[Page 348]

86. National Intelligence Estimate1

NIE 20–72

PROBLEMS IN US-WEST EUROPEAN RELATIONS

Note

This paper seeks to define and explore the issues most likely to trouble US-West European relations in the next few years. We have had to make some assumptions about US attitudes (e.g., that there will be general continuity in US policies toward Europe) and have in addition discussed what Europeans expect American policy to be—expectations which (whether justified or not) inevitably will color their own actions. Finally, we address some contingencies (e.g., a reduction in the US military role in Europe or a failure to resolve economic differences) which obviously are only hypothetical at this time.

Some of the Estimate’s principal judgments—on the general climate likely to prevail in US-European relations, on divergent approaches to European security and détente, on likely consequences of a reduction in US force levels in Europe, and on the effects of continued economic disputes—are to be found in Section V, entitled “Some Broader Judgments”.

THE ESTIMATE

I. Introduction

1. In significant ways 1971 and 1972 have been watershed years in US-West European relations, important not so much for the emergence of new trends as for the visible culmination of important stages in a long-brewing process of change. The Four Power Agreement on Berlin and subsequent accords between the two German states, ratification of Bonn’s quasi-peace treaties with Moscow and Warsaw, achievement of an initial agreement on strategic arms limitation between the US and the USSR, enlargement of the European Community, and Washington’s New Economic Policy, have marked important political and psychological steps in the restructuring of Atlantic as well as European relations.

2. These changes, in turn, have raised questions vital to the course of US-West European relations: How can both US and West European interests be properly represented and protected in the course of the developing East-West détente? How can Western security best be pre[Page 349]served in the light of pressures in the US for reduced force levels in Europe? How can West Germany’s growing disposition to play a role commensurate with its great relative strength be reconciled with the interests of Germany’s partners and German interest in continued US protection? How can harmony be achieved between the enlarged and feisty European Community and the US, at a time when the latter is adjusting its foreign commitments and trying to close a large trade deficit? Clearly, these are problems with myriad ramifications. They will be addressed in an atmosphere of considerable European uneasiness about, in some quarters even resentment of, a US which no longer seems to many so wise, so rich, or so beneficent as it once did. And the fact that different aspects of the US-West European political, security, and economic relationship will be up for revision at virtually the same time in a variety of overlapping forums and negotiations assures ample opportunity for the dramatization and aggravation of trans-Atlantic differences.

3. Thus it is important, especially in a paper which deliberately concentrates on “problems,” to acknowledge at the outset the enduring sources of strength in US-West European ties. There is a large reservoir of good will toward the US in Western Europe which cannot be entirely eroded by disapproval of specific US policies. There is widespread recognition that most of the Atlantic peoples want to live in essentially the same kind of world, and realization that a common cultural and political heritage promotes common interests. As a corollary, most West European governments continue to believe that American and West European security interests are essentially the same, whatever differences may exist as to tactics and intermediate objectives. This sense of shared outlook will be especially potent whenever the Europeans are dealing with both the US and the (always more “foreign”) USSR.

4. And of course there are quite practical bonds. All the West European governments, in and out of NATO, appreciate that their ability to pursue détente with the East confidently is made possible by the existence of close ties with the US. All feel a vital interest in continuation of a strong US security role in Europe, especially during this delicate period of trying to work out new all-European relations. The US, moreover, still is valued as a balancing factor among the West Europeans themselves, a buffer to Franco-German rivalries and a reassurance to smaller states fearful of dominance by one or another of their larger neighbors. There also is widespread recognition of economic interdependence; the Europeans know that a further deterioration in the US economic position could create more trouble for them, and that failure to ease trans-Atlantic economic strains would hurt everyone.

5. There nonetheless are a variety of negative factors in US-West European relations. Disillusion with the US as a social, economic, and [Page 350]foreign policy model, together with what some perceive as a decline in US power, doubtless has reduced the deference once paid to American views. But this by itself has not made the European governments less willing to cooperate with Washington on a broad range of subjects of mutual interest. A more important source of the problem is that the Europeans are ambivalent about just what it is that they want from the US. Long-standing desires for a lessening of dependence on the US now are complicated by concern over the prospect that there might actually be a significant reduction in that dependence. Similarly, governments which long have urged (and still want) superpower rapprochement nonetheless are apprehensive about how Washington’s willingness to deal with erstwhile enemies in Peking and Moscow might affect their own interests. They are worried about the relative importance Washington intends to place on its relations with the USSR and with themselves.

6. Perhaps most fundamental of all, Europeans are uncertain about the direction of American policy and many doubt whether the US itself is clear as to its purpose. There is growing apprehension about whether Washington’s interest in détente extends much beyond a desire to reduce the cost to the US of the present system of East-West relations in Europe. There also is uncertainty about Washington’s approach to US-European economic relations in particular and to the idea of European unity in general. Many suspect that the US really does not know whether it still wants a united Western Europe which might be a stronger economic and political partner (and sometimes rival) or perhaps would prefer to go on dealing with individual West European states in the hope that they would be more amenable to American economic pressures and less of a political nuisance.

7. In the following paragraphs we discuss first how these suspicions and uncertainties are likely to complicate the resolution of differences between the US and the West Europeans in pending negotiations on European security issues and on international trade and monetary reform. We also touch briefly on relations with non-European countries and how these might affect trans-Atlantic dealings. While major emphasis is given to national interests and policies as defined by West European governments, we also discuss domestic political and economic problems of those governments which might limit their flexibility in doing business with the US. Finally, we note some common themes which run throughout the spectrum of US-West European issues, and we discuss how problems in one area might affect those in another and which are likely to prove of most lasting significance.

II. Problems in the Relationship

A. European Security and Détente

8. The one area of foreign affairs to have captured the imagination of West Europeans in recent years is the pursuit of East-West détente. [Page 351]Whether the players include just about everyone in a Conference on Security and Cooperation in Europe (CSCE), or selected participants from both NATO and the Warsaw Pact in Mutual and Balanced Force Reduction (MBFR) negotiations, or only the US and the USSR in further Strategic Arms Limitation Talks (SALT) or other bilateral dealings, all the European governments feel their national interests are involved. Current efforts toward détente provide a classic example of US-West European frictions and disagreements on the way to essentially shared ends; of how the US can get into a certain amount of trouble with its allies for following a course they themselves have long urged.

