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PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHFR #3360/01 1390737
ZNY CCCCC ZZH
P 190737Z MAY 06
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC PRIORITY 7572
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 04 PARIS 003360 

SIPDIS 

SIPDIS 

E.O. 12958: DECL: 01/01/2016 
TAGS: PGOV PREL ECON FR PINR EUN
SUBJECT: DOMINIQUE STRAUSS-KAHN ON CLEARSTREAM, HIS 
PRESIDENTIAL ASPIRATIONS, AND FRANCE: A COMPREHENSIVE 
SNAPSHOT OF THE POLITICAL SCENE 

REF: A. PARIS 3178 

¶B. PARIS POINTS OF 5/16 

Classified By: AMB Craig Stapleton for reasons 1.4 (B & D). 

¶1. (C) Summary: In a remarkably wide-ranging tour de force 
equally remarkable for its candor, former finance minister 
and leading Socialist party presidential candidate Dominique 
Strauss-Kahn shared with Ambassador Stapleton May 16 his 
views that: the Clearstream scandal is far from over; the 
Socialist Party can win in the 2007 presidential elections 
and that there will not be a repeat of 2002; his most 
difficult hurdle in his quest for the presidency will be to 
win his party's nomination over Segolene Royal; tackling 
significant reform in France is all the more difficult for 
being necessary; France's main problem is its current lack of 
confidence in itself; and the Chirac presidency looks 
increasingly to be marked by failure. End summary. 

Clearstream and the Censure Motion 
---------------------------------- 
¶2. (C) In a May 16 meeting with the Ambassador, Former 
finance minister, Socialist Party (PS) heavyweight and 
presidential contender Dominique Strauss-Kahn (known here as 
DSK) insisted on the seriousness of the censure motion vote 
tabled earlier by the PS, to be voted on later the same 
afternoon, in connection with the Clearstream scandal (see 
also ref A). While the outcome was a foregone conclusion, 
and such motions generally were little more than political 
"theater" given the institutional realities of the Fifth 
Republic, he asserted that it was nonetheless important. 
This was especially so given the decision by some leading 
center-right UMP governing party deputies (ref B) not to be 
present for the vote and center-right UDF party president 
Francois Bayrou's decision to vote for the censure motion. 

¶3. (C) Although DSK dismissed Bayrou's decision as political 
posturing to maximize his own first-round presidential 
election chances (DSK judged that Bayrou would receive only 
6-9 percent of the first-round vote), he judged that an 
alliance with the left -- even if Bayrou switched to 
supporting the right in the second round -- could potentially 
have significant ramifications for a left-right face-off in 
the second round of the 2007 presidential elections. He 
hedged about the impact in the end, however, noting that most 
UDF voters were probably more to the right than their leaders. 

2007 Between Center-Left and Center-Right 
----------------------------------------- 
¶4. (C) DSK was confident that the second round would be a 
contest between the UMP and the PS, notwithstanding the 
current popularity of extremist elements on the left and the 
right. But voters had learned from the 2002 elections, where 
their protest votes cost Jospin the elections. He predicted 
that the PS candidate would garner around 22-23 percent, with 
likely UMP candidate Sarkozy getting closer to 24-25 percent 
of the first-round vote. Chirac's initial 2002 score of less 
than 20 percent was, DSK asserted, an historical anomaly. 
DSK was adamant that far-right National Front leader 
Jean-Marie Le Pen would come in third. Even if he managed to 
exceed his initial score of 2002, it would still not be 
enough. 

Villepin Will Survive, Good for Left 
------------------------------------ 
¶5. (C) DSK acknowledged when asked that it would probably be 
better for the PS if Villepin stayed in office until the end 
of Chirac's term, given that the prospects were for "one year 
of nothing." Even if Chirac did decide to jettison Villepin, 
it is not clear whom Chirac should name as a successor. DSK 
concluded that, if the current government managed to survive 
until the beginning of the World Cup in late June, then it 
would sail through the July/August holiday period. When 
September rolled around, the electorate would be more focused 
on the 2007 presidential elections than trying to boot the 
incumbent government out of office. 

¶6. (C) Asked if this meant that the Clearstream affair would 
therefore soon be forgotten, DSK (in contrast to some) 
responded that "this was only the beginning." He was struck 
by secret investigator General Rondot's decision not to meet 
with the investigating judges, commenting that "this meant 
there was someone more he feared than the judges" (by 
implication, with something to hide). Explaining, he added 
that Rondot was a military guy who was obeying orders. 
Someone had told him to stonewall, which is why he had gone 
silent. Turning to a putative meeting on Clearstream between 
Chirac and Sarkozy, he said Chirac had asked Sarkozy what the 
risks were of Clearstream continuing, and Sarkozy had 
responded "100 percent." DSK concluded that, although the 
scandal might disappear from the public eye, the 

PARIS 00003360 002 OF 004 


investigations would continue. He lamented that France was 
not a more mature democracy like the U.S. DSK said that 
Sarkozy had rightly understood that voters felt touched by 
the scandal and were demanding justice, even if they could 
not understand it fully. His dilemma was that, if he stayed 
in the government, this would only bewilder voters and 
reinforce their alienation. Chirac, DSK continued, could 
have put an end to the story by changing prime ministers. 

