Enlarge imageBy Jon Boyle
PARIS (Reuters) - French Finance Minister Herve Gaymard has resigned over his handling of a scandal about his state-paid luxury apartment that rocked a conservative government as it forces unpopular cost-cutting measures on a restive nation.
"I have decided to hand to the prime minister my resignation as minister of economy, finance and industry," he said in a statement on Friday.
"I am aware of having made blunders and a serious error of judgment concerning the conditions of my official accommodation."
Prime Minister Jean-Pierre Raffarin’s office said he had accepted the resignation, but it was not immediately clear when the government would name a replacement.
The move came less than five hours before Gaymard was to go on national television to explain why he, his wife and eight children had moved into a vast 14,000-euro a month apartment paid for by the cash-strapped state.
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French ministers are entitled to official accommodation but the price of his apartment, even for central Paris, was deemed unacceptably extravagant by many critics once it was known.
The monthly rent on Gaymard’s flat is roughly equivalent to the annual minimum wage for a worker in France.
Gaymard, 44, had denied any wrongdoing but quit the 600 sq m split-level home in a chic Paris district at the centre of the scandal that erupted last week.
The extra costs of converting the flat to his family’s needs dismayed public and politicians alike. His pledge to reimburse the costs failed to abate the sense of shock.
PROPERTY PORTFOLIO
Gaymard’s situation was aggravated by his flip-flop accounts of the status of his property portfolio and personal finances, prompting Raffarin to give him until the end of the week to end a controversy that was harming an already unpopular government.
His fate appears to have been sealed by a report that he owned five homes, including another large flat in central Paris, coming at the same time as a glossy society magazine quoted him as saying "I’m not loaded" and that the row would not have erupted if he had had the money to buy his own apartment.
That from a man who, aides confirmed, owns five homes, his constituency office and was rich enough to pay a wealth tax last year that applies to people with sizeable assets in France.
Gaymard insists his comments have been misconstrued. Aides said he would appear on TF1 evening news as planned.
SYMBOL OF INEQUALITY
Adding to the gloom surrounding the man running France’s economy, official unemployment -- voters’ top concern -- hit a five-year high in France at 10 percent and business confidence unexpectedly dipped.
The scandal has been hugely damaging to a government beset by sluggish growth, high unemployment, street protests over its economic reforms and facing a tough battle to convince voters to approve the EU constitution in a referendum.
Support from Gaymard’s cabinet colleagues has been lukewarm in recent days and few expressed regret at his departure.
"It is a responsible, dignified, respectable and honest decision," said his predecessor Nicolas Sarkozy, now head of the ruling UMP party.
Three months ago, things were so different for Gaymard.
Promoted by President Jacques Chirac from farms to finance, the fiercely loyal man appeared the perfect replacement for Sarkozy. But his disastrous public relations, epitomised by his claim to be as "clean as a new penny", shredded his reputation.
Speculation immediately began to swirl over who would become France’s fourth finance minister in about a year.
Among the possible candidates are Budget Minister Jean-Francois Cope, France Telecom chief Thierry Breton and Gilles Carrez, a member of the parliamentary finance committee.
Economists had worried that the longer the scandal dragged on, the tougher the government would find implementing the major reforms that are key to robust, sustainable growth. Few, however, saw any short-term damage from Gaymard’s departure.
"He hasn’t had time to settle in, to set up any system whatsoever, so in a way it is not that bad," said Philippe Waechter, chief economist at Natexis Asset Management.