9. Certainly there is wide approval in Europe for US and Soviet efforts to reduce cold war tensions. The first Strategic Arms Limitation Treaty, the first visit of an American President to Moscow, the first Four Power accord to reduce tensions over Berlin, all have won wide popular support throughout Europe and added to the eagerness of West European governments to be—and to be seen by their electorates to be—actively involved in the détente process.

10. Part of the problem between Washington and the European governments is simply one of “participation”—including the touchy issue of NATO consultations. Widespread unhappiness with US acceptance of Soviet communiqué language on “peaceful coexistence” during the Moscow Summit was not so much over substance as over the fact that the communiqué seemed to contradict views Washington was espousing in NATO consultations, and thus raised questions about the seriousness with which Washington was pursuing those consultations. The West Europeans also have been distressed over US efforts to limit discussion of security issues to the smaller MBFR forum (rather than the larger CSCE), and to exclude representatives of NATO’s northern and southern “flank” members from MBFR talks. Even those governments which were not especially concerned with the substance of the dispute were alarmed at Washington’s apparent willingness to risk damaging allied unity by ignoring its partners’ wishes. All agree that troop reductions can only be negotiated by the states whose troops or territory are involved and have accepted, however grudgingly, that key decisions will be taken between the US and the USSR. But all want a chance to speak their piece on the East-West stage, not just in NATO councils. And all want some “confidence building” or “tension reducing” security measures to be discussed in the arena of the Security Conference, where smaller countries might hope to make more of an impact, rather than solely in the MBFR forum.

11. This problem of “participation”—perhaps largely cosmetic but nonetheless important to national pride and to internal politics—is complicated by some misgivings about US intentions. In broad terms, many West European officials worry that a disagreement may be [Page 352]shaping up between themselves and the US as to who should continue to bear the burden of manning anti-Communist defenses (psychological as well as military), and who should get some relief, on the way to that détente presumably desired by all. There is considerable concern that Washington wants a small, tightly controlled group in the MBFR forum fairly quickly to ratify reductions of US forces in central Europe. At the same time, what many see as a primarily defensive US approach to CSCE issues—its repeated warnings against “détente euphoria”—makes them suspect that Washington wants to use that forum essentially to keep European distrust of the USSR alive by embarrassing the Soviets on such issues as freer movement of people, ideas, and information.

12. The approach of most West European governments to these two sets of pending talks is rather different from what they perceive that of the US to be. All (except France) would prefer mutual Soviet and American reductions to the unilateral US troop cuts which they believe are the alternative.2 But all want to use (hopefully lengthy) MBFR negotiations first to stave off Congressional pressures for unilateral US withdrawals and so delay the evil day as long as possible. And since most believe that any negotiable reductions will leave the Soviets in a significantly stronger military position relative to NATO, they want the cuts to be accompanied by agreements on constraints in the use of forces (reinforcements, maneuvers, equipment positioning, etc.). These governments tend to view a CSCE, on the other hand, less as a danger to NATO’s defensive cement (as Washington warns) than as an opportunity to improve East-West atmospherics and so set the stage for genuine improvements in European relations (which, inter alia, in time would lessen their own dependence on the US)—a scenario which requires not being too beastly to the Russians on such issues as “freer movement.”

13. The West Germans, who believe they have most to lose from US troop reductions, seem to have thought things through most carefully. They would have MBFR talks start with agreements on collateral constraints on the use of forces before going on to negotiate phased and carefully verified reductions. Some German officials talk of a 10-year process, although this probably reflects more hope than expectation. [Page 353]Bonn also hopes that MBFR talks in time would make possible a reduction of West German as well as US forces, so that neither Bonn’s eastern nor western neighbors (nor the economy-minded German taxpayer) will be alarmed at the prospect of a proportionately larger West German military role in Europe. Bonn further insists that other Western territory be included in the reduction zone, so that there will be no hint of a “neutralization” of Germany or any other infringement of West German sovereignty.3 And since the Germans see the West as demandeur for productive MBFR talks, they sometimes speak of the necessity of paying a Soviet price in CSCE, i.e., avoiding contentious issues in favor of general declarations of goodwill and cooperation.

14. French national ambitions are focused on an early, well-publicized, and “successful” CSCE, much along lines advocated by Moscow. There is something here of French desire to nurture the “special relationship” which Paris and Moscow say they have. But the French also hope the Conference might be a step toward eventually overcoming the bloc-to-bloc (read US-Soviet) dominance of European affairs and, in the process, might give France an opportunity to appear as champion of the smaller states, East and West, against superpower “hegemony.” This would edge Paris back into the détente spotlight recently occupied by Bonn and Washington.

15. The British in large part just want to stay in step with their new European Community partners.4 While asserting that not much good can come of the CSCE, London argues that it probably won’t do much harm either and that the US will only divide the alliance by taking a tough line. The British view MBFR negotiations as at best a necessary evil, and have come to see the tactical advantage of joining Bonn in pressing for early US commitment to the “phased and integral” approach (i.e., constraints first, reductions later).

16. The Italians, Belgians, Dutch, and Scandinavians are motivated both by long traditions of European peace-seeking and by domestic political difficulties. Emphasis and approach vary among them, with the Belgians and Scandinavians most optimistic about détente prospects, the Dutch least so, and the Italians ambivalent. But all tend to view a CSCE as more immediately appealing to their electorates, more likely to lead to genuine improvements in East-West relations, and less risky to West European security, than force reductions. The Italians, Bel[Page 354]gians, and Dutch are inclined to greater skepticism about the prospect of troop reductions in central Europe than are the Scandinavians, who tend to regard efforts toward force reductions as another facet of détente which deserves their support. But in general, the smaller states of Western Europe probably view CSCE as an opportunity to develop a community-of-interests atmosphere between themselves and the East European countries. MBFR negotiations, on the other hand, will in the view of most Europeans take place in a forum dominated by the superpowers, and will provide the smaller states relatively little room for maneuver and initiative.

17. Frictions in NATO’s preparation for the CSCE and the MBFR talks have not in fact dominated the proceedings, which are going on in a cooperative and constructive atmosphere. Nonetheless, doubts about US policies are contributing to a unique sense of unity among the West Europeans—a conviction that they must join together to protect their interests vis-à-vis both superpowers. We have seen examples of the European Community members striking bargains among themselves in order to enhance European influence in NATO discussions. They now seem united in supporting the French proposal to hold an early round of CSCE at the publicity-attracting ministerial level, rather than following US wishes to have working groups do most of the negotiating before giving the Soviets such a propaganda plum; in wanting to word “freer movement” proposals in such a way as to offend Soviet sensitivities as little as possible; and in insisting on preserving an option to introduce further military-security proposals into the CSCE unless the US and USSR satisfy their wish that military constraints precede troop cuts on the MBFR agenda.

