Word: francs
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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...
...latest franc crisis had been building up for months, but for political reasons the government chose to wait until after the municipal elections were over before tackling the problem. Meanwhile, the election in West Germany of Christian Democratic Chancellor Helmut Kohl made matters worse. Kohl's reassuring conservatism prompted even more speculators to play the deutsche mark against the failing franc. To the French it was "the deutsche mark problem," and Mitterrand expected Bonn to correct it by simply raising the value of the West German currency. To the West Germans and others it was a "franc problem" caused...
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