MITTERRAND'S FRANCE: NEAR-TERM OUTLOOK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00302R000300370003-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 22, 2016
• Document Release Date: July 15, 2009
• Sequence Number: 3
• Publication Date: March 22, 1983
• Content Type: NIE

- I I
Approved For Release 2009/07/15 : CIA-RDP86T00302R000300370003-9
Director of
Central
Intelligence
I WI
tr a t~ti"f~(~
Near-Term OutooK
Mitterrand's Fr
NIE 22-83
22 March 1983
copy 396
25X1
 MITTERRAND'S FRANCE:
NEAR-TERM OUTLOOK
Information available as of 21 March 1983 was
used in the preparation of this Estimate.
 THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS.
The following intelligence organizations participated in the preparation of the
Estimate:
The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organizations of the Departments of State and
the Treasury.
Also Participating:
The Assistant Chief of Staff for Intelligence, Department of the Army
The Director of Naval Intelligence, Department of the Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
 Page
KEY JUDGMENTS .................................................................................................. 1
DISCUSSION .............................................................................................................. 5
The Economic Challenge ....................................................................................... 6
East-West Security Issues ....................................................................................... 8
French Defense Policy ........................................................................................... 8
Relations With NATO and the United States ...................................................... 9
The Importance of West Germany ....................................................................... 10
Relations With Moscow .......................................................................................... 10
France and the Third World ................................................................................. 12
Implications for the United States ......................................................................... 15
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Approved For Release 2009/07/15 : CIA-RDP86T00302R000300370003-9
 Municipal elections this month, although contested largely on local
issues, have been widely interpreted as a referendum on Francois
Mitterrand's 22-month Socialist stewardship of France, particularly his
economic austerity program's mixed results and uncertain prospects.
The outcome fell well short of the unequivocal rejection of Mitterrand's
policies sought by the opposition; but it served as a warning that the
Socialists' domination of the French political scene could be reversed if
their management of the economy does not measurably improve before
the national elections in 1986. Thus, although Mitterrand has been able
to sustain a domestic consensus for his foreign and defense policies by
skillfully subordinating Socialist concerns to broader and more tradi-
tional French interests, it will be France's economic fortunes that
ultimately will determine the political viability of the Socialist regime.
Despite waning public confidence in his economic policies, Mitter-
rand is unlikely to abandon the basic thrust of his Socialist agenda and
its major objectives of redistributing economic power and revitalizing
French industry under the direction of the state. However, the pros-
pects for continued decline in industrial production and investment,
persistence of the external deficit, and high rates of inflation and
unemployment leave the government little room to maneuver. We
expect the government to take tough measures to reduce consumer
purchasing power and control government spending. These should
afford the government a measure of success in reducing inflation and
lowering the trade deficit. The devaluation of the franc was a necessary
but, at best, temporary palliative. Inflation will continue to exceed that
of West Germany, and pressure for another realignment within the
European Monetary System (EMS) could develop within the year.
On defense matters, the government will continue to give priority
to modernizing strategic nuclear forces and will reject attempts to
include them in arms control negotiations in the absence of dramatic re-
ductions by the superpowers. Paris also will proceed with plans for
deploying by the early 1990s an improved tactical nuclear missile able
to reach targets in Eastern Europe from French territory. France's
conventional forces, however, are likely to suffer from cutbacks in real
growth of the defense budget, and we believe operational readiness and
combat ability will be adversely affected.
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 In foreign affairs, Mitterrand will seek a limited revival of France's
dormant dialogue with Moscow, fearing eventual isolation if US-Soviet
relations improve and unwilling to cede to West Germany the role of
preeminent interlocutor with the USSR in Europe. Prospects for
significant movement in Franco-Soviet relations, however, are limited:
for example, differences persist with the Soviets over Afghanistan,
Poland, and human rights; and Paris and Moscow will remain at odds
over Soviet efforts to take account of French nuclear systems in arms
control negotiations. France will, nonetheless, continue to press its
economic relations with Moscow and seek to redress its trade imbalance,
both because it views the USSR as a potentially lucrative market for
agriculture and high-technology exports and because it believes that
East-West economic relations can have a moderating effect on Soviet
behavior.
Paris will remain committed to participate in the studies on the se-
curity implications of East-West trade under way in NATO and other
forums in the hope that a Western consensus will help constrain future
unilateral US restrictive efforts in this area. However, it will continue to
resist the appearance of US or Alliance "direction" of national economic
policies, especially if it believes its ability to compete for Eastern
markets will be hampered. While willing to apply tighter controls on
technology transfer in the Coordinating Committee for East-West
Trade Policy (COCOM), Paris will seek to narrow the definition of what
is strategically "sensitive."
Mitterrand's concern about the Soviet military buildup could
provide impulse and motivation for enlarging the scope of French
military cooperation with NATO, although well short of reintegration
into its military command structure. The French may believe it is in
their interest, for example, to broaden discreet participation in Alliance
exercises and to improve bilateral cooperation on security matters with
the United States, although preferring in the latter instance to keep
sensitive issues within military or intelligence channels. The Gaullist
party under Jacques Chirac has been stressing domestically its ties with
the United States, and the Socialist government also may believe it is
good politics to strengthen its relationship with the United States.
France will continue to be preoccupied by fears that abandonment
of NATO's dual-track decision could leave it exposed to Soviet military
and political pressures and perhaps eventually even to force it toward
an uncomfortably close alignment with Washington. Intermediate-
range nuclear force (INF) deployment-and its coupling effect on US
and European defense-will remain France's primary concern. The
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 French, however, are likely to see a balance of US and Soviet INF at re-
duced numbers as fulfilling the same objective. They would not,
however, support a compromise solution that either envisaged a delay in
deployment or the exclusion of Pershing Its from the missile mix.
French anxieties about pacifist trends in Germany have not been
entirely allayed by Kohl's victory; Mitterrand's overall approach to
Germany will stress the necessity for European unity predicated on the
European Community (EC) and on the possibilities, although limited,
for enhanced bilateral security cooperation.
