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French government faces growing unrest from party ranks

France's President Francois Hollande speaks at a joint news conference with Germany's Chancellor Angela Merkel (not pictured) during a Europ
France's President Francois Hollande speaks at a joint news conference with Germany's Chancellor Angela Merkel (not pictured) during a Europ

PARIS (Reuters) - France's newly reshuffled Socialist government faces growing unrest from within its own party and from former coalition allies the Greens ahead of a confidence vote on Tuesday which will test France's ability to push ahead on reforms.

President Francois Hollande, whose administration has failed to lower stubbornly high unemployment in Europe's second-biggest economy after two years in power, is staking his credibility on a "responsibility pact" to cut companies' payroll taxes if they boost hiring in return.

New Prime Minister Manuel Valls, who was put in charge after Socialists suffered a rout in local elections last week, has been tasked with helming the reform despite resistance from the Left and after the Greens declined posts in his government in protest at his centrist stances.

Now around one hundred Socialist lawmakers have signed a manifesto calling for a change of policy ahead of Tuesday's vote, leaving open the possibility of abstaining unless Valls pledges to do more to fight German-led demands for budgetary rigor across Europe and to re-focus on growth and jobs.

"The local elections were a rebuke of (the current) economic policy and the ruling majority's disarray," Socialist deputy Pouria Amirshahi said. Amirshahi, who was one of the first to begin drumming up support for a new "contract" with Valls' government, said around one hundred deputies had joined.

"There will be no blank cheque (for the government)."

Hollande originally intended to tie the vote of confidence to a subsequent vote on the responsibility pact.

However, that would have raised the risk of rejection in parliament due to opposition from the far-Left and the Greens. Instead, Tuesday's vote will be on the general policy statement Valls is due to make in parliament the same day.

The Socialists retain a slim majority in the National Assembly, the lower house of Parliament, even without support from the Greens: they hold 291 seats out of a total of 577. The Greens hold 17 seats and the centre-left Radical Party, which would tend to vote with Valls, also holds 17 seats.

The government's ability to win the vote depends on limiting abstentions or opposition from within the Socialists' own ranks. If the Greens and the Radicals vote with Valls, there would need to be over 30 dissenting votes from Socialists to torpedo Valls' government and trigger a dissolution of parliament.

Valls pitched a message of reconciliation on Sunday, telling newspaper Journal du Dimanche: "If (the Greens) remain in the majority by voting their confidence, they will become a part of it. The bigger our majority, the more effective we will be."

Although Amirshahi said that voting outright against the government would be irresponsible, he left open the possibility of abstaining from voting, an option he said would be preferable to many of those who have signed the manifesto.

New Finance Minister Michel Sapin is due to travel to Berlin on Monday for talks with his opposite number Wolfgang Schaeuble, whose backing he will seek for France's call to re-negotiate a pledge to bring its public deficit within EU limits by 2015.

EU Economic and Monetary Affairs Commissioner Olli Rehn, the only official who can propose a deadline revision, told Reuters on Saturday he saw no reason to extend France's deadline.

Data last week showed France's public deficit stood at 4.3 percent of output in 2013, above its forecast for the year and well short of the EU-sanctioned threshold of three percent.

(Reporting by Emmanuel Jarry and Gregory Blachier; Writing by Lionel Laurent; Editing by Mark John and Stephen Powell)

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