JPRS ID: 10123 WEST EUROPE REPORT

APPROVED FOR RELEASE: 2047102109: CIA-RDP82-00850R400404070038-9 _ FOR OFFICIAL USE ONLY JPRS L/ 10123 - 18 November 1981 Ve/est E u ro e Re ~rt p p (FOUO 60/81) ~g~$ FOREIGN BROADCAST INFORMATION SERVICE � FOR OF~'ICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 NOTE JPRS publications contain information primarily from foreign newspapers, periodicals a;id books, but also from news agency transmissions and broadcasts. Materials from foreign-language _ sources are translated; those from English-language sources - are transcribed or reprinted, with the original phrasing and other characteristics retained. Headlines, editorial reports, and material enclosed in brackets are supplied by JPRS. Processing indicators such as [Text] or [Excerpt] in the first line of each item, or fol.lowing the = last line of a brief, indicate how the original informa.tion was processed. Where no processing indicator is given, the infor- mation was summarized or extracted. J Unfamiliar names rendered phonetically or transliterated are enclosed in parentheses. Words or names pxeceded by a ques- tion mark and enclosed in parentheses were not clear in the original but have been supplied as appropriate in context. Other unattributed parenthetical notes within the body of ar. item originate with the source. Times within items are as _ given by source. " The contents of this publi~ation in no way represent th~ poli- cies, views or attitudes of the U.S. Government. COPYRIGHT LAWS AND REGULATIONS GOVERNING OWDiERSHIP OF MATERIALS REP~ODUCED HEREIN REQUIRE THAT DISSE~[INATION OF THIS PUBLICATION B~ RESTRICTED FOR OFFICIAL USE ONL,Y. APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 FOR OF'FICIAL USE ONLY JPRS L/10123 18 November I981 WEST EUROPE REPORT (FOUO 60/81) COlVTENTS ECONOMIC FRANCE Ways To End Inflation, Increase Production Reviewed (Raymond Bourgine; VALEURS ACTUELLES, 5 Oct 81) 1 PQLITICRL SPAIN Recent Terrorist Reprieve, New Violence Analyzed (CAMBIO, 5, 12 Oct 81) 8 Recent Reprieve, by Ander Landaburu New Violence Sartorius Discusses Internal Issues oF PCE (Nicolas Sartorius Interview; CAN~IO, 28 Sep 81) 17 UCD Can No Longer As~ume Support of Business Sector (CAh]BIO, 19 Oct 81) 21 _ GENERAL , - FRANCE Crews of First Franco-Soviet Flight To Be Trained Before End of 1981 (PierrE Langereux; AIR ET COSMOS, 12 Sep 81) 25 - a - [III - WE - 150 FOUO] APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000440070038-9 ~ FOR OFFICIAL USE ONLY ECONOMIC FRANCE WAYS TO END INFLATION, INCREASE PRODUCTION REVIEWED Paris VALEURS ACTUELi,ES in French S Oct 81 pp 27-29 _ ~Article by Ftaymond,Bourgine~ , _ ~Text~ For employment, against inflation, through solidarity! This, in a few words, sums up the intent of the 1~~2 budget submitted by Mr Fabius. What are its chances of success? Under what cone~itions? Impcartant though the budget certainly is, it is but part of an entirety which is economic policy as a whole. Let us begin by identifying the dimension of the problem of unemployment. First of all, it demands the creation, each year, of 250,000 new jobs (750,000 youths : are reaching employment age as 500,000 older employees retire). In addition to this, the existing number of unemployed (1,800,000) must be reduced. Will this be possible? It is at all events necessarv. ' In the United States, between 1975 and 1981, 12 million jobs were creatQd, which ' is an average of 2 million jobs a year and the figure actually reached l.ast year. , Considering the ratio between the two populations, which is 4 to 1, this would ~ mean the creation in France of 500,000 jobs. I~ Let us not hear made to this comment the silly response, "But France is not the United States; France, for example, dces not have the energy resources!" Neither are we Japan, which has no raw materials in its own soil and very little tillable land. No! Economics is not a purely quantitative science. 7ts determinative _ factor is the human being, who~e intelligenc~ and will are variables. On a requirement of 300,000-500,000 jobs annually, the etfect of the state budget is negligible: For 1981 and 1982, the socialists themselves have not dared to project n~ore than 65,000 a year. Thus, the solution depends essentially upon the industrial and commercial sector. Now, what are the requisites for the creation of jobs in private enterprise? Their nature is twofold: Psychological and practical. Conf~dence must be reunited with means, factors which react upon each other. 1 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 FOR O~'FIC'IAi. USE ONLY Let us state the key term: There must be profits. Without the prospect of profits there is no confidence; witho ut grofits there are no means. ~dr Laurent Fabius writes: "The recovery of productive investment depends upon the strengthening of the prospec ts for demand. Currently, it is moderate, inasmuch aH the profit margin of business enterprises...is very much below its 1980 level." _ Mr Fabius expects the self-f inancing of business to improve substantially more rapidly. In plain words, this means th a t the Socialist government is counting on the re- c~very of profit margins. One o~ the basic as~umptions of the 1982 budge t is that, volumewise, the investments of the productive branches, other than the GEN's ~Large National Enterprises~ will increase by 2.9 percent, even though in 1981 they decreased by 4.9 percent. - Actually, this recovery is ne cessary. It is an essential condition for a 3.3-per- cent volume increase in GDP ~Gross Domestic Product~, without which the budgetary deficit will greatly exceed the