France’s Delors Used to Controversy

When Jacques Delors became president of the Commission of the European Community in 1985, he was expected to give a strong lead to French President Francois Mitterrand’s ideas about a new push toward European unity.

And after his comment Wednesday--that the United States was prepared to let the dollar slide, precipitating the dollar’s plunge on foreign exchange markets to the lowest levels in years--Europe is united and angry. Governments throughout Europe as well as the commission itself quickly distanced themselves from Delors’ remarks, saying that they were his personal views.

Delors himself backed off, saying his remarks were exaggerated and taken out of context.

The 62-year-old French politician has waded into controversy before, both at home and in the international arena.

As Mitterrand’s finance minister, he was known for his outspoken, and often acerbic, criticism of the high U.S. budget deficit and what were then high U.S. interest rates. After the 1984 economic summit of the seven Western industrial powers, he was asked if he was disappointed in the final declaration.

He apologized for an “inelegant” metaphor, then said: “We must be realistic--if a rooster pecks at the back of an elephant, it does not change its size.”

While serving in Mitterrand’s cabinet, Delors became the symbol of an unpopular austerity program, which he described as “an operation without an anesthetic.” Taxes and utility rates went up, indexing of wage increases to inflation was eliminated, and the government reneged on a Socialist Party promise to increase the minimum wage by 4% in 1982, causing widespread strikes.

One of the most despised measures, implemented in 1983, severely limited spending by French citizens during travel abroad, including a ban on the use of credit cards. A month later, the man once favored as a possible prime minister was promising to lift the restrictions by the end of the year.

In his speech Wednesday before the European Parliament in Strasbourg, France, Delors said that the major industrial nations had agreed, as part of last February’s currency stabilization accord, to keep the dollar at about 1.80 West German marks. He noted that in recent days it had slipped to 1.75 marks.

“Do not have any illusions,” Delors said. “The Americans are ready to come down to 1.60 marks to the dollar.”

In adjusting his position on Thursday, Delors said that an exchange rate of around 1.80 marks to the dollar is the “acceptable and tolerable” level for the U.S. currency.

“If the U.S. doesn’t make a credible gesture toward the markets by reducing its budget deficit, if West Germany doesn’t lower its interest rates and if Europe as a whole doesn’t decide on a bit more growth because the U.S. will be obliged to have less, then it won’t work,” he said in an interview on French radio.

Delors said the governments of the major industrialized countries “aren’t in the situation of the crash of 1929; they have the possibility of controlling the situation.”

He also criticized West Germany, saying that the nation “hasn’t been reasonable” in the current financial crisis by keeping real interest rates excessively high compared with those prevailing in the United States.

Delors has long called for international cooperation to stabilize movements in the foreign exchange markets.

Pascal Lamy, a Delors aide in Brussels, said at a news conference that in making his comment to the Parliament, Delors was not speaking authoritatively.

“He doesn’t know about the intentions of the U.S. government,” Lamy said.