In the Third World, Mitterrand believes that his policies serve his
domestic economic requirements and complement his stand on East-
West issues. He remains firmly wedded to the notion that Soviet gains
can be halted or reversed through diplomatic, economic, and occasional.
military support to "progressive" regimes. Since Mitterrand's election,
Socialist rhetoric has given way somewhat to more pragmatic and
traditional French motivations, especially in Africa. Despite resentment
over what some French officials perceive to be efforts by the United
States to expand its influence-and its exports-in Africa at French
expense, Mitterrand will be concerned about the potential for Soviet,
Cuban, and Libyan meddling there. Thus, Paris will continue to seek
discreet cooperation with Washington, notably with regard to Chad,
Namibia, and Zaire.
In the Middle East, Paris will seek to maintain its traditional
influence in Lebanon and remain firm in its demands for withdrawal of
foreign forces. Mitterrand believes that only the United States is in a
position to extract concessions from Israel and that French interest in
obtaining a general peace settlement would be best served by encourag-
ing President Reagan's initiative. Should that initiative stall, Paris will
seek to develop an Arab consensus on an alternative. Elsewhere in the
region, the French probably will continue their strong support of Iraq in
its war with Iran, despite the uncertainties of recouping its substantial
investments in Iraq. Political and economic imperatives will sustain
French arms sales, particularly to conservative Persian Gulf govern-
ments. Paris will favor continued discreet Western military cooperation
in the Indian Ocean, although insisting that it remain outside the NATO
context.
Mitterrand's tentative search for a peacemaker role in Central
America and reluctance to be identified with US policies there will, at
times, complicate US efforts in the region. However, we believe Paris
will be content to remain a marginal factor, and we think it unlikely
that it will, in the next year or two, launch any dramatic unilateral
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 initiatives. Although Paris will probably fulfill its 1981 arms contract
with Nicaragua, doubts among some Socialist leaders about the direc-
tion of Sandinista policies-and about Nicaragua's willingness to dis-
tance itself from the Soviets and Cubans-will make new arms sales
unlikely. The French will continue their dialogue with Cuba and urge a
lessening of tension between Washington and Havana as essential for
peace in the region.
French policy in Asia has also been modified by increasingly
pragmatic considerations. Threatened economic retaliation by South
Korea has blunted Paris's earlier intention to recognize North Korea.
Similarly, veiled warnings by members of the Association of Southeast
Asian Nations (ASEAN) that French markets in that area would suffer
were Paris to move closer to Hanoi have helped to limit any French-
Vietnamese rapprochement. And, although Mitterrand's visit to China
this spring will provide a clearer indication of the future direction of
French-Chinese relations, economic motives will also predominate here.
The French will be particularly anxious to complete agreement on a
proposed sale of nuclear power reactors to China,
France will remain a difficult ally, eager to demonstrate it is not
sacrificing the Gaullist legacy of "independence" to reliance on Ameri-
can leadership. This will be particularly true in economic affairs.
France, for example, will resist efforts it believes are aimed at inhibiting
French trade with the East; within the European Community, it will
continue to be the most vocal advocate of a more restrictive trade
policy, primarily to improve its own deteriorating trade balance; and it
is likely to become increasingly assertive in attacking US agricultural
export policies in competing third-country markets and may seek EC
agreement to restrict certain US agricultural exports to the Community
as well. Mitterrand's primary concern, however, will be his fear of
Soviet designs in Europe, and his first priority will be the maintenance
of European unity and a European security balance-interests that
favor a broad convergence of French and US views on East-West
security matters. Outside the East-West context, Paris will continue to
see both tactical and longer term advantages in close-and closely
held-cooperation with Washington in the Middle East and Africa.
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 1. Nearly 22 months after his election as President,
Francois Mitterrand is struggling to reconcile his ambi-
tious plans for a "Socialist transformation" of France
with his growing appreciation of domestic and inter-
national constraints on his policies. Municipal elections
in March, although contested largely on local issues
and personalities, have been widely interpreted as a
referendum on Mitterrand's Socialist stewardship of
France; and the outcome was largely a reflection of
public disenchantment with his management of the
economy. In defense and foreign affairs, where Mit-
terrand has strong personal views and enjoys a rela-
tively free hand, he has had little trouble in accommo-
dating or subordinating specifically Socialist concerns
to broader (and more traditional) French political,
security, and economic interests. With a firmer con-
sensus behind him on foreign rather than domestic
affairs, Mitterrand will be more inclined than his
predecessors to work closely with the United States on
East-West security issues, the Middle East, and Africa.
Friction, however, over economic issues periodically
will mar an otherwise improving US-French relation-
ship.
2. Although the election results fell well short of the
clear rejection of Mitterrand's policies sought by the
opposition, it served as a warning that the Socialists'
domination of the French political scene could be
reversed if their management of the economy does not
measurably improve before the legislative election in
1986. The election outcome could have a nearer term
impact on national political alignments as well. Wan-
ing political support for the Communists could prompt
Mitterrand to explore the possibility of an "opening"
to the center-left-including perhaps the offer of
ministerial posts to a few prominent centrists-in an
attempt to defuse some of the business community's
hostility and recapture the support of moderate voters
prior to national elections in 1986. Although some
leftwing Socialists would oppose even a limited "tilt"
toward the center, few would go so far as to break
with Mitterrand. Mitterrand might also be tempted to
push through a proportional representation system for
the National Assembly, thus reducing the Socialists'
need to depend on uneasy electoral alliances with the
Communists.
