Shultz believed that the Department’s most important task was the conduct of its Soviet and European diplomacy. By the summer of 1982, relations were strained not only between Washington and Moscow but also between Washington and key capitals in Western Europe. In response to the imposition of martial law in Poland the previous December, the Reagan administration had prohibited U.S. companies as well as their European subsidiaries or licensees from involvement in the construction of a natural gas pipeline from Siberia to West Germany. European leaders vigorously protested sanctions that damaged their interests in the pipeline but not U.S. interests in grain sales to the Soviet Union. Shultz finally resolved this “poisonous problem” in December 1982. The Americans agreed to abandon sanctions against the pipeline, and the Europeans agreed to adopt stricter controls on strategic trade with the Soviets.
A more controversial issue was the NATO Ministers’ 1979 “dual track” decision: if the Soviets refused to remove their SS-20 medium range ballistic missiles within four years, then the Allies would deploy a countervailing force of cruise and Pershing II missiles in Western Europe. When negotiations on these intermediate nuclear forces (INF) stalled, 1983 became a year of the protest. Shultz and other Western leaders worked hard to maintain allied unity amidst popular anti-nuclear demonstrations in Europe and United States. In spite of Western protests and Soviet propaganda, the allies began deployment of the missiles as scheduled in November 1983.
As the missiles were installed, Shultz thought the time was right “to resume a dialogue with the Soviets if we could.” But Secretary Shultz was out of sync with the President and his hard-line advisers. In March 1983, the President announced the Strategic Defense Initiative and called the Soviet Union an “evil empire”—without consulting the Secretary of State beforehand.