Pragmatism, austerity are the big winners in French Cabinet shuffle

Francois Mitterrand, a radical socialist or a cautious pragmatist? Yesterday, the French President shuffled his Cabinet, paving the way for formal announcement Friday of new economic measures designed to bring down France's trade deficit and its intractable inflation. The actions will almost surely prove that he has chosen the pragmatic path.

The Cabinet shake-up points in this direction. Prime Minister Pierre Mauroy was renamed to his post, but behind him is a smaller (15 ministers, down from 25 ), more conservative Cabinet dominated by the businesslike banker Jacques Delors. The President has given the new Cabinet a mandate for increased belt-tightening.

The measures aim to reduce imports and inflation by reducing consumer demand. Mr. Delors, the minister for economy, finance, and budget, said March 22 there would be no new wage-price freeze. But he suggested there would be tighter controls on public spending and French incentives for saving - actions squeezing the common Frenchman.

Mr. Mitterrand's moves represent a repudiation of his party's left wing. Led by Jean-Pierre Chevenement, head of the Ministry of Research and Industry, the left-wingers had been urging the President to withdraw from the European Monetary System (EMS) and reflate the economy, even at the risk of increased foreign borrowing and protectionism.

Mr. Chevenement is conspicuously absent in the new Cabinet, replaced by the more moderate Laurent Fabius.

The chief advocate of an austere economic policy has been Finance Minister Jacques Delors. Mr. Delors has always been concerned that a Socialist attempt to spend France's way out of the recession would send the country's trade deficit soaring (93 billion francs, or $11 billion last year) and keep its inflation in double digits (10 percent last year), while inflation shriveled among France's trading partners.

Mr. Delors soon saw that stiff measures were needed to reach the government's goals of bringing inflation down to 8 percent and the trade deficit to a more modest 40 million francs ($4.75 million) this year. While the country's trade position was worsening, the franc's position was deteriorating, making a devaluation seem inevitable to bankers.

Monday, France devalued the franc 21/2 percent and the West Germans revalued the mark 51/2 percent. The result was that the EMS continued to exist, but at the price of hard feelings between Bonn and Paris.

Even though Mr. Mauroy's economic policies had come under fire, Mr. Mitterrand gave him a fresh mandate March 22 in allowing him to retain his post as prime minister. Analysts interpret the move as an attempt to bolster the government's image with the left of the Socialist Party and the Communists while retaining the austerity package.

Mr. Mauroy provides a measure of continuity for the left; he promises that the austerity measures will not be too drastic. The prime minister is a strong advocate of France remaining within the EMS, but he also believes that belt-tightening measures should not deflect the government from its social and employment objectives.

Still, the overall makeup of the new Cabinet shows that austerity is the order of the day. Mr. Delors's position has been strengthened as he adds the budget portfolio to his present post at the Finance Ministry. In his new job, he will wield great power over the economy.

Pierre Beregovoy, another moderate, has also been given additional powers at the Ministry of Social Affairs. He can be expected to practice austerity as well , since he has already acted to cut some social benefits.

''I'm waiting to see how tight the austerity will be,'' said J. Paul Horne, European economic analyst at Smith, Barney, Harris, Upham and Company Ltd., a longtime critic of the Socialists's economic policies. ''But I'm surprised how pragmatic Mitterrand has been. He is fast becoming the most conservative Socialist in France.''