18. The particular bone of US-West European contention is of course always changing, as NATO consultations on CSCE and MBFR talks reach a compromise on one issue and move on to another. But the cases cited above are examples of a basic difference of approach which is likely to remain constant. Indeed, there is some danger of a cumulative effect here, as tensions aroused over one disagreement leave a residue of mistrust which complicates resolution of the next. Already there is some softening of the determination to keep differences within the NATO family. Alliance unity is likely to become even harder to maintain as the CSCE and MBFR talks develop and the Soviets have direct opportunity to play upon Western disagreements. The West Europeans will remain especially alert to any sign that the US is trying to restrain West European concessions to the Soviets in the CSCE context, while Washington makes its own arrangements with Moscow elsewhere.

19. Thus, SALT II will be a shadow over the CSCE and MBFR talks. Since SALT II will deal with offensive systems, and since the Soviets will insist on discussing US weapons located in Europe, NATO’s nu[Page 355]clear protection by the US could be directly at stake—and in a forum from which the Europeans are excluded. Moreover, decisions on US-Soviet nuclear weaponry may be taken more or less in parallel with conventional force changes, as a result of MBFR, which might make NATO more dependent on early nuclear response. West European governments will give general support to any attempt to stabilize the arms race, both from conviction and because the idea is so popular with their electorates. But they will be sensitive to any suggestion of a ban on first use of nuclear weapons, or to any limitation placed on American nuclear relations with themselves. While these governments realize that their security rests ultimately with the US strategic deterrent, they expect Washington to safeguard that in its own interests; they are far more worried about how SALT II might affect US nuclear weapons in Europe (the Forward-Based Systems) which provide Western Europe’s trigger to the strategic forces. A “failure” of SALT II, on the other hand, would be a setback to popular hopes throughout Europe and could somewhat tarnish Washington’s recently won peacemaking image.

B. The Consequences of Change in United States Force Levels in Europe

20. There is no question that all the West European governments oppose major US troop withdrawals. The US forces in Europe are essential to existing defense plans and to a meaningful effort by NATO’s European members. The present military balance on the Continent is one everyone has grown used to, and which therefore provides a comfortable backdrop to the pursuit of improved relations with the East. None of the governments wants to risk charges from domestic political opponents of having “lost” a measure of US support, or to face the economic choices of how or even whether to do more in their own defense. And all want to avoid complicating the first years of the enlarged European Community with the problems of new West European military efforts—problems which could include defining a proper role for West Germany and, for the Germans themselves, deciding whether a larger military role could be reconciled with pursuit of their objectives in East Germany and the rest of Eastern Europe. The general reluctance to borrow trouble has made West European governments willing to pay some price—in well advertised efforts at “burden sharing” in defense projects or even in trade and monetary concessions—to forestall any change in the American military role in Europe.

21. All these governments, nonetheless, anticipate that cuts are coming. Obviously mutual US-Soviet troop reductions would better suit the needs of most, if only because the event would seem less dramatic to popular opinion than unilateral US withdrawals and so would require less response from the governments. For similar reasons, the governments (except possibly France) would want to minimize expres[Page 356]sions of distress over mutual or even some unilateral US cuts in order to preserve public confidence that Western defenses remained firm.5

22. There is virtually no chance that the West Europeans would significantly increase their own defense spending to make up for cuts in US troop strength on the Continent. Rather, a reduction in superpower forces in central Europe would be seized upon by most West European governments as an excuse for defense cuts of their own—a trend likely in any case in response to domestic economic and political pressures. Even a new act of Soviet repression in Eastern Europe—e.g., along the lines of the 1968 invasion of Czechoslovakia—would probably only slow, not halt, the trend toward giving a lower percentage of national wealth to defense efforts and toward reduction or abolition of compulsory military services. (A sustained Soviet return to a more hostile posture, including sabre rattling directed at the West Europeans themselves, would of course require fundamental rethinking of European, and presumably of US, defense policies.)

23. US reductions certainly would put new life into recurring proposals for cooperative defense efforts among the Europeans, who would wish to make the most of the limited resources available for defense and to increase their own influence within NATO. But all the familiar problems of national rivalries and different defense concepts would remain. Moreover, European military efforts, collectively or singly, still would be plagued by the desire to do just enough to convince the US Congress and electorate that Europe “deserves” continued American protection, but not so much as to give the US an excuse for further reductions in its role in European defense. A decline in European purchases of American weapons—likely to follow US reductions if only because the West German commitment to “offset” purchases would decline—might further spur the development of European defense industries, thus in time putting them in a better position to compete for the arms purchases West European governments now make from the US—purchases which totalled nearly one billion dollars in 1971.

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24. It is widely thought that American influence on European affairs would drop as a result of US troop reductions. But this question is not so simple. A mechanical one-for-one relation between the number of US troops and the degree of US influence obviously is not the real case. It might even prove that the West Europeans would cling ever more closely to the remaining American military presence, much as a man takes fewer chances with a sole remaining eye. But it could also be that the Europeans, once adjusted to the changed situation, would develop a certain immunity to the prospect of further changes. Indeed, many would read the initial reductions as a precursor of things to come. Especially if the current thawing trend of East-West relations continued as US troops were reduced, the “need” factor in European willingness to accept US guidance or even to coordinate foreign policies with Washington would diminish. Certainly the Europeans would demand a larger voice in any revision of NATO strategy prompted by US troop withdrawals. And their experience in European consultations on MBFR and CSCE issues is likely to result in a greater sense of European “identity” vis-à-vis the US in the whole spectrum of NATO activity.

25. It is not likely, however, that a reduction of US force levels in Europe would by itself make the West Europeans significantly more responsive to Soviet wishes than their present desire for East-West rapprochement already inclines them to be. Indeed, insofar as fears of “détente euphoria” proved justified—i.e., to the extent that the Europeans saw in US withdrawals further evidence that the threat of Soviet aggression had declined—fear of suffering military consequences for resisting Soviet pressures would diminish accordingly. Even if Moscow should in the future reverse its current peace offensive and show greater menace to West Europeans, it might be that the latter would by then have adjusted to the new military balance on the Continent. Much of course would depend on how the Europeans perceived the US commitment to their defense at that time.

