Villepin Refuses to Step Down Over French Smear Scandal

His popularity nearing record lows, French Prime Minister Dominique de Villepin on Tuesday rejected demands that he resign over accusations that he used spy services to smear a top rival.

Villepin endured angry debate Tuesday in the National Assembly about allegations that he tried to implicate Interior Minister Nicolas Sarkozy, the center-right government’s leading presidential hopeful, in a case in which politicians and executives were falsely accused of holding secret bank accounts. Villepin has denied any wrongdoing, and one of the key investigators backed his version Tuesday.

The scandal involves a shadowy tipster, a Luxembourg holding company, a legendary spymaster and alleged kickbacks. But it apparently has a simple cause: the longtime feud pitting Sarkozy against Villepin and President Jacques Chirac, the prime minister’s mentor.

Legislators expressed disgust over a case in which investigators have searched the Defense Ministry and could soon question Villepin. Francois Hollande, leader of the Socialist Party, declared that the divided government’s sagging credibility damages France’s international image.

“This affair reveals a loathsome climate at the summit of the state,” Hollande said. “Maneuvers, manipulations, suspicions, feuds, it’s all there. Do you realize, Mr. Prime Minister, that you are forced today to deny having pushed an investigation of the No. 2 of your government?

“And there’s worse,” he said. “The intelligence services were used, I would say manipulated, for ends that have little to do with their mission.”

With a year left until presidential elections, doubts are increasing about the survival of a government already staggered by riots in immigrant housing projects in November and student protests that scuttled a proposed labor reform last month.

During an interview on Europe 1 radio Tuesday morning, Villepin rejected calls by the left that he step down. He later told legislators that “nothing will deter” him from his duty as prime minister.

“I have been a victim in recent days of an ignoble campaign of calumny and lies, a campaign that has profoundly shocked and wounded me,” Villepin said. “It is too much. How can we accept in our country that one can be personally accused on the basis of twisted information?”

A poll published by the Liberation newspaper Tuesday showed that Villepin’s approval rating has hit a new low of 20%, 2 percentage points above the record low for prime ministers in recent decades. The scandal and Villepin’s defeat in the labor law conflict have damaged his presidential aspirations while strengthening Sarkozy’s image as a savvy political street fighter.

Nonetheless, Chirac appears reluctant to dismiss his protege and try to fashion a new government with the 2007 elections approaching, said Pierre Giacometti, director of the Ipsos polling firm. The dirty tricks scandal has not hurt Villepin enough to force his departure, Giacometti said in an interview.

“This government can certainly withstand despite its unpopularity,” Giacometti said. “It depends on the circumstances in which Villepin finds himself in the weeks to come. This affair is not over. And new dramatic developments are possible.

“In any event, this does not help the right,” Giacometti said. “The French are exasperated to see the right tearing itself apart.”

The scandal centers on a list of purported secret bank accounts that was sent anonymously in 2004 to investigative magistrates looking into alleged kickbacks from a $2-billion sale of French frigates to Taiwan. The tipster accused Sarkozy and 56 others, mostly French leaders in the worlds of politics, business and intelligence, of funneling clandestine funds through a holding company in Luxembourg named Clearstream.

But investigators soon determined that the allegations were false, and focused instead on identifying the masterminds of a suspected smear campaign. Investigative magistrates have questioned a former diplomat close to Villepin as well as retired Gen. Phillippe Rondot, a respected intelligence operative brought in to assist the inquiry.

Rondot supported Villepin’s version by denying a recent report in Le Monde newspaper alleging that he had testified that the prime minister instructed him to target Sarkozy.

“Dominique de Villepin never asked me to focus, at one time or another, on politicians,” Rondot said in an interview with Le Figaro newspaper published Tuesday. “I deny it categorically.”