France opts for youth and pragmatism

Laurent Fabius, a brilliant young economist, is pragmatic and modern. By naming him prime minister of France late Tuesday evening, President Francois Mitterrand signaled that he wants to emphasize these qualities in his new government.

Mr. Fabius replaces Pierre Mauroy, a Socialist Party warhorse who had served as prime minister since the Socialists took power in 1981. A shake-up had been widely expected since the government did poorly in last month's European elections. Its popularity had dropped to a new low.

The appointment of Mr. Fabius means Mr. Mitterrand will forge ahead with his controversial economic policies. As industry minister, Fabius had sponsored plans to make French businesses more competitive through reductions of industry labor forces and government subsidies.

The transfer of power also confirms the end of Mitterrand's attempt to push through ideological social legislation. Former Prime Minister Pierre Mauroy was closely identified with the sweeping changes of the Socialists' first year in power - from the abolition of the death penalty to an ambitious work-sharing program. More recently, Mauroy was involved in trying to extend state control over private, mostly Roman Catholic, schools.

This school reform provoked unprecedented opposition. After more than 1 million protesters clogged Paris to mark their displeasure, Mitterrand was forced last week to withdraw his proposal.

At the same time, the President decided on a complex maneuver designed to win back the political initiative from the conservative opposition. By marching under the banner of ''free schools,'' the opposition had succeeded in portraying themselves as guarantors of liberty.

In an effort to take this popular platform away, Mitterrand plans to hold a referendum in September on changing the Constitution to permit further referendums on issues affecting personal freedoms.

Former President Charles de Gaulle used similar referendums to enhance his personal prestige, though a ''no'' vote on one led to his resignation in 1969. Such a defeat could present Mitterrand with the same dilemma. But so far, at least, the tactic has succeeded in putting his government back on the offensive.

The conservaties are split. Some want to vote ''no'' as a censure of the government. Others are leaning toward casting a ''yes'' ballot in favor of personal liberties.

The change in prime ministers is part of this maneuver to regain political momentum. In France, the prime minister serves at the will of the President. Mauroy had used up his political capital in the debilitating ideological battles , and Mitterrand decided a dynamic, umblemished figure was needed.

Fabius fits this bill. At 37, he is France's youngest prime minister in more than a century. He brings to office a close personal relationship with the President and a reputation for intellectual agility and ideological openness.

Unlike his predecessor Mauroy, he is no son of the working class. Nor did he grow up with close ties to the Socialist Party machine.

Fabius's father is a wealthy Jewish antique dealer, and the young Fabius was an equestrian champion. He was also a brilliant student, graduating from both the prestigious Ecole Normale Superiere and the Ecole Nationale d'Administration , where he received a rigorous training in economics.

He joined the Socialist Party only in 1974 and was noticed immediately. In 1975, Mitterrand took him on as an economic adviser, and soon afterward appointed him to run his private office. In 1979, Fabius became party spokesman, and in 1981 he ran the Mitterrand campaign.

''Fabius is the man who best translates my philosophy,'' Mitterrand said at the time.

Since the Socialists took power, Fabius has served in a variety of economic posts. In them, he has moved, despite some zigzags, from a reliance on state intervention to a greater emphasis on the market.

As budget minister, he antagonized conservatives by proposing a wealth tax and a new corporate tax on industrial capital. But when appointed industry minister in March 1983, he moved quickly to curtail previous Socialist moves to extend state intervention in the economy.

He masterminded the plan to cut government subsidies to unprofitable coal mines, shipyards, and steel plants, while permitting private industry more freedom of action. On taking office as prime minister, Fabius made it clear that more austerity and sacrifices lie ahead.

''I have a hard task,'' he told reporters. ''It will take all my will to modernize the country. Now I better get back to work.''

As he forms his government, he faces two tough decisions: (1) whether to retain the Communists with their four Cabinet posts, and (2) whether to keep respected Finance Minister Jacques Delors in his post.

The Communists have never trusted Fabius's left-wing credentials. Recently, they criticized him by name for his tough economic policies. Party leaders began huddling to discuss what to do just after Fabius's selection.

But it is unclear whether the new prime minister will even let them stay on. The Communists slumped to 11.3 percent of the vote in the June 17 European Parliament elections, their lowest level since 1932. Fabius may decide it is not worth keeping the party and its critical attitude toward the government's strict economic policy.

Finance Minister Delors's position is just as uncertain. He has played a key role in defending the franc and forming present economic policy, especially in preparing the tough 1985 budget, which combines cuts in corporate and personal income taxes with cuts in government spending. Such measures have made him a symbol of economic moderation in international financial circles.

But Delors reportedly does not get along well with Fabius. He had his own eyes on the prime ministership, and observers here suggest it would be hard for him to serve under the younger economist.

One possibility is to make Delors the new president of the European Commission, replacing Gaston Thorn of Luxembourg, whose term ends this year.

Final decisions on both these issues are expected soon, probably today.