projected one of Fr 95.4 billion. The battl.e for employment and against infla tion will then be lost. How then can the confidence and ihe means of the business community be reactiva- ted? This question ran like a leitmotif thraugh the president of the Republic's press conference: --"Our industry rnust be reac tivated A major effort was launched at the the start of Mr Pompidou's pre sidency, an effort that subsequently slowed and disintegrated Our domestic market must be recaptured. I repeat that, I em- phasize it! It shal.l be a ba sic objective 4� my policy throughout my seven-year term." True! True! But Mr Francois Mitterrar.d and his ministers must tace the fa~t realistically that in this re spect they are laboring under a handica~. What is a businessman? He is the central figure of a capitalist economy--the one who takes the initiative in organiz:ng people and capital around an idea to form an enterprise the ultimate ma ster of which is the customer. Now, what has been the central theme of the socialist doctrine? The "break with capitalism!" And this is still the intent of most of the new deputies, according to their own statements. Therein lies a gap. Actions will be necessary to bridge it. The proposed actions, as they are perceived by the businessmen, do not reassure them: nationalizations, their indemnizations, the wealth tax, "emergency" but regularly renewed supplementary allowances, etc. In concrete terms, the busine ssmen know they are entirely exposed to international competition: They must expor t 40 percent of our industrial and agricultural production, while 32 percent of the industrial products being sold on our domestic _ 2 F'OR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00854R000400070038-9 FOR OFFIC[AL USE ONLY market are of foreign origin. They have heard the prime minister, ~nc~ then the ~resident of the Republic, deplore the loss of 5 to 6 percent of the domestic market during the last 5 years--a loss with which they are thoroughly familiar, since it is they who have suffered it. It accounts for a loss of 300,000 jobs out of the approximately 6 million jobs in industry (construction industry excluded). But they also know it is not their fault. Industrial policy is inseparable from monetary policy. - why have MrRaymond Barre and Mr Jacques Delors, one after the other, professed the fetishism of the strong--the artificially strong--franc? Neither of them has been at the head of an enterprise whose competitors bzlong to a country with a lower inflation rate. Since 1978, French costs and prices have increased by 20 percent more than have those of the FRG. No amount of genius can surmount such a handicap. To save one's business, the only solution is to suspend one's own production and offer one's production network to his competitor as a channel for the marketing of the competitor's products. There is undoubtedly also the fact that both Mr Barre and Mr Delors are'dedicated Europeans: The EMS ~European Monetary System~ holds forth the hope qf a future common European currency. But a single,currency requires a single inflation rate. The businessmen have heard Mr Mitterrand talk to them of their "just interest," which in truth is indistinguishable from the interest of the enterprise and its jobs. They have heard him say that the currency is the "reflection" of the economy. Which means there is just one way of "defending the franc," which is: i Recognize the lessons of the past, align the currency exchange rate on a parity basis with its purchasing power; then, on this n~w basis, never again suffer an inflation rate higher than that of our neighbors. , Meanwhile, our monetary unrealism is inflicting upon our businessmen two sources of losses: A franc-mark exchange rate that is 20 percent too high for them, and ' interest rates which, at 18-23 percent levels, are unbearable. Take the draft budget: It contains, for 1982, a subsidy of Fr 1 billion for Renault that did not exist last year. It is a reflection of the general situa- tion. In his submittal of the 1982 budget, Mr Laurent Fabius evokes the cause-and-effect relationship between monetary parities and commercial competitiveness. H~~ points c~ut that the drop in European currencies with respect to the dollar and the yen will favor "profits in parts of the EEC's marketing zone." That is entirely true. Unfortunately, within the EMS, we the French are being penalized by our inflation rate. This monetary parities problem is the major problem in the competitiveness of our enterprises. 3 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400070038-9 FOR OFFICIAL USE ONLY ,___a u~., p~~~yo~~, ~P~ayed with the passing of It should 'nave been teso~~CU ~n ~�.~I. j each month. On the wealth tax, it was Mr Mitc.errand himself who react~d personally. As con- ceived by the experts, it was a machine designed to crush growth (see VALEURS ACTUELLES No 2338, 21 Sep: "A Question o� Confidence in Mr Mauroy"). D1r Jacques Attali, special adviser to the president, stated to MA7.'IN I~AGAZINE: --"we were about to commit an error. Public debate helped us avoid it." Briefly, owners of enterprises whose personal capital increases by more than 1.5 percent annually and is invested will be exempt from the tax on this portion of their wealth. It is a success for realism. As regards nationalizations, Mr Francois Mitterrand explained during his confer- ence that their intent was to stave off "internationalizations." For most businessmen, this poses the question: Yesterday, we were prevented from allowinq our.selves to be taken over hy the multinationals; tomorrow, are we not going t