3. Any such move to the center could lead to an
open crisis in the government coalition. Communist
leader Marchais already has warned the government
not to use the leftist election setback as a pretext to
"veer toward the right." At a minimum, the poor
Communist showing and subsequent downgrading of
Communist participation in the Cabinet will rekindle
debate within the Communist leadership over the
wisdom of participation in a government that, in the
eyes of some party officials and rank-and-file activists,
may be proving a liability. As Socialist policy has
moved to the right (from the Communist perspective)
in terms of both economic policy and relations with
the Alliance, it has complicated Communist efforts to
mobilize the once-disciplined Communist electorate,
to criticize Socialist policies, and to stake out inde-
pendent positions,
4. Although we think it unlikely the Communists
will soon opt to quit the coalition or that Mitterrand
will dismiss them outright, the tensions likely to arise
from their contradictory economic prescriptions even-
tually could persuade both sides that the Alliance is no
longer viable. A Communist demand for a return to
expansionist economic policies, for example, including
a new round of nationalizations, would almost certain-
ly be rejected by Mitterrand. Should the Communists
leave, their aim would be to rally what they perceive
as growing worker discontent with Socialist domestic
policies and to attack more openly Mitterrand's stand
on East-West security issues. The Communists could
cause trouble on the labor front, but Mitterrand
probably would not be seriously threatened. Non-
Communist unions would reject participation in Com-
munist-backed "political strikes," and Communist
deputies probably would still back the government on
some social issues. Although the departure of Commu-
nist ministers and the consequent need to guard
against attacks from the left could lead Mitterrand to
soften his anti-Soviet rhetoric, we believe it would
5
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 have very little effect on the substance of French-
Soviet relations.
5. The center-right parties will seek to use their
improved local bases, which have become more im-
portant because of Socialist policies aimed at trans-
ferring some administrative responsibilities from the
central government to local authorities, to prepare a
concerted attack on the Socialists in the legislative
elections. Faltering public support for the government
will also encourage Gaullist leader (and Paris Mayor)
Chirac to continue his efforts to emerge as undisputed
leader of the opposition. Others, however, including
former President Giscard and former Prime Minister
Barre, probably will continue to muster substantial
support within conservative circles.
The Economic Challenge
6. In economic matters, Mitterrand will be obliged
to navigate in even more uncertain and ideologically
troubled waters. After first plotting an expansionary
economic course in accord with a long-term strategy to
restructure the economy along Socialist lines, domestic
imperatives and the international economic environ-
ment forced Mitterrand to accept the need for more
restrictive policies. These policies have had some
success in dampening inflation and stabilizing unem-
ployment, but at a cost in real income for workers,
slower growth in social benefits, and growing discon-
tent among Mitterrand's leftist constituency. In addi-
tion, the persistence of the external deficit and contin-
ued pressure on the franc leave the government little
option but to impose a new dose of what the Socialists
are calling "economic rigor." Mitterrand's reappoint-
ment of Prime Minister Mauroy to head a more
streamlined Cabinet reflected his desire to avoid the
appearance of renouncing previous policies while in
fact moving to adjust them substantially.
7. Mitterrand's domestic problems stem largely
from policy choices made early in his administration.
Having interpreted his victory (and the Socialist land-
slide in the subsequent legislative election) as a man-
date for Socialist innovation, Mitterrand rapidly
moved to:
- Nationalize key industrial firms and most re-
maining private banks.
- Grant workers increased benefits and shorter
working hours.
- Expand public-sector employment.
- Increase transfer payments to low-income
Socialist strategists believed increased public spending
would stimulate consumption, encourage new private
investment (which had shown little real increase dur-
ing Giscard's presidency), and reduce unemployment.
They also believed the nationalization program would
lay the groundwork for reindustrialization by rescuing
threatened industries-such as steel and textiles-and
enhancing French competitiveness in high-technology
fields.
8. Failing to absorb the lesson of the first devalua-
tion of the franc in October 1981-namely, that
France could not long pursue expansionary policies
while its principal trading partners followed a defla-
tionary course-the government found itself danger-
ously exposed to external pressures in mid-1982. The
growth in consumer spending boosted imports, sending
the trade account deeper into deficit and putting new
downward pressure on the franc. Meanwhile, business
fears of rising inflation and uncertainty about govern-
ment policy left many French firms unwilling to
invest and unable to win back markets at home and
abroad.
9. Convinced of the need to change direction fol-
lowing a second devaluation of the franc in June 1982,
the government adopted a long-term program of
budgetary restraint, at the same time shifting its
economic strategy from consumption to investment-
led growth through increased government grants and
subsidized bank loans to nationalized industries. While
the change in course helped ameliorate inflationary
pressures, the potentially positive effects on French
exports of the depreciation of the franc were vitiated
by the continuing sluggish pace of growth in its major
trading partners in Europe. A persistent trade imba;-
ance and a weakening currency proved as intractable
as the need to rely on heavy borrowing from abroad to
delay another politically embarrassing devaluation un-
til after the elections. In restrospect, it is clear that the
June 1982 economic policy adjustment only slowed the
pace at which French prices and incomes were out-
stripping those of its trading partners and did not go
far enough to reverse the trend toward large foreign
trade deficits.
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 10. Despite the austerity program's mixed results
and uncertain prospects, Mitterrand is unlikely to
abandon key aspects of his Socialist program that
already are in place. The government, for instance,
will continue to direct substantial capital investment
into the nationalized sector, hoping to position French
industry first to recapture the domestic market to curb
unemployment and, over a longer term, to develop
"industries of the future" to steal a march on interna-
tional markets, If private investment continues to lag
and lameduck industries continue to absorb a dispro-
portionate share of available resources, a major com-
ponent of the government's longer term strategy to
promote growth with lower inflation and to reverse
the trend toward increasing trade deficits in industrial
goods will be undermined.
11. Although the beginning of a worldwide recov-
ery and the decline in oil prices will help support his
efforts to bring the French economy into better bal-
ance, Mitterrand cannot expect these favorable cir-
cumstances alone to bail him out. If progress is to be
made on reducing inflationary demand and lowering
imports, he has no alternative but to cut real consumer
purchasing power and get a firmer grip on govern-
ment spending, including that of the nationalized
companies. We expect that the measures complement-
ing the European Monetary System (EMS) realignment
of 21 March will begin that process. These probably
will include strengthening the government's plan to
hold down nominal wage gains and eliminate indexa-
tion, at the same time freeing industrial prices to
reflect market conditions; making significant cuts in
ministerial budgets while programing larger-than-an-
ticipated increases in charges for public services; and
taking steps to boost consumer savings. In 1983 the
price to be paid for a lower trade deficit and for the
government's earlier largess will be little or no real
growth in the economy, a continuing decline in invest-
ment, and a further increase in the politically sensitive
unemployment rate. Although the government will
come close to achieving its 8-percent inflation target, it
will still be more than twice that anticipated for West
Germany. Thus, it is only a matter of time-perhaps a
year-before the inflation differential between the
two countries again begins to exert pressure for
another EMS realignment. (See table.)