Government Dead in Water 
------------------------ 
¶7. (C) Turning to Villepin, DSK recalled his last press 
conference during which he had touted small improvements in 
the unemployment situation. But this did not fool anyone, he 
asserted. DSK explained that it was difficult to flaunt a 
tiny improvement in one area when, at the same time, the 
overall economic situation was not good and deteriorating, 
and social tensions were on the uptick. Moreover, the 
controversy over the First Employment Contract, a measure of 
little significance per se, had now made further reform 
almost impossible. 

Admiration for Sarkozy 
---------------------- 
¶8. (C) DSK agreed that the PS had benefited from the 
Clearstream scandal, although he acknowledged that every 
party or figure had skeletons in the closet. He nonetheless 
complained that Sarkozy had overdone it in portraying himself 
as a victim and that this would reap little sympathy on the 
left. DSK characterized Sarkozy's overall strategy simply as 
one of being determined to win, but readily admitted that he 
was an extremely talented politician who had managed 
successfully to turn voters' concerns about growing crime, 
for example, to his own benefit. DSK expressed astonishment 
that Sarkozy was running on a platform of claiming that he 
"knew the solutions to France's problems, but would not 
reveal or implement them until elected." This was a 
permissible strategy for the opposition party, he complained, 
but was hard to sustain for someone already in power. 

Chirac Prefers Left to Sarkozy 
------------------------------ 
¶9. (C) DSK also judged that Sarkozy had positioned himself 
so far to the right that he would have difficulty moving back 
to the center. He claimed there was a large number of Chirac 
supporters who would not vote for Sarkozy as president. DSK 
vigorously affirmed that Chirac was "an objective ally" who 
would prefer a victory of the left to having Sarkozy succeed 
him for a number of reasons: he did not deem Sarkozy a 
"worthy" successor (just as Mitterrand had favored Chirac 
over Jospin); he was a "radical-socialist" (in the French 
sense) at heart in any case, in contrast to Sarkozy, the free 
market "liberal." Chirac also feared Sarkozy was more likely 
than the left to pursue him in the courts for past scandals 
in which he was implicated. (Note: The French Radical party 
fits loosely into the Christian democratic tradition of 
capitalism with a strong social component.) 

Royal Leading for Now, But... 
----------------------------- 
¶10. (C) Asked about the presidential nomination process in 
the PS, DSK referred to Segolene Royal's commanding lead in 
public opinion polls as a "collective hallucination" and 
reminded the Ambassador that, in France, those who were poll 
leaders six months before the elections -- Giscard d'Estaing 
in 1981, Balladur in 1995, and Jospin in 2002 were the most 
recent examples -- had invariably lost. DSK predicted that 
Royal would eventually crumble and that, if nominated by the 
PS, would not survive against Sarkozy. He noted wryly in 
that Sarkozy had already reached the same conclusion, which 
explained why he continued to extol her qualities as a 
potential candidate. DSK added that while she had a decent 
chance of winning the "internal" debate within the PS, she 
would have much more difficulty winning the "external" debate 
with Sarkozy, even with good advisors and handlers. 

Not of Presidential Timber 
-------------------------- 
¶11. (C) Within the PS, according to DSK, Royal was not as 
popular, as she drew much of her public support from the 
right and center. He claimed that 80 percent of the party 
was not behind her, and dismissed announcements of support 
from various mayors as falling far short of a snowball 
effect. DSK asserted that activists in the party "sensed," 
for example, that Royal could not imagine herself in the 
international arena, for example, negotiating gas agreements 
with Putin; good advisors would not be able to make up for 
her rather shallow experience. He noted that she had not 
become the President of the Poitou-Charentes region by 
defeating former prime minister Raffarin, as has been 
claimed; she had simply won the seat that he had vacated. 

PARIS 00003360 003 OF 004 


She had never won a tough election battle, he contended, and 
there were no assurances that she would be able to do so. He 
described her several times as "fragile but not in the 
feminine sense," not up to a real debate on the issues. The 
problem, he admitted readily, was that she was currently 
popular and that even her most banal pronouncements -- such 
as being a "Blairite" in the positive sense when it was he, 
DSK, who had carried this label for years -- were greeted as 
major media events. 

DSK's Strategy for Winning 
-------------------------- 
¶12. (C) Asked to outline his own strategy for winning the 
presidency, DSK said that the party was currently divided in 
thirds between supporters of Royal, of him, and of former 
prime minister Laurent Fabius. His hope was that a debate -- 
the holding of which he admitted would be difficult to 
arrange -- among candidates within the party would produce a 
choice based on substance and that candidate's potential for 
defeating Sarkozy. He did not believe Royal could win on 
either count. New PS members had joined on the basis of 
being able to participate in the outcome, and this could not 
occur without a debate; if Royal tried to prevent a debate, 
then she would be perceived as hiding something. DSK 
summarized his strategy as getting past the highest hurdle 
first: the key for him would be to come in at least second in 
the initial first round of the party's selection (not at all 
a sure thing), and then win in the second round. (Note: The 
clear implication was that if DSK and Royal survive the first 
round, the supporters of Fabius would shift their support to 
DSK in the second round.) Similarly, in the presidential 
elections, if DSK made it to the second round (which he 
believed would be possible for whoever was the PS candidate), 
then he would be the best positioned to defeat Sarkozy in the 
final round. 

