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A furore over alleged cash donations by France's richest woman, Liliane Bettencourt, to conservative politicians has shaken President Nicolas Sarkozy's government and driven his approval rating to a record low.The allegation has raised pressure on Sarkozy to bring forward a reshuffle of the government, already battered by sleaze allegations, which is due to put an unpopular pension reform to parliament in September, followed by an austere 2011 budget.Below are some questions and answers about the potential policy implications of the scandal:* WILL THE GOVERNMENT FALL?Two junior ministers resigned on Sunday over expenses scandals but that did not relieve pressure on the government.Analysts saw the twin resignations as an attempt by Sarkozy to shield Labour Minister Eric Woerth, whose reputation has been tarnished by allegations of illegal cash donations by Bettencourt.Prime Minister Francois Fillon ruled out any immediate cabinet reshuffle and an official from Sarkozy's office told Reuters the president would not change his government before October. A number of analysts, however, doubt the government will be able to withstand the pressure for that long."Sarkozy needs to reshuffle his government for the immediate reason of trying to re-establish control both within the government and with the governing party, and second to try to stop his descent in the opinion polls which has been in free-fall," said Robert Ladrech, senior lecturer in politics at Britain's Keele University.* IS THE PENSION REFORM COMPROMISED?Woerth, at the centre of the Bettencourt affair, is the minister leading the pension reform which brought hundreds of thousands of protesters onto the streets of France in June."This (the scandal) may reinforce the willingness of large parts of public opinion to fight the pension reform after the summer recess", said BNP Paribas analyst Dominique Barbet.Ladrech said the row might delay the pension reforms but that they would ultimately go ahead, although it would be hard for Sarkozy to keep Woerth now.The government is due to approve a draft bill next week which will raise the minimum retirement age to 62 from 60, raise the contribution period for a full pension and gradually increase civil servants' contributions to private sector levels.The pensions bill is seen as one of the most important reforms in Sarkozy's bid to modernise the economy and clean up public finances. A failure would be a major setback for the president.France has a long tradition of strikes and protests that have forced governments to abandon key pieces of legislation.In 1995, protests against a proposed reform of social security and early retirement forced President Jacques Chirac to retreat. Mass demonstrations later forced him to drop plans for a youth employment contract with less job protection.* WHAT DOES THE SCANDAL MEAN FOR PLANNED BUDGET CUTS?The government is trying to bring public finances under control and has announced cuts in civil service jobs and less social spending in the 2011 budget.Paris has pledged to bring the deficit down to 6 percent of gross domestic product by the end of 2011, from an expected 8 percent this year, and below the EU limit of 3 percent in 2013.The budget is based on a GDP growth forecast of 2.5 percent in 2011, which many economists see as over-optimistic. Slower growth could force the government to further cut back tax breaks and curb spending to meet its budget commitments.However, with presidential and parliamentary elections due in spring 2012, Sarkozy may be loath to tighten the screw."This prospect (the 2012 elections) does not help when it comes to implementing massive fiscal tightening," Barbet said in a research note.* IS THERE ANY CHANCE SARKOZY WILL HAVE TO RESIGN?French presidents are immune from prosecution in ordinary courts while in office and can only be tried by a special court made up by members of parliament.Since Sarkozy's centre-right coalition has a majority in both houses of the legislature, it seems very unlikely that he could be forced to resign.Sarkozy's widely expected bid for re-election in 2012 could, however, be undermined by the Bettencourt affair if further evidence emerged of illegal campaign funding or political meddling in her tax and legal affairs.
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