France's new Socialist govt gets down to work

New French President Francois Hollande and his Socialist government adopted a 30 percent pay cut Thursday, a gesture of shared sacrifice by leaders who must now reduce the country's massive debts and tackle spiraling unemployment.             

The new Cabinet's first meeting, just a week after conservative former leader Nicolas Sarkozy last convened his government, marked a sharp shift in France's power structure and strategy for solving Europe's debt crisis and restructuring the economy.              

The new finance minister reduced hopes in some other European capitals that Hollande would ease off on his push for a renegotiation of a hard-won European treaty on trimming budgets.                      
Hollande, elected May 6, has said the treaty focuses too much on spending cuts that are stifling growth and making the debt crisis worse, and argued for stimulus spending as well. He and the leaders of Germany, Britain, Italy and the European Union will hold a conference call later Thursday to discuss Europe's economic strategy ahead of the Group of Eight summit in the United States.               

Hollande promised during his campaign to protect France's elaborate social benefit system even vowing to roll back some of Sarkozy's cuts  while also continuing to trim the country's deficit. France hasn't balanced a budget in nearly 40 years, and Hollande has promised to eliminate the deficit in 2017.                

It will be a difficult balancing act for the Socialists, who are taking power in the middle of a global economic slowdown and Europe's debt crisis. France's GDP did not grow in the first quarter of the year. Economists say growth will require deep reform to France's inflexible labor market  and it's unclear if Hollande is willing to take that on.                

Ministers leaving the Cabinet meeting said the government started by adopting a 30 percent pay cut and signing an ethics charter to spend less money on travel and on their ministries.               
But as a series of handovers of power took place Thursday, the emphasis seemed to be more on fulfilling campaign promises to enhance or at least protect benefits than on cutting spending.                  
Employment Minister Michel Sapin said his major challenge would be reducing unemployment that has reached 10 percent and allowing people who started working at a young age to retire earlier than a law passed under Sarkozy currently allows them to. Sarkozy faced down unions and strikes to push the retirement age to 62 from 60, saying it was the only way to save the system.               

The new government will also confront major international questions, like Hollande's promise to withdraw troops by the end of the year from Afghanistan.               

Defense Minister Jean-Yves Le Drian, an old friend of Hollande's, and Foreign Minister Laurent Fabius, a former prime minister, will surely wade into that debate, which will be raised at a NATO summit this weekend in Chicago.                  

Many NATO partners are unhappy with Hollande's decision. France had previously committed to keeping troops in the country until 2013 already faster than the alliance's timetable.                 
Hollande leaves Thursday night for Washington for a meeting with President Barack Obama, then attends the G-8 and NATO summits.      

AP