Chirac again ran for president in 1995; this time he was elected, defeating the Socialist candidate, Lionel Jospin, and his fellow Gaullist Édouard Balladur. In office he has sought to reduce France's unemployment, cut the deficit (a requirement for establishment of a single European Union currency), and strengthen ties with Germany. His attempt (1995) to reduce costs in the heavily subsidized railway system led to a crippling national transportation strike and a capitulation to striking workers.
In an effort to solidify conservative control of the National Assembly, he called early elections in 1997. The Socialists and their allies triumphed at the polls, forcing Chirac to work with a Socialist premier, Lionel Jospin. Chirac has championed a general reduction in French military expenditures, but he has also called for the development of the military capabilities of the European Union as a counterbalance to those of the United States. In 2000 and 2001, Chirac was implicated in a number of corruption scandals, including a 1980s kickback scheme when he was mayor of Paris that provided funds for political parties. A French magistrate indicated that he had evidence that Chirac had taken part in the kickback scheme, but, as president, Chirac was immune from prosecution. Chirac was reelected in May, 2002, defeating Jean-Marie Le Pen, a right-wing extremist who had edged out Jospin in the election's first round. Chirac was a vocal opponent of the Bush administration's use of force in 2003 to disarm Iraq and remove Saddam Hussein from power. Also in 2003 he became the first French president to make a state visit to Algeria since that nation won its independence from France. His failure in 2005 to win the approval of French voters for a new EU constitution was a blow to his prestige. In Mar., 2007, he officially announced that he would not seek a third term; his decision was not unexpected. He was succeeded as president by Nicolas Sarkozy.