The politics of franc fort: French European monetary policy during the Mitterrand era, 1981-1995

French European monetary policy during the Mitterrand era (1981--1995) was symbolized by the franc fort (strong franc) policy and the commitment to the European Monetary System (EMS). Since the policy turnaround in 1983, the priority of French economic policy had been fixed at exchange rate stability and low inflation. Both the left and right wing governments pursued the franc fort policy even at the cost of employment and social welfare. This dissertation explores the political nature of the franc fort policy, which has often been neglected in economic and sectoral approaches. The economic rationale of the franc fort policy was sustainable only when a strong political consensus existed. In this study, I examine the policy preferences of domestic political actors and their relative capacities in European monetary policy-making. Then I explore the factors shaping the domestic consensus in support of the franc fort policy.;No single political actor could dominate French European monetary policy. The franc fort policy needed a broader domestic consensus based on a fusion of diverse interests. The combination of economic rationale and political interests occurred in part because of the existence of a core policy group based on the grands corps. Interpenetration between politics and administration through ministerial cabinets provided an ideal environment in which to build a consensus on the franc fort policy at the elite level. Private-sector interests were usually reflected through the bureaucracy and the division between public and private interests was blurred by the frequent pantouflage (move of bureaucrats into the private sector). Domestic consensus in support of the franc fort policy also required a certain degree of insulation of policy-makers from the public. The preference of the public in European monetary integration was not clearly articulated and often blurred with general issues of European integration. Taken together, these domestic factors provided an impetus for the franc fort policy. By exploring the franc fort policy as a test case, this study tries to build a theoretical framework which combines political and economic interests in a broader perspective of domestic-international relations where those two interests are intertwined.