12. Although the Mitterrand government shares
some of its predecessors' ambivalence toward Europe-
an Community institutions, it believes the EC is
necessary to further its economic and political objec-
tives in Europe and internationally. In particular,
Mitterrand views the Community as a means of
anchoring West Germany to the West and magnifying
the impact of Franco-German collaboration, thus but-
tressing French security. Within the EC, however,
Mitterrand will continue to defend important French
economic interests, and this will put Paris at odds with
London, for example, over relative contributions to the
EC budget, as well as complicate the projected en-
largement of the EC to Spain and Portugal.
13. The government's early economic miscalcula-
tions and the prospects for continuing slow growth will
almost certainly make Paris less flexible on interna-
tional trade issues. The protectionist urge, never far
below the surface in France, will tempt French politi-
cians to see trade restrictions as a way to compensate
Real commercial GDP a
1.2
0.1
1.5
0.5
Real private consumption C
1.7
2.2
3.3
-0.8
Real gross fixed investment C
2.4
-2.8
-0.9
-2.0
Export volume c
2.9
5.1
-2.0
3.4
Import volume c
7.3
0.4
3.6
-2.7
Current account balance d
-4.2
-4.8
-13.0
-7.1
Consumer price index a
13.6
14.0
9.7
9.0
Percentage of unemployment
6.2
7.5
8.4
9.5
General government balancer
0.3
-1.3
-3.0
-3.0
Value of currency a
4.23
5.43
6.57
7.15
? Preliminary.
b Projected.
e Percent of change from year earlier.
n Billion US dollars.
e December to December.
f Expressed as a percentage of GDP.
g Francs per US dollar.
7
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 for the competitive disadvantages caused by lax do-
mestic economic policies and the intractability of
world market conditions. Although Mitterrand clearly
recognizes the inadequacy of such a solution for a
nation with critical import dependencies in energy
and raw materials and with aspirations to play a
leading role in the international trading system, stub-
born trade deficits and the difficulty of restoring
competitiveness to French industry in the near term
could lead him to accept increased protectionism as a
tactical necessity.
14. We believe, however, that the French will
generally attempt to employ the EC as their first line
of defense, using the Common Agriculture Policy to
boost French agricultural exports and pressing the EC
for higher barriers to imports from Japan. But Paris
also may seek to impose unilateral restrictions similar
to those levied last year on Japanese video tape
recorders, despite the risk of straining relations be-
tween Mitterrand and his EC Partners. Moreover,
French frustrations will be vented in criticisms of US
economic policies. Paris has clearly bridled at US
efforts to promote agricultural sales in what it regards
as "European" markets in the Third World, and, if
such sales continue, it will almost certainly press the
EC for retaliatory measures against certain US agricul-
tural exports to Europe. Although we think it unlikely
that Mitterrand will seek a public brawl with the
United States, lest intemperate attacks on US trade
policies adversely affect French-US cooperation on
security and other issues, we do not discount the depth
of French feeling on the matter. Mitterrand may seek
to buttress his own limited options for countervailing
actions by warning Washington that US-European
trade frictions could impact on larger US interests in
Europe, including intermediate-range nuclear force
(INF) deployment,
East-West Security Issues
15. Like de Gaulle, Mitterrand believes France's
security and ability to play an independent role in
world affairs depend on the existence of an East-West
military balance. The Soviet military buildup, particu-
larly in Europe, has convinced him that France must
actively seek to discourage policies-at home and
abroad-that could weaken the US commitment to
Europe's defense. Although Mitterrand believes the
Soviets want to avoid a military confrontation with the
West, he expects them increasingly to attempt to split
the Alliance with the aim of extorting major political
and economic concessions-especially from the West
Europeans. Mitterrand's deep suspicions regarding So-
viet aggressive intentions in Europe are widely shared
within Socialist and center-right circles.
16. Mitterrand's worries concerning Soviet pres-
sures on the Alliance are heightened by what he and
prominent opposition figures fear are trends in West
Germany that could undermine Alliance solidarity.
The French fear that any West German drift toward
"neutralism"-a concern not entirely allayed by
Chancellor Kohl's election-would leave France dan-
gerously exposed to Soviet military and political pres-
sures, forcing Paris into an uncomfortably close align-
ment with Washington.
17. Given these concerns, we believe Mitterrand
will continue to place East-West security issues at the
top of his foreign policy agenda. Specifically, we
believe his government will seek to:
- Maintain and, in some cases, upgrade French
defense capabilities.
- Continue the trend toward closer military coordi-
nation and cooperation with NATO-while re-
maining outside its integrated military command
structure-and bilaterally with the United States.
- Continue to support NATO INF modernization.
- Strengthen the West German Government's re-
solve to resist Soviet intimidation and blandish-
ments.
Mitterrand's ability to follow through on pledges to
help strengthen Western security will remain limited
by a weakened domestic economy and Paris's reluc-
tance to further compromise French "independence."
French Defense Policy
18. The Mitterrand government subscribes to the
national consensus on the need for a strong defense,
including an independent nuclear deterrent. Indeed,
the government's emphasis on the independence of
France's nuclear deterrent has helped to prevent the
appearance of a significant French "peace movement"
similar to those elsewhere in Western Europe. Mitter-
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 rand managed to minimize controversy during his first
year in office by stressing continuity both in defense
expenditures and in strategic doctrine. However, the
Socialists' shift in economic policy last June, coupled
with their own priorities on social programs, has led to
reductions in real growth of defense spending for the
first time in several years. It also has projected the
defense issue into the domestic political arena.
19. While the government's intentions will become
clearer when it submits its 1984-88 defense plan for
parliamentary approval this spring, we believe the
government will continue, as did its conservative
predecessors, to give priority to the maintenance and
modernization of the strategic nuclear forces. For
example, it will continue funding its seventh ballistic
missile submarine and two new types of submarine-
launched ballistic missiles carrying multiple warheads.
