French President Jacques Chirac was to name a new prime minister and order major policy changes on Tuesday, in an effort to claw back the political initiative after his crushing defeat over the EU constitution.

Aides said Chirac would address the nation late on Tuesday, an announcement that heralded the resignation of Prime Minister Jean-Pierre Raffarin, whose unpopular economic reforms and poor record on jobs were blamed in part for Sunday's result.

"The president will announce his decisions concerning the government on Tuesday," Chirac's office said.

He met separately all main candidates for the post on Monday, notably Interior Minister Dominique de Villepin, a Chirac loyalist, and former Finance Minister Nicolas Sarkozy, who is bidding to replace Chirac as president in 2007.

Chirac's foreign minister during the US-led war in Iraq, Villepin won plaudits at home for his elegant defense of France's opposition to the conflict. But he has little experience in the rough and tumble of domestic politics.

The career diplomat has never stood for election and has prickly relations with the parliamentary majority on which he will be reliant.

Defense Minister Michele Alliot-Marie is cited as a possible compromise candidate -- compatible both with Chirac and Sarkozy, leader of the ruling Union for a Popular Majority (UMP) party.

Among outsiders are Health Minister Philippe Douste-Blazy, Social Cohesion Minister Jean-Louis Borloo and National Assembly speaker Jean-Louis Debre.

Reform figurehead

Former Prime Minister Alain Juppe, who remains a close Chirac confident despite being forced out of active politics over a party-funding scandal, stressed a need for new economic policy.

"There has to be a change of policy, and that is the most difficult," he said on his personal Website. "It's clear that the priority of priorities is a general mobilisation for jobs."

Economists see Sarkozy as the only hope for far-reaching reform in France and job creation. He is the only top politician to criticize the country's generous social welfare system as a recipe for chronically high unemployment.

"The other names are not perceived as real change for France so there seems to be no other alternative to Sarkozy for anyone who wants to see reform in France," said Lorenzo Codogno, co-head of European economics at Bank of America in London.

Within minutes of the polls closing, Sarkozy, the most popular rightwing politician in France, appealed for a major change of direction, seen as a direct pitch for Raffarin's job.

"The 22 months between now and the presidential elections in 2007 must be used to work on a new hope," he said. "This assumes ... a major turnaround in our economic and social policies."

But his intense personal rivalry with Chirac is a huge barrier to his appointment.

Sarkozy makes no secret of his desire to replace Chirac come 2007 elections and has been campaigning for a preliminary election for the right to choose a single candidate before the next presidential election.

Chirac has yet to say if he will seek a third term.

The president may also decide that after a referendum during which voters clamored for more socially-orientated policies, France is not ready for the sort of free-market style reforms espoused by Sarkozy on the campaign trail.

(Chinadaily.com via agencies May 31, 2005)