Chirac allies scarred by tales of 'French Watergate'

PARIS - Just three years after being hailed as the golden boy, Prime Minister Dominique de Villepin is fighting for his career - and he may be only the first casualty in a struggle that may reshape France's political landscape.

Villepin is mired in claims he used the French intelligence services to try to smear arch-rival for the presidency, Interior Minister Nicolas Sarkozy.

The extraordinary affair - deservedly dubbed the French Watergate - involves false claims of financial sleaze, spies and coverups.

At the UN in 2003 as Foreign Minister, the suave, self-confident Villepin was acclaimed for refusing to give France's backing to the Iraq war.

Today, his popularity rating has slumped 30 points in four months, making him the most disliked Prime Minister in the 47-year history of the Fifth French Republic.

The decline began last year with his disastrous handling of riots on rundown housing estates and accelerated in March, when street protests forced him to backtrack on job security laws.

This time, it seems that only a miraculous charm offensive or the intervention of his mentor, Jacques Chirac, can save Villepin's skin.

The affair began in 2004, when investigator Renaud van Ruymbeke received a CD-Rom accusing Sarkozy and other politicians of having secret accounts with Luxembourg financial firm Clearstream containing kickbacks from a US$2.8 billion ($4.4 billion) sale of frigates to Taiwan.

A Van Ruymbeke probe concluded the CD was a hoax but it is now seeking to identify its origin. In so doing, it has delved ever deeper into the inner circles of power, exposing some unpleasant and malodorous activities.

Last week, Le Monde reported that former senior spy Philippe Rondot told the probe that Villepin had asked him in 2004 - on Chirac's instructions - to see whether Sarkozy was included in the Clearstream files.

As Villepin was Foreign Minister at the time, the stunning implication is that he was using the French intelligence services to conduct a personal vendetta against Sarkozy.

Villepin and Chirac deny the report but, given their deep unpopularity and known dislike for Sarkozy, sympathy has been hard to come by.

For months, Villepin and Sarkozy have been trading blows, discrediting each other and their policies ahead of next year's presidential campaign.

Sarkozy bears a scarcely-veiled contempt for Villepin, among the loyalists who have benefited from Chirac's scandal-tainted decades as mayor of Paris, PM and President.

Villepin's nickname for Sarkozy, according to press leaks, is "le roquet" - a term for a yappy, runtish dog, and a clear reference to the minister's overweaning ambition and shortness.

Chirac runs the risk of investigation for alleged financial misdeeds in the past but is immune from prosecution so long as he stays in office.

Many people have assumed that Chirac is scheming to ease Villepin into the presidency to secure himself a trouble-free retirement.

Thus Villepin and Chirac are clutching onto each other to ensure their survival while Sarkozy prowls around like a lithe, carnivorous beast.

Several newspapers have reported that Sarkozy blames the Chirac clan for implicating him in Clearstream and using leaks and skulduggery to help wreck his marriage.

"One day, I'll find the bastard who set me up and he'll end up on a butchers hook," Sarkozy is quoted as having said last year.

The stench of rot, double-dealing, and plotting from a sick and unpopular Government is pervasive.

Mainstream politicians, who face legislative elections shortly after the presidential ballot, fear they will be punished by the public's disgust.

But others hope the crisis will provide the chance to scrap the Fifth Republic's monarchical constitution which allows the President to name the Prime Minister, approve the Cabinet and dissolve Parliament at whim.