It probably also will proceed with plans to deploy a
nuclear-armed, air-launched standoff missile in the
mid-to-late 1980s and a mobile land-based intermedi-
ate-range ballistic missile in the early 1990s.
20. The government will move gradually to en-
hance French tactical nuclear capabilities as well. For
example, it will proceed with plans to deploy the
Hades surface-to-surface ballistic missile (which will
be capable of reaching targets in Eastern Europe from
French territory) in 1991. It also will continue ad-
vanced development of an enhanced radiation weapon
(ERW), which is intended for the Hades, while post-
poning any announcement regarding production or
deployment of an ERW.
21. Conventional force capabilities will bear the
brunt of expected cutbacks in the defense budget,
perhaps amounting to a decline in real terms of 1 or 2
percent in 1983. Procurement schedules for armored
vehicles, artillery, and combat aircraft probably will
slip further. Reductions in overall troop levels of some
30,000 to 50,000 personnel also are likely to occur,
particuarly in the ground forces, although Paris proba-
bly will maintain current levels in West Germany,
Africa, and the rapid assistance forces. Despite prom-
ises by French defense officials to compensate for
eventual reductions in conventional manning levels by
increasing the firepower, mobility, and versatility of
their forces, we believe further budget cutbacks will
limit their operational readiness.
22. Nevertheless, in our judgment, the Mitterrand
government will want to play down any reductions in
the size or capabilities of French forces. The Socialists
recognize that any perceived weakness on national
defense would be a significant political windfall for
the opposition in the 1986 legislative elections. More-
over, a further French tilt toward a strictly nuclear
deterrent strategy and away from conventional forces
could fuel West German concerns about French will-
ingness and ability to help defend West German
territory from a Soviet conventional attack.
Relations With NATO and the United States
23. The Mitterrand government has endorsed the
policy, which was quietly pushed by Giscard, of
gradually enlarging the scope of French military
cooperation with NATO short of reintegration into the
military command structure. We believe Mitterrand's
perception of the Soviet threat in Europe will be a
major factor in prompting him to continue this
trend-for example, by broadening discreet French
participation in Alliance exercises. On the other hand,
France will vigorously oppose anything it regards as
"expanding" NATO or amending the North Atlantic
Treaty regarding expansion of its roles. Thus, France
will oppose any institutionalization of links with Japan,
Australia, or New Zealand and will also oppose other
US efforts to develp a NATO consensus on "out-of-
area" problems, such as the Persian Gulf.
24. The Parameters of French military cooperation
within the Alliance will remain circumscribed by
domestic political sensitivities regarding any perceived
loss of French "independence." There are signs, how-
ever, that these sensitivities may be on the decline.
Mitterrand's decision to host the North Atlantic Coun-
cil ministerial meeting in June is one indication of the
government's willingness to call more public attention
to France's role in the Alliance. Mitterrand may see
domestic advantage in such displays of French ties to
the Alliance; they serve both to parry suggestions from
the center-right that the Socialists are unable to
maintain close security relationships with France's
principal allies-particularly the United States-and
to place the Communists in the uncomfortable role of
publicly acknowledging agreement with policies they
have castigated in the past. Although the tone of
Mitterrand's early pronouncements on the need to
strengthen the Alliance might have been intended in
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 part to reassure nervous Allies that any deal with the
French Communists would not involve concessions on
foreign policy, we doubt that an eventual breakup of
the coalition would lead him to alter present attitudes
toward the Alliance.
25. The French, in our view, also may be open to
improving bilateral cooperation on security matters
with the United States. Mitterrand and his top national
security advisers probably will prefer, as did their
predecessors, to keep sensitive issues within either
military or intelligence channels. In dealing with the
United States on defense procurement issues, Paris will
stress the need for more US procurement of French
arms in order to make the "two-way street" work.
The Importance of West Germany
26. France's role in the Alliance is heavily influ-
enced by events in West Germany. Although recent
French expressions of concern over neutralism and
pacifist currents across the Rhine could in part be self-
serving-Mitterrand's predecessors sometimes found it
useful, in dealings with Washington, to contrast
French reliability with West German wavering-they
nonetheless reflect a deep and continuing preoccupa-
tion. Above all, the French fear that if West Germany
were seriously to alienate the United States-for ex-
ample, by abandoning the 1979 NATO dual-track
policy on INF-the ensuing trans-Atlantic recrimina-
tions could result in an effective decoupling of the US
nuclear guarantee. In that event, Paris may be faced
with the dilemma of seeking some sort of bilateral
security arrangement with Washington, despite the
restrictions this would impose on French policy op-
tions both within and outside Europe.
27. As part of its efforts to keep West Germany
anchored in the Alliance, the Mitterrand government
will continue its policy of strong public and private
support for Chancellor Kohl's stand on INF, even at
the risk of alienating further some elements of the
German Social Democratic Party. Western deploy-
ment-and the coupling effect on US and European
defense-will remain France's primary concern, but
the French probably would accept a balance of US
and Soviet INF at reduced numbers as fulfilling the
objective, provided Pershing Its were included in the
missile mix.
28. The French also will pursue their intermittent
initiatives to improve bilateral defense cooperation
with West Germany. As in the past, however, French
rhetorical commitments are likely to outpace their
willingness to overcome institutional and industrial
obstacles to ambitious joint weapon-development pro-
grams. Moreover, the usefulness of recently stepped-
up security consultations with Bonn will be limited by
continued French reluctance to define precisely at
what point French forces would be committed to
battle and their unwillingness to provide any kind of
French nuclear guarantee to West Germany.
Relations With Moscow
29. We believe there is little prospect that the chill
in French-Soviet relations that followed Mitterrand's
election will dissipate significantly in the coming year,
although even within the government some will argue
for more positive gestures toward Moscow. Mitter-
rand's deep personal aversion to Soviet totalitarianism
is shared by the majority of French Socialists and has
been conditioned, in part, by their long history of
bitter rivalry with the French Communists. In addi-
tion, Soviet actions in Afghanistan and Poland have
accelerated a trend of rising anti-Soviet sentiment in
France-including within the leftist intelligentsia-
which dates at least to the invasion of Czechoslovakia
in 1968.
