FORTUNE — As Fortune’s Paris bureau chief in the early 1980s, I frequently visited the Ministry of Finance at its splendid former quarters in the medieval Louvre Palace to interview a young official named Gérard Mestrallet. At the time, Mestrallet helped his boss, Jacques Delors, orchestrate one of the most dramatic and successful policy reversals in modern European history.
Starting in 1983, the administration of Socialist President Francois Mitterrand abandoned its program of heavy spending and gigantic deficits, and made a dramatic right turn, embracing a solution called “La Rigueur,” or austerity. The shift brought balanced budgets from 1985 to 1987, and one of the most prosperous periods in French post-war history. Delors was a principal architect, and Mestrallet helped write the blueprint.
In the mid-1980s, Mestrallet led the team that convinced the Walt Disney Co. (DIS) to bring its European theme park to Paris instead of the warmer climes of Spain, which was avidly competing for the project. I later learned from a reliable source — Mestrallet has never mentioned it — that in the last days of negotiations, a secretary at Disney’s law firm let slip that CEO Michael Eisner had arrived in Paris for the final signing ceremony. Mestrallet recognized that Eisner’s presence meant that Disney planned to build the park in Paris, no matter what. So during an all-night round of negotiations, Mestrallet rejected every concession that Disney demanded, and imposed last-minute demands of his own. Just as he’d predicted, Disney caved on every point, and Eisner signed that afternoon.
Like many young government officials, Mestrallet moved into a prominent job in business, joining the Compagnie de Suez. Mestrallet — who became CEO in 1995 — totally transformed Suez from a struggling financial and real estate player into the world’s biggest utility, GDF Suez, with sales of $130 billion and a market cap of $65 billion. In February, GDF Suez immensely increased its global footprint by taking 70% ownership of International Power of Britain, a deal that made the group the seventh or eighth largest utility in the U.S.
Last week, I met Mestrallet for coffee at the Four Seasons Hotel in Manhattan. Since I’d first found him in a shoebox office in the otherwise grand Louvre Palace, I joked that only two people weren’t totally amazed by his success, myself — and him.
Given his perspective from both business and government, I was anxious to ask Mestrallet about the future of the euro. “The euro will survive,” he said. “The eurozone nations have total debt to GDP of 80% compared with 100% for the U.S., so it’s manageable.” He states that Italy and Spain, the two nations that could bring the euro down, both have basically strong economies, and will succeed at bringing debt under control with a mix of lower spending and higher taxes: “They can solve their problems with their own efforts.”
The EU, reckons Mestrallet, will eventually issue bonds guaranteed by all the members to reassure financial markets that no nation will default. But with a strict requirement. “No Europe-wide guarantees should be given without collective rules to limit deficits,” he says.
Just before leaving, Mestrallet made a surprising observation about the U.S. “It seems strange to me that the U.S., after witnessing all the problems Europe is encountering with excess debt, wants to spend and borrow even more,” he marvels. “Countries should support their spending with tax revenues.” Departing from that rule, he says, is what accounts for Europe’s current woes. “When expenses are higher than revenues, enormous borrowing becomes necessary. Countries then rely on international financial markets, especially by selling bonds to China and other Asian countries.” As we’ve learned, financial markets can terrorize governments through panic selling. The reliance on international markets, warns Mestrallet, makes it far more difficult for a nation to control its economic destiny.
Then, Mestrallet looked back three decades to his role in orchestrating Mitterrand’s historic change in direction. “The Delors plan of cutting un-useful spending and balancing budgets was very effective,” he says. “We got far better results than by continuing to spend more.” That policy balanced spending with taxes rather than borrowing, and lowered reliance on fickle financial markets.
It was quite a statement from this pragmatic Frenchman, who recalls how a Socialist government redeemed itself. Maybe America should heed the “histoire de succès” of 30 years ago, where Mestallet was present at the creation.