26. This relatively sanguine outlook is based on a belief that widespread expectation of US troop cuts already has tended to soften a psychological shock from reductions themselves, and on an appreciation of the growing sense of confidence and political identity among the members of the European Community. Both these trends are likely to become stronger, of course, if US reductions are delayed for a time—either through MBFR talks with the Soviets or, if those should prove fruitless, by extensive “consultations” within NATO. The manner in which reductions were undertaken—and especially US sensitivity to at least the appearance of deliberate and thorough consultations with its allies—could prove as significant as the cuts themselves.

27. A US military commitment will remain important to West European confidence for a long time to come. But the significance at[Page 358]tached to any given number of US troops as an earnest of that commitment has declined. Rather, European confidence in the US security guarantee rests on a complex mixture of the US military presence itself, wishful thinking, fatalism, and growing sophistication about military strategy. There is widespread belief (or will to believe) that if the Soviets actually launched a military attack against Western Europe, the US would intervene in its own interests—or at least that the Soviets must reckon that Washington might—even if the number of American troops in Europe were reduced. Moreover, West European participation in NATO’s Nuclear Planning Group and close observation of the SALT dialogue have made strategic planners in those countries aware of the complexities of measuring nuclear “superiority”; a change in the particular numerical balance between the US and the USSR, resulting either from MBFR or from SALT II, would not now alarm them so much as it might once have. (The West Germans, in any case, always have had mixed emotions about the US-designed “flexible response” strategy which envisions large military forces fighting a relatively prolonged conventional or tactical nuclear battle on German territory.)

28. The minimum essential military requirement for retention of West European confidence in NATO security arrangements is an integrated military structure in Germany, with American forces and nuclear weapons to help provide an immediate military response (conventional or nuclear) and to threaten early escalation to strategic nuclear warfare. It even is possible that, if the Europeans came to believe that a reduced number of American troops met US domestic requirements and thus was not likely to be further reduced, they might feel more confident than with a higher number which was under constant attack in the US. Just as important as the level of forces itself will be how West Europeans rate the depth of America’s commitment to their security and its likely response to any open or incipient threat to their safety—a far more complex calculation than merely counting soldiers and warheads in Germany.

C. Atlantic Economic Relations: Partnership or Rivalry?

29. Economic relations are likely to figure increasingly in that calculation. In fact, the greatest dangers to Atlantic harmony over the next few years probably lie less in military-security differences than in the more arcane areas of trade and monetary policy. America’s economic problems had been apparent to Europe’s financial managers for some years before August of 1971, but the inauguration of the New Economic Policy was a shock to the average European’s conception of the US as an economic giant, and perhaps even to his confidence in US willingness to continue providing military protection. While US-European economic disputes largely disappeared from the headlines with the res[Page 359]olution of immediate differences, Washington’s tough approach has jolted many European government and business leaders.

30. The community of interests between the US and the West Europeans may run less deep on economic than on security issues. Despite widespread appreciation of recent US efforts toward economic adjustment, some resentment lingers over what many West Europeans see as US efforts to avoid monetary and fiscal discipline at home by shifting the burden for correcting past American economic mistakes onto foreign countries. Nevertheless, everybody wants expanding world trade and acknowledges a mutual dependence on it; and the Europeans are aware of their own stake in a healthy US economy. In principle, they recognize the need for the US to restore overall payments balance, and indeed frequently demand that the US do so.

31. But there are important differences in approach regarding balance of payments objectives and adjustment. As part of its efforts to restore balance of payments equilibrium without sacrificing overseas commitments and investments, the US has said it needs a worldwide surplus on current account, which in turn requires a significantly more favorable international trade balance.6 The West European current account (world-wide and with the US) is in surplus, as is their world-wide trade account. But they argue that their bilateral trade with the US is in near balance (until recently in deficit). They are most reluctant to accept a reduction of their large world-wide current account and trade surplus and the consequent loss of stimulus to growth in their domestic economies. They find support for this position in the critical attitude of many toward much of Washington’s non-European military spending, and in widespread questioning of US firms’ “buying up” European industries.

32. Specific differences over economic policy are aggravated by a belief that the US commitment to European unity is at least wavering. Washington’s outspoken criticism of European trade policies has led many to fear that America’s own economic troubles are making it less willing or even able to pay a price (i.e., acceptance of the European Community customs union) for the sake of its long-declared goal of European political unity and the eventual (presumed) common economic good. (Here, too, there is some nascent suspicion of at least tacit US-Soviet ganging up on West European interests, as each of the superpowers attacks the Community’s tariff barriers. This suspicion was made most explicit in Le Monde’s portrayal of the signing of the US-Soviet trade pact of October 1972, “on the very eve” of the Euro[Page 360]pean Community Summit.) As a consequence of this suspicion of Washington’s motives, even some US proposals which might be acceptable on economic grounds alone will be resisted because—despite any verbal disclaimers—they will be seen as attacks on the European Community principle itself.

33. For instance: there is growing discontent among Europe’s economic managers with the inflationary impact of the protectionist Common Agricultural Policy (CAP). Similarly, a reduction in the Community’s Common External Tariff (CXT) for industrial goods might help reduce general price pressures. But for the present and very likely for some years to come, the CAP and CXT are the most visible accomplishments of the drive toward European unity. France, which profits materially from both, almost certainly will not contemplate replacement of either, even by accepting a decision in principle to work toward a long-term goal of zero tariffs among all industrialized states. And the economic, political, and indeed emotional commitment of the others to preserving at least as much European integration as the French have allowed insures that none would break with Paris on these issues.

34. The British, who would have most to gain from a reduction in EC food prices, realize that acceptance of the CAP was their price of admission into the Community. While seeking to hold down the inflationary effect of the CAP, they will do nothing to invite charges of attempting to renege on that bargain. Rather, British hopes of recovering some of the costs of the CAP from Community industrial and regional policies will make them reluctant to jeopardize steps toward EC industrial cooperation which could include measures potentially damaging to American interests (preferential government procurement and taxation policies to boost European industries, Community subsidies to distressed industries, etc.) in order to resolve Europe’s economic differences with the US.

35. Paris of course will not dictate EC positions to the extent that it did under de Gaulle. The enlarging Community is now a far more complex animal. In any case, Pompidou lacks de Gaulle’s awe-inspiring mystique and is more disposed to cooperate with his EC partners and with the US than was his predecessor. In preparation for October’s Community Summit, for example, several of the other governments demonstrated their ability to bargain hard with Paris and to win significant concessions about the Community’s development. Perhaps more important than the concrete accomplishments of that session, leaders of the other eight emerged from the experience with a greater belief in their ability to bargain with the French, inter alia on behalf of a more open Community.

