Nevertheless, the right won the 1993 legislative election. Chirac announced that he did not want to come back as prime minister, suggesting the appointment of Edouard Balladur, who had promised that he would not run for the presidency against Chirac in 1995. However, benefiting from positive polls, Balladur decided to be a presidential candidate, with the support of a majority of right-wing politicians. Balladur broke from Chirac along with a number of friends and allies, including Charles Pasqua, Nicolas Sarkozy, etc., who supported his candidacy. A small group of "fidels" would remain with Chirac, including Alain Juppé and Jean-Louis Debré. When Nicolas Sarkozy became president in 2007, Juppé was one of the few "chiraquiens" to serve in François Fillon's government.
During the 1995 presidential campaign, Chirac criticised the "sole thought" (pensée unique) of neoliberalism represented by his challenger on the right and promised to reduce the "social fracture", placing himself more to the centre and thus forcing Balladur to radicalise himself. Ultimately, he obtained more votes than Balladur in the first round (20.8 percent), and then defeated the Socialist candidate Lionel Jospin in the second round (52.6 percent).
Chirac was elected on a platform of tax cuts and job programmes, but his policies did little to ease the labour strikes during his first months in office. On the domestic front, neo-liberal economic austerity measures introduced by Chirac and his conservative prime minister Alain Juppé, including budgetary cutbacks, proved highly unpopular. At about the same time, it became apparent that Juppé and others had obtained preferential conditions for public housing, as well as other perks. At the year's end Chirac faced major workers' strikes which turned, in November–December 1995, into a general strike, one of the largest since May 1968. The demonstrations were largely pitted against Juppé's plan for pension reform, and ultimately led to his dismissal.
Shortly after taking office, Chirac – undaunted by international protests by environmental groups – insisted upon the resumption of nuclear tests at Mururoa Atoll in French Polynesia in 1995, a few months before signing the Comprehensive Test Ban Treaty. Reacting to criticism, Chirac said, "You only have to look back at 1935...There were people then who were against France arming itself, and look what happened." On 1 February 1996, Chirac announced that France had ended "once and for all" its nuclear testing and intended to accede to the Comprehensive Test Ban Treaty.
Prior to 1995, the French government had maintained that the French Republic had been dismantled when Philippe Pétain instituted a new French State during World War II and that the Republic had been re-established when the war was over. It was not for France, therefore, to apologise for the roundup of Jews for deportation that happened while the Republic had not existed and was carried out by a state, Vichy France, which it did not recognise. President François Mitterrand had reiterated this position: "The Republic had nothing to do with this. I do not believe France is responsible," he said in September 1994.
Chirac was the first President of France to take responsibility for the deportation of Jews during the Vichy regime. In a speech made on 16 July 1995 at the site of the Vel' d'Hiv Roundup, where 13,000 Jews had been held for deportation to concentration camps in July 1942, Chirac said, "France, on that day, committed the irreparable". Those responsible for the roundup were "4,500 policemen and gendarmes, French, under the authority of their leaders [who] obeyed the demands of the Nazis. ... the criminal folly of the occupiers was seconded by the French, by the French State".
After François Mitterrand left office in 1995, Chirac began a rapprochement with NATO by joining the Military Committee and attempting to negotiate a return to the integrated military command, which failed after the French demand for parity with the United States went unmet. The possibility of a further attempt foundered after Chirac was forced into cohabitation with a Socialist-led cabinet between 1997 and 2002, then poor Franco-American relations after the French UN veto threat over Iraq in 2003 made transatlantic negotiations impossible.