As Mitterrand teeters on socialist edge, Europe watches
French President Francois Mitterrand's most important battle is not with student demonstrators on the boulevard or with Ronald Reagan over interest rates.
It is with his own Socialist Party, badly split by the government's recently imposed tough austerity policy.
The outcome of the battle is crucial because it will determine whether France stays on it less inflationary austerity course, or swings back toward reflation and protectionism. That, in turn, will have great impact on France's partners in the European Community and NATO who fear that Mitterrand may be forced by his left wing to resort to a narrow and jarring nationalism.
The split within the party has been clear for some time. But during the past few weeks, as the austerity program has proved unpopular with the nation, party left-wingers have raised the public tone of their complaints.
This past weekend at the party's national convention, the dissonant notes reached a crescendo. A blistering attack was delivered on the government's policies by Jean-Pierre Chevenement, leader of the so-called CERES group on the left of the party and industry minister until he resigned in March after the President rejected his advice on socialist policies.
''There is nothing very socialist about the government's present economic policy,'' he said. ''It's merely a classical policy of diminishing demand.''
Many agree with this assessment, noting the austerity policy aims to reduce consumer purchasing power enough to cut inflation and bring down the country's huge trade deficit.
Mr. Chevenement proposes a different recipe. First, he would withdraw from the European Monetary System (EMS), which keeps European currencies in line. Next would come heavy government spending. Then a pinch of protectionism would be in order to make sure that consumers spend their new-found wealth on French, not foreign goods.
A slightly different dish of Mr. Chevenement's cooking has gained significant support among Socialists in the National Assembly. Its chef is Christian Goux, chairman of the assembly's finance committee.
Mr. Goux would like to slap on another wage-and-price freeze to cut inflation. To reduce the trade deficit, he argues that import controls of some 15 percent, would be justified, so long as France's industrial allies refuse to reflate.
So far, there is little support in the Cabinet for these alternatives to austerity. At the convention, Prime Minister Pierre Mauroy delivered a ringing defense of the government's present course - and he was backed within the party by the supporters of Michel Rocard, minister of agriculture and a leader in the left wing of the party.
But this does not mean that Mr. Chevenement, Mr. Goux, and other left-wingers will give up. Their instincts have deep roots in the popular wings of both leftist and rightist thought here.
French industry has always preferred protection, devaluation, and subsidy to the cold struggle of international competition. The left, too, historically has distrusted the liberal, international system, symbolized in France by Charles de Gaulle's technocratic, elitist Fifth Republic.
To a certain extent, Mitterrand has always shared these instincts. So the great question mark is what side of the battle he will take. In public, he insists that austerity is the only course, but the left-wingers think he can be brought around to their views.
They say, with reason, that Mr. Mitterrand's initial reaction was to pull out of the EMS last March when the franc was devalued. All that stopped him, according to recently published reports, was that France did not have enough reserves to protect its currency independently.
The reserves have been rebuilt to a certain extent and the President could presumably go it alone in the next crisis.
The crisis could be monetary as the franc continues to fall to record levels against the dollar. Or it could be economic: Austerity could fail to bring down inflation and the trade deficit.
Thanks in part to some large export contracts to the Mideast, the trade deficit was narrowed to 1.5 billion francs ($200 million) in April. But inflation shot up to an unpromising 3.9 percent during the first quarter of this year.
Political difficulties could also change Mr. Mitterrand's mind. His support in the polls has continued to ebb. Among all voters, it has fallen to 42 percent. Within the ranks of Sociaists, it has dropped to 73 percent, and within the Communist Party, to 63 percent.
The latter figures are particularly worrying to party leaders. No. 2 in the Socialist Party, Jean Poperen, recently warned in an open letter to the President that his policies were destroying the government's support among its natural supporters on the left.