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36. But especially in the present climate of uncertainty concerning US policies, Pompidou’s emphasis on a “European identity,” clearly separate from the US even while closely cooperating with it, has considerable appeal. (An appeal doubtless enhanced by its very vagueness as to specifics.) The most important fact of European economic life is that the EC partners mean far more to each other than the US means to any of them, and the EC as a unit means more to the other (non-member) European economies than does the US.7 Worries that protectionist or other “neo-isolationist” tendencies are likely to grow in the US, whatever Europe does, are adding psychological weight to the priority accorded intra-European economic relations, at some cost to those with the US.

37. On political as well as economic grounds, the developing sense of a community of interests vis-à-vis both superpowers, together with the expectation of a reduction in the US military presence in Europe, is strengthening the tendency to give intra-European relations primacy over trans-Atlantic. While several of the EC members (notably the Dutch, Germans, and sometimes the British) will work within Community councils toward some accommodation with US economic wishes, it remains possible for Paris (or indeed any other major EC partner willing to take a firm stand) to veto Community compromise with Washington. Therefore, concessions actually offered to the US are likely to be [Page 362]the lowest common denominator of Community agreement. The weakness of Community institutions and resulting agony of Community decision-making seems certain to add to EC inflexibility in international negotiations.

38. Thus the trade negotiations scheduled to begin this summer will be very difficult. The Community probably would negotiate international commodity agreements for major farm products to help divide non-EC markets with the US, or it might resurrect its proposal of a reciprocal freeze on existing margins of protection afforded grains. In the past the US has found neither proposal satisfactory. In general the Europeans will recite all the barriers put in the way of their agricultural exports to the US, and the large surplus the US already runs in agricultural trade with the EC ($1.4 billion in 1971).

39. Negotiations on reduction of industrial tariffs or non-tariff barriers also will be difficult. As yet, there is not even agreement on what should constitute a list of non-tariff barriers, and the high tariffs remaining after the Kennedy Round of cuts are on especially sensitive items. Recriminations could become quite nasty, with Europeans responding to American complaints—e.g., the tax break West European exporters receive from the Community’s Value Added Tax, or diverse technical and sanitary provisions which hurt US exports—by citing, for example, US insistence on “voluntary” controls on a variety of import categories, or the tax break afforded US exports by the Domestic International Sales Corporation scheme. The Community might propose the adoption of common ceilings on tariffs, a move which France contends would require more lowering of US than of European barriers. But the Europeans are not likely to make trade concessions for anything short of fully reciprocal reductions in US barriers to industrial trade. Even then, it is likely to be difficult to negotiate deep cuts in the Community’s Common External Tariff.

40. Negotiating a reform of the international monetary system will be at least as difficult as the trade talks. Recent expressions of US ideas on the problem have done much to improve the atmosphere. And indeed there are some broad areas of consensus—most importantly, on the need for comprehensive reforms which will promote balance of payments equilibrium in the context of a liberal trade and payments system. There also is general agreement on the goals of greater flexibility in exchange rates and increased use of Special Drawings Rights in international finance. But agreement on how to implement even these general principles will be hard to achieve. At present, key differences exist over whether to use “objective” or quantitative criteria to determine the existence of disequilibrium and whether the system should impose disciplines or sanctions to induce adjustments. The relative roles of exchange rate changes, domestic economic policies, and con[Page 363]trols on trade and payments in the adjustment process also are in dispute. Another important issue will be whether (as the US has suggested) countries with balance of payments surpluses should accept as much responsibility for adjustments as states in deficit.

41. Another complication of monetary reform negotiations is the interest of West Europeans in achieving monetary union among themselves. Paris is insisting that monetary union be the next goal of the European Community, and indeed a condition to progress on economic harmonization and cooperation desired by its Community partners. The French may try to exploit their partners’ desire for further European integration in order to mobilize support for French attacks on the dollar’s special role in world trade or on US “economic imperialism” generally.

42. There is one area of US-European economic relations which now looks less fractious than a few years ago. As noted above, Europeans don’t think they should make any trade or monetary sacrifices to facilitate US investment in their economies. But governments and business leaders, at least, are becoming less hostile to that investment as such. This is partly due to an appreciation of the jobs and technology which multinational corporations bring to Europe, but even more to the benefit to Europeans of the growing flow of their investment to the US. In 1971, West European private long-term investments in the US—largely portfolio—totaled $2.5 billion, while those from the US to Western Europe—largely direct—were only $2.1 billion. Moreover, some of the European investors in the US have considerable political clout at home (e.g., major institutional investors, German automobile and chemical industries, and leading French aluminum, chemical, and pharmaceutical firms). Thus important European opinion-shapers are acquiring a vested interest in preventing mutual restrictions on foreign investment.

43. The European operations of US-based multinational corporations doubtless will remain a public relations irritant. And those corporations may be on the receiving end of some de facto discrimination as the EC intensifies efforts to strengthen its own industries—e.g., through mergers, joint production, research and marketing arrangements, development of a European company law, and technological cooperation arrangements. But the only concerted attack on multinational firms is likely to come from European labor unions, and then the aim will not be to drive the foreigners out but to make them accept coordinated collective bargaining agreements with European-wide labor representatives. One of the few points of agreement among European unions these days is that multinational corporations should not be allowed to cow local unions with threats to switch investments and jobs to other countries.

[Page 364]

D. Some Economic Consequences of Failure in Trade and Monetary Negotiations

44. The Europeans for the most part see no urgent need for reduction in tariff and non-tariff barriers to trade. The rapidly rising intra-European trade has reduced Europe’s dependence on the US market, and governments have learned to take appropriate domestic actions to moderate the adverse effect of fluctuations in their American trade. As a result, European interest in trade adjustments is less to correct an existing situation than to avoid a general deterioration in US-European relations; this interest will be a powerful deterrent to new measures which might further damage American exports to Western Europe.

45. In time, however, if there were stalemate in trade negotiations, together with continued American balance of payments difficulties, European expectations of protectionist moves on the part of the US would grow. If the US should adopt policies which the Europeans saw as protectionist, the latter could take a variety of national or EC measures to support affected European industries and restrict US imports. In such circumstances we would expect to see direct discrimination against US companies operating in Europe. Early targets would be those US firms producing the sophisticated goods (e.g., aircraft, and some electronics products) which West Europeans want to develop themselves.