30. Mitterrand apparently is skeptical that General
Secretary Andropov will institute dramatic changes in
Soviet foreign policy. Nevertheless, he sees advantages
in sounding out the new leadership. By sending For-
eign Minister Cheysson to Moscow in mid-February,
Mitterrand hoped to signal that Paris remained inter-
ested in maintaining the political dialogue. Disagree-
ment over fundamental issues evident during the
Cheysson visit make any significant rapprochement
unlikely:
- Paris and Moscow will remain at loggerheads
over Soviet efforts to count French nuclear sys-
tems-even indirectly-in arms control negotia-
tions. The French will continue to argue that
their systems are totally independent of NATO
and constitute the minimum necessary to sustain
a credible deterrent strategy.
- The French are likely to continue to criticize
Soviet policies in Afghanistan, perhaps assuming
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 a more public role in opposing the use of chemi-
cal warfare there and in Southeast Asia.
- The French also probably will try to keep diplo-
matic pressure on the Polish Government for a
significant liberalization of its internal political
and economic policies.
31. We believe Mitterrand would be reluctant to
agree to a summit that promises to be purely symbolic.
He no doubt recalls the negative domestic reaction-
and his own scathing criticism-following Giscard's
unproductive meeting with Brezhnev in Warsaw only
a few months after the invasion of Afghanistan. He
probably would reconsider his position, however, in
the event that a US or West German summit threat-
ened to relegate Paris to a marginal role in the East-
West dialogue.
32. Economic Issues. Like its West European part-
ners, the Mitterrand government believes that long-
term Western interests are served by increasing East-
West trade. The French have not entirely written off
hope that such trade eventually could have a moderat-
ing effect on Soviet foreign policy. Although trade
with the USSR represents less than 3 percent of overall
French trade, it provides jobs for some sectors hard hit
by the recession.
33. The French nevertheless recognize the political
damage that could be done to the Alliance by a
renewed bitter public dispute over East-West trade
issues. Thus, they probably will attempt to use their
participation in parallel studies on East-West eco-
nomic relations within NATO, COCOM, and the
Organization for Economic Cooperation and Develop-
ment (OECD), to build a European consensus on
guidelines for these relations with the hope of restrict-
ing future US policy options. In any event, we believe
the French will continue to reject any perceived effort
by the United States to develop a comprehensive
Western strategy aimed at weakening the Soviet econ-
omy. Therefore, they will also oppose expanding the
mandate of NATO's Economic Committee to permit
any studies believed to be leading in this direction.
Mitterrand's opposition to what he has called US
efforts to engage in "economic warfare" against the
Soviets will continue to receive broad domestic sup-
port, including from opposition leaders such as Chirac
and Barre. At the same time, the French will seek to
redress their large trade imbalance with the USSR by
expanding sales.
34. The Mitterrand government has been more
concerned than its predecessors about the transfer to
the East of sensitive technologies that could serve to
improve Soviet military capabilities. Thus, the French
will favor a dual approach to East-West economic
issues:
- In areas where the French accept the existence of
an "authentic" security dimension, we believe
they generally will support-or at least acquiesce
in-efforts to tighten Western controls.
- Where the French see the stakes as primarily
economic, they will, in our judgment, strenuously
oppose any comprehensive approach by the
West.
35. The French view of what constitutes an "au-
thentic" security dimension is likely to continue to
differ considerably from that of the United States.
Although the Mitterrand government has tightened
national controls on transfers of sensitive technology to
the East, it probably will continue to resist requests
from the United States for details on these controls. In
COCOM, the French will continue to advocate the
establishment of a hardcore list of militarily sensitive
technologies, but will oppose what they view as US
efforts to cut back the overall volume of East-West
trade in areas-such as advanced technology-in
which the West Europeans hope to improve their
ability to compete with the United States and Japan.
36. France ranks third behind West Germany and
Japan as a source of the USSR's imports of Western
high technology, accounting for nearly 15 percent of
those imports. France's strong position in such fields as
computers and telecommunications and its broad ac-
cess to advanced US technology makes it one of the
Soviets' prime targets for acquiring critical high-
technology products and manufacturing know-how.
37. The Mitterrand government is becoming more
sensitive to the technology-loss problem and seems
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 genuinely interested in reaching a common under-
standing with the United States on the types of
technologies that should be subject to stricter controls.
For example, Paris apparently desires closer coopera-
tion with the United States in combating illegal acqui-
sitions by the Soviet and East European intelligence
services. We believe Paris would approve restrictions
on discrete items or technologies on a case-by-case
basis, provided a strong case can be made for their
strategic military significance and foreign competitors
would not profit at the expense of French firms.
France and the Third World
38. Mitterrand believes his Third World policies
complement both his domestic agenda and his stand
on East-West issues. Expanding markets in the Third
World is essential, in his view, to French-and West
European-economic recovery. To such pragmatic
concerns, which have traditionally influenced French
policy toward the LDCs, must be added Mitterrand's
attachment to socialist humanitarian ideals. Mitter-
rand also remains firmly wedded to the notion that
Soviet gains in the Third World eventually can be
halted or even reversed by subtle diplomacy, econom-
ic support, and occasional military assistance to "pro-
gressive" regimes. His personal role in weaning Afri-
can nationalists such as Ivory Coast President
Houphouet-Boigny from the Communists during the
1950s, combined with his success in reducing the
Communist electorate at home, apparently has helped
to convince him that France, especially under Socialist
leadership, can outmaneuver the Communists in the
Third World.
39. The Socialist overtones of French Third World
policies have been muted over the past 22 months,
however. French economic interests have taken in-
creasing precedence in Mitterrand's calculations, ex-
cept in the area of nuclear exports, where Paris shows
no signs of deviating significantly from the restrictive
policy on sensitive nuclear transfers in place at the end
of the Giscard administration. Although the French
will probably replace Iraq's Osirak reactor destroyed
by Israel in June 1981, they are likely to supply only
low-enriched uranium and almost certainly would
stipulate that the spent fuel be returned to them.