Jospin Out; Hollande's Mistakes 
------------------------------- 
¶13. (C) DSK did not believe that former prime minister 
Jospin would be the party's nominee, as he could not seek the 
nomination directly and the party was unlikely to offer it to 
him on a platter absent some serious crisis. DSK believed 
that he would benefit most from Jospin supporters, given 
Jospin's opposition to Royal and Fabius. DSK was critical of 
First Secretary Hollande, saying that he had yielded to the 
temptation of being a presidential candidate himself, when 
more even-handed treatment of other candidates would have 
assured him a place as prime minister in any new government 
and kept alive his presidential aspirations for the future. 
Hollande was described as a good tactician but poor 
strategist, who would be left out in the cold if Royal won, 
given his status as her domestic partner. DSK claimed that 
Hollande had initially proposed Royal's candidacy as a way to 
preserve his own chances, but that the sorcerer's apprentice 
had taken on a life of her own. This attempted 
"privatisation" of the party's agenda had damaged Hollande's 
reputation. 

Domestic Situation Key 
---------------------- 
¶14. (C) Looking to the 2007 presidential elections, DSK 
criticized Villepin for putting students in the streets over 
a triviality (the CPE, or First Employment Contract) rather 
than something important and more worthy of a fight. The 
main issue, DSK said, is economic growth, not this or that 
reform of the labor code. France needed to focus on basic 
reforms, such as of its universities, not on whether a youth 
under 26 could be fired without a proper explanation. Given 
the overall sense of insecurity in France, particularly among 
parents who feared that their children would have worse lives 
than they, DSK thought foreign policy would play only a very 
modest role in the elections, notwithstanding the public's 
interest in Iran and terrorism. 

¶15. (C) Nor did DSK believe that Europe would be a major 
election issue, since France was currently too obsessed with 
its own situation to look more broadly even toward Europe. 
DSK said the 2007 presidential elections would evolve around 
the same set of issues, with the left and right platforms 
being mirror images of each other. Sarkozy would emphasize 
immigration and security, and the left would emphasize 
employment and integration. He predicted that if Sarkozy 
succeeded in getting voters to focus on security, then he 
would win, whereas the left would need to emphasize the 
economy. He said the left had lost in 2002 because it had 
allowed the right to set the agenda. 

Whoever Wins Will Have it Tough 
------------------------------- 
¶16. (C) DSK said that whoever won the 2007 elections would 
have little room for maneuver in effecting change. Things 

PARIS 00003360 004 OF 004 


would not be as easy as in 1997, when it was possible to 
stimulate the economy out of recession. The left would need 
to take risks if elected, and work harder to reform the 
system. It would be critical to act quickly, based on the 
mandate of an election. For the mid-term, DSK cited the 
importance of more investment in growth sectors. Over the 
shorter term, it was important for French companies to regain 
confidence in France. He blamed Chirac for creating anxiety 
in business and cynicism among the elites. Part of Royal's 
current success was that she had tapped into the country's 
need to have pride in itself. DSK suggested that little 
would remain of Chirac's European legacy besides a failed 
referendum and a proposal to reduce the value-added tax for 
French restaurants. France, he said, needed someone who 
could show the way forward. Sarkozy could do that, he said, 
but Royal would be unable to do so. There was not enough 
"beef" there. 

One Last Bold Step from Chirac? 
------------------------------- 
¶17. (C) DSK concluded with the thought that it was not too 
late for Chirac to show true leadership. He could quit now, 
call for a renewal of France, call for early elections, and 
announce his resignation for a date that would permit both 
sides to prepare properly for them. In this way he could 
serve France and save his reputation. DSK stopped there, 
obviously concluding, but not saying, that Chirac would never 
do it. 

Comment 
------- 
¶18. (C) DSK was lively and engaging, full of good humor, and 
remarkably modest and without pretensions. That may prove to 
be his undoing. While he was openly critical of Royal, he 
also readily admitted that she was doing many things right. 
And while he clearly viewed himself as the right man to lead 
France, he seemed reluctant to beat his own drum and was 
spare with prescriptions about what he would do if chosen to 
be France's next president. The impression left was that, 
while he may be the most capable and qualified candidate 
among the Socialists, he lacks the fire in the belly that 
would propel him to victory. He is one of those who would 
clearly be better governing than campaigning -- and therefore 
may never get the chance to govern. 


Please visit Paris' Classified Website at: 
http://www.state.sgov.gov/p/eur/paris/index.c fm 

Stapleton