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By Bloomberg

The battle between French President Francois Hollande and his prime minister, Manuel Valls, is out in the open.

At a traditional ceremony yesterday at the Elysee Palace, during which French presidents honor their prime ministers after six months in the job, Hollande took the opportunity to slap down Valls's presidential ambitions.

"One can succeed in life without becoming president," Hollande said. In a salvo aimed at asking Valls not to get ahead of himself, he said the prime minister can entertain "great hopes" for a "long career."

Coming after Hollande this month swiftly rejected Valls's proposal to take on a sacred cow -- unemployment benefits --, his comments yesterday were seen in the French media as an intensifying battle at the top level of French power. Le Parisien called it a "jab at Valls," while television channel La Chaine Parlementaire called it "a missile."

The tensions between the two men is a distraction for France, which is struggling with an economy that has barely grown in the past two years, joblessness at a record high and a president, whose popularity is the lowest for a French head of state in at least half a century.

Signs of cracks in their relationship appeared when Hollande dismissed Valls's suggestion that France tackle unemployment by attacking the country's generous jobless benefits. Even with the presidential vote more than two years away, their divergence is becoming increasingly public: Valls, 52, is playing the young, hands-on reformer, while Hollande, 60, is portraying himself as the statesmen avoiding social strife.

Different Styles

Valls and Hollande have "a huge difference in style," said Arthur Goldhammer, co-chairman of the French Study Group at Harvard University's Center for European Studies. "Hollande has always been a compromiser and consensus builder. Valls prefers to put his head down and run the ball straight into the opposition."

Those differences were evident in the jobless-benefits debate. Taking his cue from former Chancellor Gerhard Schroeder -- credited with transforming the German economy with his Hartz IV reform of unemployment benefits a decade ago -- Valls said the issue needed to be raised.

"France has made a choice in favor of unemployment that is very high and very well paid," he said. Coming under fire from Socialist lawmakers, he didn't back down. The issue is "legitimate," he told lawmakers in parliament on Oct. 8.

Hollande rejected the suggestion, saying he didn't want a political battle on his hands and that the matter could wait. "The government has enough on its plate," he said.

Waning Influence

In a tell-tale sign of Hollande's waning influence, fueled by a lack of growth and as more than 3.4 million people remain out of work, his Economy Minister Emmanuel Macron weighed in five days later -- on Valls's side.

"There shouldn't be any taboo or posturing," the 36-year- old Macron said. "The unemployment insurance system has a 4 billion-euro ($5.1 billion) deficit. What politician can be satisfied with that?"

Since Macron, who was the president's former economic adviser, left Hollande's office in July, the "Chateau" -- as the Elysee palace is known -- has stopped being the center of attention for the business world.

Business leaders and entrepreneurs, who climbed the red- carpeted stairway at the Elysee Palace to spill their woes in Macron's top floor office, hoping to win the president's ear through him, are now making a beeline for Valls's office or Macron's modern office overlooking the Seine River, a CAC 40 chief executive officer told Bloomberg News.

Most Unpopular

At the midpoint of his five-year term, Hollande finds himself with an approval rating as low as 13 percent. Valls's popularity is more than double his boss's.

Most Socialist Party supporters don't want Hollande to run in 2017 and Valls is their favorite candidate, an Opinion Way Oct. 20 poll for Le Figaro showed.

The Socialist Party risks the ejection of its candidate in the first round of the next presidential election if it doesn't unite, Valls said today in an interview on RMC radio.

During the six months since Valls rose to become prime minister from interior minister, the two claimed to be a team. They're not pretending anymore.

Valls has been working French and foreign business leaders. He teamed up with the pro-market Trade Minister Matthias Fekl and Macron, who as Hollande's former economic adviser handled business deals including GE's Alstom takeover and the record U.S. fine against BNP Paribas.

The fight over business friendliness has gained momentum.

Hosting CEOS

On Oct. 19, Hollande -- who famously said during his presidential campaign in 2011 that "his adversary was finance" -- hosted a conference for foreign CEOs, including Banco Santander's Javier Marin Romano and Nestle CEO Paul Bulcke.

The following day, he hosted a dinner for foreign investors including Saudi Arabia's Prince Alwaleed Bin Talal Al Saud, Hong-Chul Ahn, the head of the Korea Investment Authority, and Tan Chong Lee, chief investment officer of Singapore's Temasek.

The charm offensive followed a meetings by Valls in various European capitals, touting his business-friendly credentials. In Berlin this month, Valls said "I love business," echoing sentiments expressed at a French gathering a few weeks earlier.

In London, Oct. 6, he said France was "pro-business" and tackled head-on Hollande's tax of 75 percent on salaries of more than 1 million euros, pointing out that it will end soon.

Culture Vultures

The one-upmanship between the two men hasn't spared the world of culture. Hollande is trying to counter Valls, the son of an artist and husband of a violin soloist.

Hollande recently opened LVMH Moet Hennessy Louis Vuitton SA CEO Bernard Arnault's contemporary art museum designed by the star architect Frank Gehry. He'll also be at the re-opening of the Picasso Museum, home to the Spanish painter's major works.

His press office told journalists he watched a play at the Comedie Francaise on Oct. 17. He will see a premiere at the Elysee's private movie theatre on Oct. 26. He may even go to the modern art fair in Paris, the Foire Internationale d'Art Contemporain, or FIAC.

Valls does culture all the time, his office says. He'll go to the FIAC this week, and has a steady stream of concerts, exhibition or plays in his private time, it said.

Asked last month on television if he would run for president in 2017, Valls was clear.

"If a politician says 'I have no ambitions,' everyone will laugh," he said. "It's very difficult to respond to that question. Francois Hollande is president. It's his job to finish his mandate."