40. Africa. The shift from early Socialist rhetoric
and actions, which suggested a broad reappraisal of
Paris's strategy, toward the pursuit of traditional
French interests has been most apparent in Africa.
Mitterrand's personal familiarity with African issues
and leaders has been an important factor in this
evolution. So also have the reminders-from the large
French establishment in Africa as well as from wor-
ried African presidents-that France is a superpower
in Africa and that any indication of an impending
French retreat could tempt African leaders (and their
rivals) quickly to search out new patrons in Washing-
ton or Moscow.
41. The Socialists have adapted, albeit reluctantly,
to the demands of France's "privileged relationships"
in Africa. Mitterrand, for example, has reaffirmed
close French ties to Zaire and Gabon, whose leaders
had been previously criticized by the Socialists as
dictatorial. The French military presence has been
maintained, as well as the important French presence
in several African administrations. Although political
relations between Paris and Pretoria have cooled, the
French have carefully tried to insulate their substan-
tial economic relations with South Africa.
42. We believe Mitterrand will remain concerned
about the potential for Soviet, Cuban, and Libyan
meddling in Africa, particularly in areas adjacent to
French-speaking states. If faced with a serious Libyan
threat to Chad, for example, we think the French
would increase their modest economic and military
assistance to Habre, despite their reservations over
Mitterrand's ability to stabilize the situation. Paris also
can be expected to pursue its efforts to improve ties to
"progressive" regimes-including Angola, Benin, Con-
go, Seychelles, and Mozambique-where the French
believe there are opportunities to reduce Soviet
influence.
43. The Mitterrand government will keep a wary
eye on US activities in Africa, with some officials
concerned that the United States is seeking to expand
its influence in Africa at French expense. We think it
unlikely, however, that French concerns about compe-
tition with the United States in Africa will reach the
levels evident under previous governments. On the
contrary, we think Paris will remain interested in
improving discreet cooperation with Washington in
Africa, although on a case-by-case basis. For example:
- The French probably will see advantages in close
consultations with the United States on Chad, in
part as a means of encouraging the United States
to increase its assistance to Habre.
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 - The French also probably will want to explore
possible diplomatic and economic pressures, in
conjunction with the United States, to counter
Libyan activities elsewhere in Africa. They prob-
ably would not, however, join any US attempt to
isolate Qadhafi diplomatically, fearing that such
a move could provoke a dangerous response by
the Libyan leader, enhance his prestige among
Third World states, and push him closer to the
Soviets.
- We believe the French will work within the
Contact Group to attempt to further a settlement
on Namibian independence that seeks to meet at
least some US concerns regarding the issue of a
Cuban troop withdrawal from Angola. Paris,
however, will continue publicly to disassociate
itself from efforts to link the two questions.
- In Zaire, the French will continue to participate
in a coordinated Western strategy to press Mo-
butu on economic reforms.
44. In North Africa, we believe the French will
pursue their effort, which has already met with some
success, to improve bilateral relations with Algeria
while simultaneously maintaining close ties with Mo-
rocco. In working for broader, improved ties between
Rabat and Algiers, Paris is hopeful that out of that
rapprochement will come a Western Sahara settle-
ment.
45. French domestic economic problems, however,
make it increasingly difficult for Paris to meet its
economic aid commitments to Africa. As a result, the
Mitterrand government will continue the trend appar-
ent in recent months to give first priority to its
traditional French-speaking partners, thus moderating
some of its ambitious plans to expand efforts (begun
under Giscard) to develop French relations with
English-speaking and Portuguese-speaking African
countries. The French also are likely to urge the
United States to increase its development assistance to
Africa.
46. The Middle East. Mitterrand has attempted to
restore a measure of balance in French policy toward
the Middle East, which had a decidedly pro-Arab bias
under his predecessors. His policies to date, however,
have neither lived up to initial Israeli expectations nor
justified early Arab concerns. Although Mitterrand
remains committed to ensuring Israel's right to exist
within secure and internationally recognized bor-
ders-a commitment influenced, in part, by his close
ties with Israel Labor Party leaders-he also supports
eventual creation of a Palestinian state.
47. Mitterrand's early hopes of brokering a general
Middle East settlement were dashed by a combination
of Israeli intransigence and Arab disunity. The impor-
tance of French trade and investment links to Arab
states also limited Paris's room for maneuver. At the
same time, a flareup of terrorist incidents in France-
at least some of which were related to the Arab-Israeli
conflict-apparently convinced Mitterrand and his
top advisers that continued violence in the Middle
East could pose a serious threat to French internal
security.
48. We believe Mitterrand has concluded that only
the United States is in a position to extract concessions
from Israel and that French interest in obtaining a
general peace settlement would be best served by
supporting President Reagan's initiative. The French
are likely to remain firm in their demands for with-
drawal of foreign forces from Lebanon and for main-
tenance of the integrity of the country. Strong Leba-
nese interest in cooperating closely with Washington
also has convinced Paris to seek to maintain its
traditional influence in Lebanon by participating in
the multinational force and by coordinating French
and US assistance to the Lebanese armed forces.
49. Should the President's initiative appear to be
stalled, however, we believe Paris would revive be-
hind-the-scenes efforts to develop an Arab consensus
on an alternative. In doing so, the French would seek
to work closely with the Egyptians and Saudis, both to
put new pressure on Washington and to extract some
concessions from the PLO-for example, an explicit
recognition of Israel's right to exist. Mitterrand proba-
bly would view some increased political recognition of
the PLO as strengthening what the French see as a
moderate faction led by Arafat. However, we believe
Mitterrand would refuse to meet with Arafat, fearing
that the gesture would seriously damage relations with
Israel and alienate many French Socialists, unless
Arafat offered some dramatic political concessions.
50. Elsewhere in the region, we believe the Mitter-
rand government will continue the policy approach
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 that it inherited from the Giscard administration. For
example:
- The French will maintain their strong financial,
military, and political support for Iraq in its war
with Iran. Relations with Syria will continue to
be cool, in part because of French ties to Iraq,
Syria's close ties to the Soviets, and French
suspicions regarding Syrian support for interna-
tional terrorists.