46. Europe’s economic managers believe that US monetary policies, on the other hand, already have caused serious problems for themselves. In 1971, for example, large dollar outflows resulting from divergencies between US and European interest rates, and subsequently from exchange rate speculation, impaired European monetary policies and aggravated inflationary pressures. US suspension of convertibility in August 1971 has added to the unhappiness of West Europeans saddled with large dollar holdings. If large capital flows should again occur, we would expect further tightening of capital controls by the EC partners and possibly by other European states as well. If a climate of pessimism should develop about the success of international financial negotiations, European capital controls would likely be more pervasive than controls instituted to deal with temporary dollar outflows.

III. The European Community, the United States, and Third Countries

47. Another subject which presently takes the form of an economic difference between the US and the EC but which has broader political ramifications is the Community’s growing network of preferential trade agreements with a wide variety of other nations. The EC now has such arrangements with Spain, Austria, and 29 other (primarily African [Page 365]and Mediterranean) countries. Following Community enlargement the network will be extended to include six additional European states (Switzerland, Finland, Iceland, Norway, Sweden, and Portugal) and, probably, some 20 less developed countries of the British Commonwealth. With this proliferation of preferential agreements the discrimination against US exports will increase substantially.

48. The problem took on an overtly political tone last October, when the EC Commision proposed to “harmonize” all the Community’s arrangements with Mediterranean countries, and to confirm the principle of reverse preferences for entry of EC industrial products into those countries. US objections brought similar responses from several European governments: reminders of Washington’s oft-repeated appeals to the Community to be more outward looking; assertions of the political significance of this form of assistance to less developed countries (a form allegedly less wounding to their pride than one-way trade preferences or aid); and emphasis on the Mediterranean’s strategic importance and Europe’s recurring hopes of contributing to a resolution of Arab-Israeli hostilities. One important European motive for this plan doubtless is concern about long-range energy supplies—aggravated by a fear that in time the US will become a competitor for Middle Eastern oil rather than a supplier of it—and the resulting desire to develop a special West European position with oil producing states in the Mediterranean.

49. France and Italy are the Community members who face most direct competition from Mediterranean agricultural imports and who thus, on economic grounds alone, might be least enthusiastic about the preferential trade arrangements. But they are also those with strongest hankerings after some sort of political role in the Mediterranean area. France’s current Mediterranean offensive has two mutually reinforcing aspects. Within Europe itself, Paris seeks to counter the strength of the northern states (principally Germany) by seeking support in the south—from Rome, through appeals to the common Latin and Catholic heritage, and from Madrid, by trying to bring Spain as close to the Community as France’s anti-Franco partners will tolerate. Outside of Europe, France wishes to see at least a slight shift in the Community’s foreign policy energies from Atlantic concerns to areas where France traditionally has played a strong role.

50. Washington’s protests are causing the Community to look for some way to achieve “reciprocity” in its preferential trade agreements other than the highly controversial reverse-preferences scheme. But the EC is unlikely to agree to a moratorium on further extensions of preferential agreements, in the Mediterranean or elsewhere. Rather it will cite the US failure to give generalized preferences to all LDCs. Most Community members have acknowledged in principle a responsibility to [Page 366]mitigate the impact of these arrangements on the US. But the US suggestion for doing so—reducing tariff barriers world-wide—will be difficult because of the Community’s attachment to the Common External Tariff.

51. Competition for world markets and sources of supply is likely to be a growing source of friction between the US and the West Europeans. An additional problem will be European resistance to suggestions that the EC should help take the heat of Japanese competition off the US by making its own markets more open to Japanese products. But in general, except for principally economic issues such as the Mediterranean problem, US and West European differences in the rest of the world are not likely to greatly complicate relations with one another.

52. On the whole, the states of the EC display a certain indifference to US relations with countries which do not directly affect themselves. This reflects the introspection of the Europeans as they turn with some relief from trying to keep up appearances of a “world role” to concentration on Europe’s own development. It also reflects their steadily lessening sense of involvement with the US on a worldwide scale. Except where their own perceived economic and security interests are involved (in terms of resource availability and reduced tensions in Europe and the Mediterranean), the Europeans are not likely to put themselves out. This is not to say that they will seek to undermine the US position economically or politically around the world, but it does means that they will do very little, and that reluctantly, to help. As a younger generation with fewer memories of World War II and its aftermath comes to positions of power and leadership, West Europeans probably will become even more reluctant to involve themselves with US responsibilities around the world.

IV. European Politics and United States-European Relations

53. Domestic political and economic considerations will of course affect the approach of each of the West European governments to the whole range of trans-Atlantic problems. Willy Brandt emerged from West Germany’s 19 November election with a clear popular mandate for his ambitious policy of reconciliation with Eastern Europe and for assertion of a strong German role in West European integration efforts. The voters also firmly endorsed the Free Democrats’ decision to throw in their lot with Brandt’s Socialists—a decision which had cost the FDP severe internal soul searching and the loyalty of several parliamentary deputies. The renewed coalition’s weak point will remain domestic policy, and especially its failure thus far to slow inflation or to deliver on promises of (expensive) internal reform measures. These problems, and differences between the Socialists and the more conservative Free Democrats over how to solve them, could limit the government’s flexi[Page 367]bility in some international economic negotiations. And shortfalls in achieving domestic ambitions probably would continue to make Brandt eager to direct public attention to his championship of West European unity and especially of Franco-Germany amity. But on the whole, the second Brandt government should be a strong and confident voice for compromise within the European Community and between it and the US.

54. Elsewhere, the picture is less bright. France’s Pompidou appears at this writing to have a good chance of winning a new parliamentary majority following legislative elections in the spring of 1973. But that majority likely will be reduced, perhaps making Pompidou’s own party more dependent on coalition partners. And Pompidou’s confidence recently has been shaken by domestic political setbacks (e.g., charges of government corruption and a small majority in the referendum last April on his European Community policy). Mending fences with hardline Gaullists is likely to take precedence over pursuing his own more cooperative inclinations toward the US, at least until the 1973 election hurdle is passed. Pompidou’s subsequent behavior will depend in large part on his reading of the results of that election—his sense of regained personal mandate, or of increased dependence either on centrist coalition partners or on his Gaullist “supporters.”

