France fumes at US over allied pipeline 'agreement'
''It's like someone stole your wallet and then said to you, 'I'll give it back to you - empty - if you give me your change in exchange.' ''
This is how an angry Michel Jobert, the French foreign minister, responded to the American decision lifting sanctions on equipment for the Soviet gas pipeline.
Unlike Britain, West Germany, and Italy, which welcomed the decision and President Reagan's announcement of an allied accord to tighten trade with the Soviets, France abruptly denied it was party to any such agreement.
Mr. Jobert and other French officials were angry that Mr. Reagan had linked the repeal of the sanctions with a trade agreement. The French response also shows that serious ideological, political, and economic differences remain between the two countries over the pipeline and Soviet trade in general.
The French do not like the idea of using trade as a weapon, do not want to look as ifthey are bowing to US pressure, and do not want to stop subsidizing credits to reduce exports to the Soviet Union when their own trade deficit is soaring.
But at the same time, French officials emphasize that these differences are not insolvable. They say that indeed ''progress'' is being made in the Washington talks between the US and the Europeans over restricting trade with the Soviets and that France agrees a joint allied commercial policy toward the Soviets is necessary.
Still, Mr. Reagan's announcement provoked the quick French denial because they say final settlement has not yet been concluded, and because the sanctions' repeal was tied to such an agreement. The US ''made an unjustified unilateral decision'' by imposing sanctions, and, as a result, must unilaterally revoke them, French Foreign Ministry officials continue to insist.
During the entire pipeline controversy, the French have taken the hardest line among the Europeans. They were the first to defy the American embargo, and President Francois Mitterrand and several key ministers have repeatedly spoken in angry terms about the American action.
They have said that the embargo and the American demand to stop the pipeline and cut trade with the Soviets constitutes ''economic warfare.'' Despite their opposition to Soviet aggression, they have explained they do not believe in using trade as a weapon.
Then there is the political problem. The French don't want to appear as if they are giving in to American pressure in agreeing to a compromise over the pipeline, American diplomats here say.
''Mitterrand is anti-Soviet, but there is no way he is going to appear as if he is falling under the US shadow,'' an American diplomat said. ''Like (Charles) de Gaulle, he has to show he is independent.''
Finally, and perhaps most important, the French have been resisting the American demand to end subsidizing credits to the Soviet Union. France agreed with the other alies in July to raise its export credit rate for the Soviets from 8.5 to 12.5 percent. But with the French trade deficit swelling to an estimated 100 billion francs ($13.8 billion) this year - 10 billion francs with the Soviet Union alone - French officials say they can go no further to jeopardize vital exports deals.
Even at 12.5 percent, bankers here say the Soviets are being offered an interest rate a few percentage points lower than a French borrower. Maintaining subsidies to keep the credits at this level and to continue offering liberal repayment schedules is crucial if French products are to remain competitive, foreign trade officials say.
The French point out that the West Germans, for example, with their low domestic interest rates, can offer 12.5 percent credits without subsidies. They add that the West Germans can even reduce the price of their goods because their domestic interest rates are in single digits.
So far the Soviets have not responded to Mr. Jobert's demands. If they don't soon buy French goods, the French will find it easier to come around to the American position.
A key US demand in the dispute all along has been European agreement not to proceed with the second part of the pipeline. Foreign trade officials here are warning that France may unilaterally break its contracts for this second part of the pipeline if the Soviets do not soon buy more French products.
US diplomats see another hopeful sign of French willingness to reach a trade agreement. They say that Mr. Mitterrand is much more receptive than his predecessors to restricting technology transfers to the USSR.