Philippe Douste-Blazy, a 52-year-old former health minister who is loyal to Chirac but a novice in international affairs, replaced Michel Barnier as foreign minister.

 

Douste-Blazy faces the tough task of maintaining France's influence in the EU despite Sunday's referendum defeat, which has left Chirac's popularity at an all-time low and may have killed his chances of winning a third term as president in 2007.

 

In a government list read out by an aide on the steps of Chirac's Elysee Palace, the head of state confirmed presidential hopeful Nicolas Sarkozy in his post as interior minister even though they could be rivals in a 2007 presidential race.

 

Sarkozy, the ambitious head of the ruling Union for a Popular Movement (UMP) party, is the government's number two under Prime Minister Dominique de Villepin, a Chirac loyalist.

 

Musical chairs?

 

New to government were Christine Lagarde, Brice Hortefeux, and Christian Estrosi, the latter two considered close allies of Sarkozy's who urged a new approach to politics that took heed of the "brutal message" sent by voters.

Christine Lagarde was named
new Minister for External Trade

 

Finance Minister Thierry Breton, Defence Minister Michele Alliot-Marie, Budget Minister Jean-Francois Cope and Farm Minister Dominique Bussereau kept their posts.

 

Opposition deputies dismissed the government's chances of turning the economy round and argued that the same old faces would carry out the same failed policies.

 

"It's a simple game of musical chairs," the Communist Party said. "There's nothing to expect from this new government which completely ignores the will expressed by the French people."

 

Chirac has ordered Villepin's slimmed-down cabinet to focus on voters' main concern - cutting the unemployment rate of 10.2% which helped fuel opposition to the EU treaty and is dragging down economic growth.

 

"It is an absolute requirement of our social pact so that the French people regain confidence in the future," Villepin said on a brief visit to an unemployment office outside Paris.

 

He will outline his policies to parliament on 8 June and has given himself 100 days to restore voters' confidence.

 

Seeking results

 

His new government was announced against a backdrop of rail chaos as unions from the state rail company SNCF protested over pay and 3000 job cuts this year.

 

Services were severely disrupted but the Eurostar rail link to Britain was unaffected. 

 

"We have to profoundly change our way of taking action, to be accountable, to find solutions in order to obtain results," Sarkozy declared on television minutes after the cabinet was announced.

 

"As interior minister and president of the UMP, I want to give people faith again in politics," said Sarkozy, 50, who tacitly confirmed his ambition to run for president.

   

"I've always said that I was elected as leader of the UMP to lead my political family to victory, not defeat. So we'll choose the best person and we'll unite behind that person."

 

Undermining French influence

 

Chirac, 72, has yet to say whether he will run again, but he has been irritated by Sarkozy's clear ambitions to succeed him.

The referendum results may
undermine French influence

 

The EU charter defeat has undermined French influence in Europe and defending the country's interests will be the key challenge facing new foreign minister Douste-Blazy.

 

He built his reputation as an efficient minister by guiding health reforms through parliament last year despite protests.

 

He will have at his side new European Affairs Minister Catherine Colonna, a former diplomat who spent nine years as Chirac's personal spokeswoman.

   

Chirac travels to Berlin on Saturday for talks with German Chancellor Gerhard Schroeder on the crisis prompted by the French and Dutch rejections of the EU treaty.

   

Chirac will hope the new team can help his personal ratings recover. They nose-dived eight points after Sunday's EU vote to 24%, the lowest of any president since records began.