(Reuters) - Michel Sapin, favorite to be named French finance minister this week, is a disciple of European integration who revels in his nickname the "head chopper" earned two decades ago when he cut down to size speculators attacking the franc.
With the euro zone .. http://www.reuters.com/subjects/euro-zone .. crisis flaring and investors scrutinizing France's deficit, Sapin is an outspoken advocate of restoring the health of the country's finances by raising taxes on the rich while gradually reining in government spending.
But the stocky 60-year-old, an archaeologist with no formal training in economics, wants to move away from blanket austerity measures which he says risk plunging the euro zone into a deep recession, and introduce selective measures to stimulate growth.
An obsessive collector of antique coins, Sapin is no stranger to monetary crises, having served as finance minister in 1992-93 at the height of speculative attacks on the European Exchange Rate Mechanism (ERM).
Acting closely with then-German finance minister Theo Waigel, he repulsed speculators trying to break the French franc's parity with the German currency, the deutsche mark, by selling marks en masse until the bank traders gave up.
"During the French Revolution, speculators were called agitators and had their heads cut off," Sapin told Reuters in an interview. "Now we don't cut their heads off we just make them lose money, but after that I became known as the head chopper."
Sapin said the lesson learned that crisis was the power of national governments to overcome market speculators by following up promises with actions. "Contrary to popular opinion, politicians are not powerless in the face of markets," he said.
CLOSEST POLITICAL ALLY
Bald and bespectacled, Sapin is regarded as Hollande's closest political ally, having befriended him in 1977 when they shared a barrack room during their military service and fought pillow-fights together.
After attending the elite ENA civil service academy alongside Hollande, Sapin became the youngest member of France's parliament at elections in 1981 which swept Socialist Francois Mitterrand to the presidency. He climbed quickly through the party ranks, holding several ministerial posts.
Deliberate and methodical, friends say Sapin is the perfect foil to the sometimes haphazard working style of Hollande. The pair are so close that Hollande was a witness at Sapin's December wedding to a journalist.
They also are ideologically aligned. A convinced European, Sapin backs Hollande's call to renegotiate an EU budget-discipline pact to refocus it on economic growth and says greater fiscal federalism is indispensable to support the euro.
Sapin speaks proudly of being finance minister in 1992 when the Maastricht Treaty was signed, setting the path to the single currency which he regards as an important symbol of European integration which must be defended.
"He is a close friend, the one who is on the same wave length as Francois," Hollande's long-time companion, Valerie Treirweiler, who is also a journalist, said of Sapin.
DEFICIT "ABNORMAL AND IRRESPONSIBLE"
Sapin, like the president, comes from the Socialist Party's moderate wing, but is seen as capable of reaching out to those further to the left, such as party secretary Martine Aubry, who ran against Hollande in the presidential primary.
"Michel is a regulator in economics but also in human relations," said Guillaume Bachelay, Aubry's ex-speechwriter.
Sapin regards improving France's flagging economic competitiveness as a priority but does not see rising wage costs as the root of the problem, saying instead that more spending is needed on education and research to improve the quality of industrial production.
He argues that Sarkozy's austerity was unfair, punishing the poor more than the rich, and wants a more just tax system with fewer exemptions for the wealthy and big companies. He wants to tighten up the social security system, which runs a perennial deficit.
"France's deficit is astronomical, abnormal and irresponsible" Sapin said in a recent book.
Member of parliament for Indre, in central France, .. http://www.reuters.com/places/france .. and mayor of Argenton-su-Creuse, Sapin admits openly to having no training as an economist. When he became finance minister in 1992, aged just 39, Sapin admitted his lack of formal qualifications to ministry experts on taking office.
"I said the only thing in my favor is that I am a coin collector and I know what false money looks like so I will know how to defend the franc," he told Reuters. "And we defended the franc, even against the Anglo Saxons."
(Reporting By Daniel Flynn; Editing by Michael Roddy)
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