French coalition rift widens over EU budget pact

PARIS (Reuters) - President Francois Hollande's government demanded on Monday its Green allies fall into line over European Union policy after the ecologist party said it would oppose a European Union budget discipline pact in a vote next month.

While the pact is set to pass with votes from Hollande's Socialists and from the right, the Greens' move is the most open defiance of Hollande's authority yet from within his four-month coalition and comes as his popularity ratings are plummeting.

While no admirer of an EU austerity accord created during the rule of his conservative predecessor Nicolas Sarkozy, the Socialist Hollande backs the plan to return to balanced budgets as a necessary step to easing the euro sovereign debt crisis.

"I am calling on all members of the EE-LV (Europe Ecology- The Greens) to show some coherence and, frankly, solidarity," said government spokeswoman Najat Vallaud-Belkacem.

The Greens' national council at the weekend rejected the pact agreed by EU leaders last March as the wrong response to Europe's rising debt burden and called for talks on an undefined "new European agenda" to tackle the crisis.

Although some Green deputies have threatened for weeks to at least abstain in the vote, the decision stunned even some within the party. Veteran ecologist Daniel Cohn-Bendit called the move "dramatically pathetic" and suspended his party membership.

Ties between Socialists and Greens have been strained by a statement by Industry Minister Arnaud Montebourg, a Socialist, suggesting nuclear power was an energy of the future - comments the ecologists feared put in doubt the government's commitment to reducing France's longstanding reliance on the energy source.

Opposition conservatives leapt on the Greens' move on the EU pact as proof of a split within the coalition, and called on their two government representatives, Housing Minister Cecile Duflot and Development Minister Pascal Canfin, to step down.

The two ministers were not immediately available for comment but the Greens' parliamentary group leader Francois de Rugy rejected calls for them to resign and said the Greens were within their rights to reject a pact which they never supported.

"The European pact was not part of the coalition agreement we made with our Socialist allies. This pact is a legacy of the Sarkozy era, it's even dubbed the 'Merkozy pact'," he told Canal Plus television, using the play on words supposed to show Sarkozy's close ties with German Chancellor Angela Merkel.

BAD NEWS TO COME

A survey by Ifop pollster released on Sunday showed Hollande's popularity fell to 43 percent from 54 percent in August, the lowest level since he took office in May.

Hollande issued an ambitious pledge this month to revive the economy in two years, but he also conceded that growth next year would fall short of an existing one percent official target, coming in around 0.8 percent instead.

August jobless data due on Wednesday are widely forecast to add to the gloom, showing unemployment, already at 13-year highs, rising above the symbolically important three million mark.

Daniel Boy, director of research at France's Sciences-Po university, said the sheer lack of good news on the horizon for Hollande meant his ratings were likely to fall further.

"The risk is that we continue to see a trend of very low ratings ... and that in turn will make it even harder to take difficult decisions on budgetary rigour," Boy added.

Hollande's government will unveil on Friday how plans to claw in the 30 billion euros ($39 billion) needed to cut its deficit to three percent of gross domestic product in 2013 en route to a balanced budget by the end of his five-year term.

It has ruled out making what would be deeply unpopular increases to value-added tax and the CSG social levy, a tax payable by all employees, to narrow the deficit.