55. Prime Minister Heath still is the underdog in British political polls. At least until the next election, which may not come until 1975, all other concerns will be subordinated to resolving the Ulster problem, to attacking Britain’s persistent economic troubles, and to demonstrating to a skeptical electorate the wisdom of his insistence on entering the European Community. The precarious Italian Government is involved in little more than a holding action, trying to resolve or delay highly-charged domestic disputes (over such issues as divorce) and to complete the recovery from Italy’s 1971 recession.

56. The Netherlands’ 29 November election produced a slight gain for the left but no clear victory for anything; its next government is likely to be either a caretaker arrangement, or another shaky four or five party coalition, or a Catholic-Labor partnership eager to attack defense spending and generally less amenable to US wishes on European security issues. Belgium, whose politics remain a fine balance of Flemish and Walloon tensions, is even now undergoing one of its recurring governmental crises over yet another manifestation of the country’s social and economic frictions. Denmark’s new government still lacks a parliamentary majority and apparently thinks its leftwing supporters—who opposed EC entry—should be placated by some public show of anti-Americanism. And Norway’s Government (which also lacks a parliamentary majority and depends on leftist support for its [Page 368]survival) must give first priority to salvaging something of an industrial free trade arrangement with the EC, following public rejection in last September’s referendum of full membership.

57. These internal problems make each of the European governments highly sensitive to a variety of domestic pressure groups. France’s always somewhat protectionist business community and volatile, highly organized farmers; the farm groups so important to West Germany’s Free Democrats; the (Walloon) grain producers whom Belgium’s (usually Flemish) Agricultural Minister must handle with special care—all will make it difficult for national leaders to make even those “concessions” to the US that might actually be in their own overall economic interests.

58. This problem will be magnified by the present in-between state of the European Community’s development. The US will have to treat with national governments which reflect a balance of varying domestic concerns and with a Community which reflects an at least equally delicate balance of national interests. Moreover, national positions on European security or international economic relations will be taken with one eye on a jockeying for position within the European Community. For instance: France’s refusal to have anything to do with MBFR talks may in some part be based on French hopes of being in a stronger position vis-à-vis West Germany for new bilateral military arrangements if French troops have not been put into the MBFR negotiating pot. The coincidence of European Community enlargement with widespread European expectation of a changing relationship with the US makes this a particularly tense period of position-staking in the “new” Europe.

59. This sort of jockeying for position must inevitably have consequences for the special US position in West German affairs. Bonn’s pursuit of all the trappings of full sovereignty—symbol of the completion of its postwar rehabilitation and its rightful position as a major European power—is complicated by its desire not to alarm its neighbors or to lose American military protection. Thus the West Germans themselves are likely to want to preserve two important limitations on their sovereignty: the integration of their military force into a unified NATO command under American leadership, and the Four Power (US, UK, French, and Soviet) rights and responsibilities for Germany as a whole. The latter, in addition to guaranteeing German good behavior, also provides one of the few concrete manifestations now available to back up Bonn’s insistence on the “special” nature of the East-West German relationship.

60. Within these limitations, and in part because of them, the West Germans will be increasingly sensitive to questions which touch on their sovereignty. The problem of how to word the statements connected with Germany’s expected application for UN entry in order to [Page 369]reaffirm the Four Power role and yet make the Federal Republic seem fully “sovereign,” or how to reaffirm that role in CSCE declarations on respect for the full sovereignty of all states, are current examples of this sensitivity. Recently revived proposals to give West Berlin deputies full voting rights in the Federal parliament, attempts to gain permission for overflight rights to Berlin for West German commercial aircraft, and quiet but persistent efforts to win a greater voice in (perhaps even a veto over) the use of American nuclear weapons located in Germany, are examples of German attempts to expand the FRG’s area of authority which would require US consent and which might impinge on US interests.

61. If Pankow should become more forthcoming about inner-German relations, at least some influential Germans would be willing to see Four Power status (including the American role in Berlin) diminished for the sake of improved East-West German relations. Such politically different figures as Brandt’s Ambassador to Moscow Ulrich Sahm, and arch-Conservative Franz Josef Strauss, have expressed their belief that East-West German relations, or indeed Bonn’s ties with West Berlin, are in the end matters for Germans themselves to decide.

V. Some Broader Judgments

62. In the preceding paragraphs we have discussed separately a number of processes which will take place simultaneously and obviously must affect each other. And we have given considerable attention to specific issues pending between the US and the West Europeans which may not themselves prove of great long-run importance for the future of trans-Atlantic relations. But some common threads can be discerned in these various specific issues which do give pointers to the overall future of America’s dealing with Europe.

63. The most important common thread is the emergence of a sense of mutual interest among the West Europeans vis-à-vis the US. This is evident in their approach to international trade and monetary negotiations and to European security and détente, and even in gropings toward EC-wide labor union cooperation. It has become a commonplace of late to say that the steam has largely gone out of the drive toward European unity because its chief purposes—economic recovery and resistance to communism as an internal subversive danger or external military threat—have been accomplished. There now is a possibility that apprehensions about US intentions or policies will provide a new motive force behind European unity. Almost all influential Europeans, in and out of government, want to avoid the development of a confrontation with the US. Even those most committed to European unification would rather accept a slower pace of integration than see the process accelerated by a major falling-out between Europe and the [Page 370]US. (Even France under Pompidou wants to avoid such a falling-out, despite Pompidou’s willingness to take some risks with Atlantic ties for the sake of France’s own ambitions to “lead” Europe.) Nonetheless, all recognize the possibility of a real divergence between their interests and those of the US.

64. Barring some dramatic reversal of present US policies—e.g., a clear signal that Washington no longer considered the defense of Europe vital to its own security—a radical and public divergence is not likely over European security issues alone. West European resentment over and suspicion of US-Soviet bilateralism will remain a constant irritant and will encourage the EC partners to take independent initiatives of their own toward Eastern Europe and outside Europe as well. While suspicions can be mitigated and the occasions for expressing them reduced by extensive consultation and compromise within NATO, the problem probably cannot be resolved. It is rooted in the awareness of Europeans that major decisions affecting their own future are, and indeed sometimes must be, taken over their heads. But if the present thaw in East-West relations continues, European pleasure at the result is likely to continue to outweigh their distress at being mostly spectators to the process.

