late March demand that the French clean up their act. That demand was enough to get the French goat. A third devaluation of the franc in 17 months, as called for, could only embarass the Mitterrand government...
When Finance Minister Jacques Delors headed for Brussels, his instructions from Mitterrand called for an absolutely final fall-back position of a 5% revaluation of the mark and a 3% devaluation of the franc. Delors, who is normally a firm pro-European, arrived with all guns blazing. Referring to West Germany's reluctance to revalue, he asked, "What am I supposed to do with arrogant and uncomprehending people?" Unless the E.M.S. could be realigned to France's advantage, Delors threatened, France would withdraw, a move that would severely undermine what little European unity exists. Delors held 13 separate...
...Mauroy becomes too much of a drag on the party, the President can replace him before the next legislative elections, which are scheduled for 1986. Mitterrand thus has given Mauroy two years in which to perform a healing miracle on the French economy. The next battle for the franc has begun. - By Frederick Painton. Reported by Jordan Bonfante and Thomas A. Sancton/Paris