120. Memorandum for the President’s File by the President’s Assistant (Flanigan)1

[Omitted here is discussion on general economic matters and domestic issues relating to trade.]

The President said that eventually we have to look to the longer term aspects of our relations in broader focus. For the present, we have a tough line. For example, his speech to the IMF meeting2 will not be forthcoming on trade matters. However, we should understand that more is involved here than just questions of “horse-trading between soybeans and cheese.”

The real question was what do the Europeans want their position vis-à-vis the U.S. and the Soviet Union to be? Does Europe want to go the route of a “Finlandization” of Europe? If they adopt an anti-U.S. trade policy, resulting in “an unenthusiastic” attitude in the U.S. about Europe, they must be made to understand that it will carry over into the political area.NATO could blow apart. The idea that the Europeans can defend themselves without us is “bull.” If NATO comes apart, they will be in a position of being economic giants and military pygmies. Cutting themselves off from the U.S. risks a more subtle form of invasion by the Soviet Union than in the conventional military sense.

European leaders, he said, are “terrified” at that prospect. However, “the economic guys over there just want to screw us and our economic guys should want to do the same. There ought to be a lot of screwing going on.”

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Nevertheless, the political aspects of our relations should be overriding for both sides. Between now and the elections, we should say nothing, but we should be giving careful thought about how trade relations fit into the context of our overall relations. We need to examine the trade prices which both we and they will have to pay for the continued strength of our overall relations. “We cannot allow the umbilical cord to be cut and Europe to be nibbled away by the Soviets.” We need to strengthen the bonds of trade, monetary relations, parliamentary exchanges, etc.

To illustrate his point, the President recalled that, in watching the 100 meter race of the Olympics, he was struck by the remarks of the Soviet winner. Borzov said that the “race marked the end of an era and now the Europeans are the best.” This was an example of the new style, according to which the Soviets are trying to identify themselves with the Europeans and against the U.S. Basically this example was just white racism (since our runners were black), but the idea of Europe versus the U.S. is a Soviet line. Brezhnev and Kosygin say almost the same thing.

Free Europeans know they would be out of their minds to come under this influence. They know we have the divisions and the nuclear weapons. It is easy to say we will take them out of Europe, but it is definitely not in our interest to do so. Nevertheless, there is a growing sentiment in the U.S. to the effect of “damn the Europeans” and “the foreigners are doing us in.”

It is true that the foreigners are treating us badly and understandable that we should want to do them in too. However, he urged that we be under no illusions. We cannot turn isolationist in the broader context. If we were only looking at trade, we could get along without the Europeans or the rest of the world, since trade is much less important to our GNP than it is to others. Trade is “the froth on top of the beer” but “beer without froth does not taste too bad.”

However, trade is part of a bigger package. For instance, we have to treat Japan with “tender loving care” since, what Europe could become to the Soviets, Japan to China would be even more. Trade is important politically, and good trade relations can contribute to good overall relations. We must realize that our interests can be served by being as tough as we can without going over the line where anti-U.S. sentiment will cause them to turn against us and break with us. The Europeans recognize that they do not matter in the world anymore, and thus they concentrate on economic issues which are more important to them. That means that we may have to give more than our trade interest, strictly construed, would require. However, for the moment, we should let them know that a lot of Americans would welcome a trade [Page 413] split with Europe. We should stress that the Administration is fighting against this, but the Europeans should realize why we are doing it. It is not because our economic survival is at stake but rather that we value our overall relations very highly, in the interest of world peace.

At the same time, they must understand that our economic relations affect our leadership position in the world. In the future, our relations will have a larger economic content and this will require more subtlety in the way we conduct our overall relations. We are best at this game because we are strongest.

This is not the time to fix on a major strategy. After the elections is the time to do this. Then we can do what we have to do. It is going to be very hard to sell trade liberalization to the Congress. We will be prepared to do it because we know that more is at stake than just trade. But for now we should not talk in public about the political-commercial trade-off.

Secretary Peterson asked what the possibilities looked like for a longer term political-security-trade linkage in our relations with Europe, and the prospects of selling liberalization bill to Congress.

The President said that if we do well in the elections, for a few months we can get quite a lot from the Congress. This does not mean we need a landslide but just a good majority. With that, we can make a major move to propose what is best for the country and to educate the country so that it sees the issues in the broader context.

We have to be able to show the country that there is a major shift in the world balance of power, particularly as among ourselves, the Russians, the Chinese and the Japanese. As regards Europe, the Europeans “will have one hell of a time acting as a bloc.” They do not get along with each other and it will be some time before they can learn to act as a group. This means we have to work with the heads of government in the various countries and not “that jackass” in the European Commission in Brussels.3

The President said that it is important that, after the elections, we look at the long-range relations. We have to tie this in with the whole political problem of what we want our relations with Europe to be. “We have to think internationally—we’re it in the Free World.” We would miss a great opportunity if we do not see these relations in broader terms and be guided by the broader picture. Then we can move to educate the public as to how it is in their own self-interest. However, we may also be able to get something in the economic area by using our political-security leverage.

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[Omitted here is a concluding comment by Nixon relating mainly to political concerns.]

  1. Source: National Archives, Nixon Presidential Materials, White House Special Files, President’s Office Files, Memos for the President, Box 89, June 4-September 17, 1972. Secret. The memorandum is a record of the President’s meeting with the Council on International Economic Policy (CIEP). The meeting took place in the Cabinet Room between 10:06 and 11:06 a.m. (Ibid., White House Central Files, Staff Members and Office Files, Office of Presidential Papers and Archives, Daily Diary) Another account of this meeting is printed in Foreign Relations, 1969–1976, vol. III, Document 100.
  2. Document 121.
  3. Presumably a reference to European Commission President Sicco Mansholt.