65. West European suspicions of US-Soviet bilateralism, and especially a concern that Washington’s chief interest in détente is to secure an early reduction in its own military burden, will make it difficult to win allied assent to many MBFR or CSCE proposals favored by the US. Nonetheless, if decisions are taken which the Europeans have resisted (e.g., on reducing the US conventional or nuclear military presence in Europe), the European governments almost certainly will try to preserve at least the appearance of allied unity and to convince themselves that the US nuclear guarantee remains as firm as ever. Reductions in US force levels in Europe might well result in some lessening of US influence on West European affairs, but troop cuts would not by themselves make the West Europeans more responsive to Soviet wishes.

66. Reducing the number of US forces in Western Europe will nonetheless be a very delicate maneuver. The timing, the immediate context of East-West negotiations, the actual size of the reductions, and whether the remaining force levels were related to a plausible strategic doctrine, all would be important elements in the West European reaction to the cuts and subsequent assessment of Washington’s interest in Europe’s defense. A critical factor would be the manner of consultations within NATO itself, and especially US sensitivity to the need for full and deliberate consideration of allied views before decisions seemed to have been reached.

67. Economic relations present a far less tractable set of problems. Mutual concessions doubtless can be negotiated. But European protec[Page 371]tion of perceived national economic interests will make it difficult to achieve a substantial reduction of trade barriers. A burgeoning competition between the US and the European Community partners for markets and sources of supply could tend to divide the world into rival trading blocs. Within Europe itself, a spirit of economic competition could spark a US–EC “race” for presumed East European markets and investment opportunities. This obviously would affect allied approaches to economic items on the CSCE agenda and indeed the whole atmosphere of East-West relations in Europe. There may, in fact, be more potential for damage to US influence in Western Europe, and to European confidence in American military protection, from economic differences than from Soviet efforts, or even from changes in US force levels in Europe.8

68. The parallelism of interests and policy which has characterized the postwar period can no longer be taken for granted. It is possible to conceive a “worst case” development of European-American relations—one in which the divergence of interests now evident would engender a process of deterioration in those relations. Economic interest groups, certain political forces, irresponsible journalism, Soviet influence, or even bad luck could combine to precipitate a mood of distrust and suspicion which governments would find it difficult to control. Nothing like this seems likely now and it can even be said that European governments will be concerned to manage conflicts of interest in a temperate manner. But clearly some danger signals are up.

69. Even in the best of circumstances, the 1970s will see a further decline of US influence in European affairs. Nonetheless, the US is likely to remain the chief external influence on Western Europe for as far into the future as it is possible to see. Similarity of social and political systems (and of their problems), a European desire for an effective military link with the US, and a continuing interdependence of the American and European economies, are all long-term bonds which Moscow simply cannot match. More important than the diminution of US influence or growth in that of the Soviets will be the Europeans’ ever greater reluctance to be influenced by any outsider. The European Community members are confident, perhaps complacent, in their growing material prosperity and their position as the world’s largest trading bloc. Their sense of common cultural identity, even superiority, [Page 372]is strong. They are beginning to show political as well as economic muscle in dealings with both the US and the USSR, and they feel they are doing so successfully. This restoration of Europe as an independent power and influence, an aim of US policy since 1945, promises to affront some US interests and to complicate US policy. But it need not undermine the essential unity of the West.

  1. Source: Central Intelligence Agency, History Staff Files. Secret; Controlled Dissem.
  2. The French, too, believe that US troops in Europe will be reduced with or without matching Soviet cuts, and President Pompidou seems sincere in deploring the military and psychological consequences for the European power balance. But the French say they will have nothing to do with an attempt to disguise the situation by presenting US and Soviet troop reductions as “balanced,” when the US forces would retreat some 3,000 miles and the Soviets only about 500. Pompidou argues that the shock of unilateral US withdrawals would do more to keep up the Western guard against the Soviet Union than would a move which was covered by a fig leaf of NATO “approval” as a step toward peace. [Footnote is in the original.]
  3. Brandt’s very long-range ambitions for a form of German reunification—a European grouping which could encompass both German states—could eventually lead him, with the right conditions and timing, to favor significant demilitarization of central Europe. But the present and still very delicate stage of Ostpolitik is not the moment for any apparent diminution in the military protection provided by the US, or for raising questions about new European security arrangements. [Footnote is in the original.]
  4. The United Kingdom became a member of the EC on January 1, 1973.
  5. A precedent of sorts might be found in the European reaction to Washington’s 1967 decision to redeploy some 33,000 of its ground and air forces from the Federal Republic to bases in the US, but to continue counting them as M-Day forces committed to NATO. All the “dual-based” forces have been returned periodically to Germany for exercises to demonstrate their continued availability and readiness. But the US Government, citing budgetary reasons, postponed 1972’s scheduled exercise to 1973. The Allies objected to the removal of these troops in the first place and were further disturbed by the postponement. But all presented the initial redeployments to their publics as a NATO-agreed move (an “improvement” made possible by advances in airlift capabilities), and all tried to keep press and public attention away from the postponement of the 1972 exercise. [Footnote is in the original.]
  6. The current account is comprised primarily of merchandise trade, tourism, transportation, military spending, interest on investments, and unilateral transfers. [Footnote is in the original.]
  7. SELECTED COUNTRIES’ TRADE WITH THE US AND THE EC OF NINE*
  8. All data are for calendar year 1971.
  9. Country Percent of Exports to the US Percent of Imports from the US Percent of Exports to EC of Nine Percent of Imports from EC of Nine
    The EC of Nine
    Germany 10 13 47 57
    Italy 10 9 49 47
    France 6 10 61 59
    Belgium-Luxembourg 7 6 73 70
    Netherlands 4 10 72 60
    United Kingdom 12 11 29 30
    Denmark 8 8 42 45
    Ireland 11 9 64 50
    Remaining EFTA Countries
    Austria 4 4 48 64
    Finland 5 5 46 43
    Iceland 37 10 31 50
    Norway 7 6 54 43
    Portugal 10 7 43 46
    Sweden 7 8 51 55
    Switzerland 9 7 47 69
    Other
    Spain 15 16 47 42

    [Footnote is in the original.]

  10. All data are for calendar year 1971.
  11. Mr. John J. McGinnis, the Special Assistant to the Secretary of the Treasury, Department of the Treasury, believes that while unresolved differences over economic policies could cause some Europeans to question whether the US strategic commitment would remain firm, it is more likely they would recognize that the economic basis for Europe’s strategic importance to the US—namely Europe’s economic power and the US share in Europe’s economy—would continue to justify our strategic commitment. [Footnote is in the original.]