- The French will continue to push arms sales in
the region, particularly to conservative Persian
Gulf governments. Mitterrand, like his predeces-
sor, believes arms sales can serve as a lever for
French influence-and an alternative to that of
the superpowers-in the region. Moreover, the
sales will become increasingly important in
French efforts to maintain a strong and fully
employed arms industry.
- Paris also will favor continued discreet Western
military cooperation in the Indian Ocean to
defend the oil supply routes. It will insist, how-
ever, that such cooperation remain within ad hoc
bilateral or multilateral channels outside the
NATO context.
51. Latin America. The prospects for French policy
in Latin America are less clear. Longstanding ideologi-
cal biases still cloud the thinking of many Socialists-
including Mitterrand-on the origins and nature of
leftist and revolutionary movements there. According
to a theory widely accepted in Socialist circles, for
example, the United States repeatedly has pushed
Latin progressives into Soviet or Cuban hands by its
support of repressive regimes. At the same time, the
Mitterrand government has been anxious to maintain
and improve significant commercial and military
supply relationships with some Latin governments-
such as Argentina-whose authoritarian policies have
been anathema to Socialists.
52. Although French policy in the area has been
complicated by an evident lack of centralized author-
ity and the possibility exists that poorly prepared or
coordinated initiatives may surface with little or no
advance warning, we believe the Mitterrand govern-
ment has moderated its early inclination to take highly
visible actions, including the French-Mexican declara-
tion on El Salvador in August 1981 and the arms sale
to Nicaragua in December 1981. Paris apparently was
chastened by the negative reaction-from both the
United States and moderate governments in the
region-to the joint declaration and the arms sale, and
the recent appointment of Antoine Blanca as a special
roving ambassador for Latin America was intended to
focus greater attention on the area, heretofore some-
what neglected by France.
53. Although Paris will continue to criticize US
policies in Central America, we think it unlikely that
the French will, in the next year or two, launch any
dramatic unilateral or bilateral initiative. Specifically,
we do not believe the French will, barring a radical
change in Sandinista policies, agree to a new arms sale,
although they can be expected to fulfill the 1981
contract. At the same time, French officials will
pursue behind-the-scenes efforts in conjunction with
the Spanish to develop a consensus among moderate
governments-including Mexico, Costa Rica, Vene-
zuela, and Colombia-for a comprehensive plan to
eliminate outside intervention in the region.
54. In line with these efforts, we believe Paris will
continue to probe for opportunities to encourage a
lessening of tension between the United States and
Cuba. The French are likely to continue to see such a
development as the key to peace in the region.
Mitterrand is unlikely, however, to risk a major clash
with the United States by meeting with Castro unless
the French President believes there is a good chance
for obtaining a significant Cuban concession-for
example, a partial withdrawal of Cuban troops from
Angola.
55. Asia. French policy in Asia similarly has been
modified by increasingly pragmatic considerations.
For example, Mitterrand probably would have fol-
lowed through last year on his campaign promise to
recognize North Korea had the South Koreans not
threatened severe economic retaliation. Although
French officials can be expected to reiterate their
intention to recognize North Korea, we believe they
will try to accomplish this goal by promoting a cross-
recognition formula acceptable to the South Koreans-
who would insist on recognition by major Communist
powers-rather than by a simple bilateral arrange-
ment with Pyongyang.
56. Mitterrand's visit to China this spring will pro-
vide some indication of the future direction of French-
14
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 Chinese relations, which have been generally cordial
but unproductive. The French, for their part, will be
particularly anxious to complete agreement on a pro-
posed sale of nuclear power reactors to China. Al-
though the French may agree to sell limited quantities
of relatively sophisticated "defensive" arms, we do not
think a significant arms supply relationship is in the
offing.
57. In Southeast Asia, we believe Paris will have
little room for maneuver. France recognizes neither
the Vietnamese-backed Heng Samrin regime in
Phnom Penh nor the anti-Vietnamese resistance coali-
tion. Although the Mitterrand government has sought
to improve relations with Vietnam-for example, by
offering limited economic assistance-Paris has given
no indication that it intends to move toward recogni-
tion of the Heng Samrin regime. The French will use
occasions such as Foreign Minister Cheysson's sched-
uled visit to Hanoi in late March to probe for signs of
Vietnamese movement on the Kampuchean issue. We
believe, however, that expressions of concern by
ASEAN nations-stiffened by veiled warnings that
French efforts to expand their markets in ASEAN
might suffer if Paris is too friendly to Hanoi-will
limit any French rapprochement with Vietnam.
Should the French, nevertheless, attempt to play a
mediating role on the Kampuchean issue, we believe
ASEAN would be unlikely to accept Paris as an honest
broker. As for Laos, there apparently has been no
movement toward developing significant economic or
cultural ties following the Mitterrand government's
decision to reestablish diplomatic relations in Decem-
ber 1981.
Implications for the United States
58. We believe Mitterrand will continue to place a
high value on good relations with the United States.
His preoccupation with the need to strengthen the
Western Alliance against Soviet pressures will favor a
broad convergence of French and US views on East-
West security issues. Like his conservative predeces-
sors, however, Mitterrand will remain sensitive to any
perceived slight to French sovereignty and freedom of
action. Thus, for example, he will resist any effort by
the United States that he believes aims at controlling-
either directly or through France's European part-
ners-French political and trade ties with the East.
59. Outside Europe, France will remain a difficult
but occasionally helpful partner for the United States.
Although Paris will continue to stress its independence
and occasionally snipe at US insensitivity toward
developing countries, Paris will continue to see both
tactical and long-term advantages in close-and pref-
erably closely held-cooperation with Washington in
parts of the Middle East and Africa. The Mitterrand
government's tentative search for a peacemaker role in
Central America will complicate US policy in the
region. but we believe Paris will be content to remain
a marginal actor there.
60. France's continuing domestic economic prob-
lems will remain the greatest challenge to the internal
cohesiveness of the Mitterrand government. Although
we believe it unlikely that these problems will pose
any significant threat to French domestic political
stability, they could lead to new frictions with the
United States, particularly in the trade arena.
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 Approved For Release 2009/07/15 : CIA-RDP86T00302R000300370003-9