Foreign Relations of the United States, 1977–1980, Volume I, Foundations of Foreign Policy

54. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter¹

Washington, August 26, 1977

SUBJECT

• Foreign Policy: The First Six Months

On vacation I read articles reviewing your first six months’ foreign policy which struck me as so silly and superficial—focusing largely on how good or bad our relations were with other governments and urging you to improve them—that I thought it might be useful to review what had really gone on in the last six months, to see whether more useful lessons could be drawn.

1. Risk of War. The media have always been preoccupied with whether Soviet leaders smile or frown at the US. But events since 1945 suggest that the ups and downs of detente are not the main factor shaping the danger of conflict between these two countries: The superpowers are drawn into adversary confrontation more by local crises in other areas than by coolness in their bilateral relations. So in assessing how your policy in the last six months has affected the risk of conflict, we should look to what has happened in potential crisis areas:

(a) Middle East. In the last six months the US developed a clear policy regarding the principles that should govern a general Middle East settlement. The Arab countries responded with a modest show of flexibility; the Israeli election produced a government less flexible than its predecessors, and its stance is popular at home. So the search for a settlement will be even longer and more difficult than seemed likely a few months ago. But you have defined the kind of settlement that is needed, which is a necessary first step.

(b) Korea. Your announced decision to withdraw US forces from Korea involved both potential pluses and minuses.² The pluses were twofold: Withdrawal of one brigade in 1978 should permit significant savings if that brigade is disbanded (as one brigade of each of the other two lightly-armed US Army divisions has been disbanded); whether or not this is done, eventual withdrawal of all US forces will give us the option of confining US involvement in any future Korean war to air and sea action. The minus is that the North Korean government may be more inclined to consider a pre-emptive attack. If the timing of further withdrawals after 1978 can be made dependent on North Korean actions and attitudes, we will have committed ourselves to the right long-term course without enhancing the risk of conflict.

(c) Europe. Six months ago there seemed some danger that the balance of power in Central Europe would shift sufficiently in favor of the USSR to encourage Soviet leaders to mount growing pressure on the West (or perhaps to intervene in a grey situation such as Yugoslavia, if the occasion arose). This risk has been reduced by the program to build up NATO forces that you launched in London.³

2. Economic. The most likely threat to the industrial democracies is not war, but a long-term deterioration in their economic circumstances due to continuing stagflation. Policies to which the US contributed in the last six months have somewhat reduced this danger:

(a) Macro-Economic Policies. At London, the seven leading industrial nations committed themselves to sensible growth and stabilization targets for 1977. These commitments strengthened pro-growth groups in the German and Japanese governments, and hence contributed to the German and Japanese expansionist decisions which will probably be taken soon, and which should yield good growth records in 1978, after a dismal German growth record in 1977. Summit stabilization pledges probably also strengthened the commitment of the French, British, and Italian governments to needed and painful anti-inflationary policies.

(b) Financial Indebtedness. In your first six months, the US played a large role in bringing about international agreement to establish a new $10 billion IMF facility to make loans to developed and developing countries that are running deficits.⁴ This has been a major success, even if one has to look among the corset ads to find press articles about it.

(c) Trade. Bob Strauss’ agreement with the European Commission has gotten the long-stalled Tokyo Round trade negotiations moving again, although there are still serious obstacles ahead.⁵

(d) Energy. Your domestic energy program⁶ set the stage for a continuing attack by the main industrial countries on one of the main threats to growth and price stability in the industrial world: the imbalance between global energy supply and demand.

None of this is going soon to solve the economic problems facing the industrial countries, particularly the weaker European nations. But our policies in the first six months have helped to get things moving in the right direction. And they have helped to strengthen the international institutions—IMF, Summitry, GATT—within which further progress can be sought.

3. Arms Control and Non-Proliferation. In the last six months the US recognized the long-term importance of these two areas and acted accordingly, seeking the basic changes that are needed, rather than the quick fixes that make good news stories.

—Instead of accepting a quick and relatively meaningless deal on arms control, the new Administration sought a major reduction in strategic force levels that would enhance nuclear stability, even if it took longer to achieve.

—We are launching the long-term international study of how to meet peaceful nuclear energy needs without proliferation pledged at the Summit. If this study eventually suggests creation of a major new international institution to provide assurances of nuclear fuel to importing countries and to store spent fuel, it could be one of the most important new advances in global architecture since the 1940s.

4. Defense Policy. The last six months have seen major shifts in defense policy, which will make it more effective in supporting US foreign policy:

—A shift from the previous Administration’s undue emphasis on strategic forces to greater stress on general purpose forces, the type of military power that counts most in an age of nuclear parity.

—Within general purpose forces, increased emphasis on Europe-oriented forces, which are badly in need of improvement.

There’s a lot more work to be done in strengthening US conventional forces, particularly ground forces in Europe and air and naval forces in the Eastern Mediterranean. But our policy has begun to reflect the right priorities.

5. North-South Relations. The last Administration focused on cosmetic gestures to respond to LDC concerns in UN debates. In its first six months, this Administration focused on substance:

(a) IBRD. You reversed the previous Administration’s position and committed the US to support a large general increase in the World Bank’s resources.⁷

(b) Aid. You pledged the US to a large increase in aid⁸ and commissioned internal and external studies⁹ as to how it might best be achieved.

(c) Commodities. The US settled on a sensible commodity stabilization policy which, if agreed to by others, should reduce price fluctuations that are equally harmful to developed and developing countries.

6. Public Confidence. You have restored a measure of public confidence in US foreign policy by aligning it in greater degree with traditional American values. I am sceptical that your human rights policy will do much to change dictatorships around the world and that US African policy will avert continuing turmoil in Southern Africa; but I’m also sceptical that either of these policies does any harm, and both policies do considerable good at home—in re-establishing the connection between US foreign policy and US public opinion that was fractured by the seeming opportunism of the last Administration.

7. The Rest. Compared to these accomplishments, the matters on which the media tend to focus seem trivial:

—Doubtless Giscard and Schmidt have moments of irritation with your ideas. This hasn’t prevented the important accomplishments noted above; indeed, it may well be the price of these accomplishments. And it seems to be tapering down, if not a thing of the past, to judge from Schmidt’s last visit.

—Brezhnev is annoyed by your human rights campaign. But nothing in the past record of Soviet policy suggests that this will prevent him or his successors from entering into any agreements with us that they conceive to be in the Soviet interest—any more than a US retreat from human rights would cause him to offer us substantive concessions. He is probably also put out because you have made clear that progress in the US-Soviet relations depends on concrete agreements; but this was an overdue change in past US policy.

8. Conclusion. The success or failure of foreign policy isn’t determined by whether heads of government do or don’t say nice things about us. It’s determined by whether we’re successful in building the world order to which you pledged yourself in the campaign. This means looking for areas of common interest, particularly with the industrial democracies—but also with developing and Communist countries, and creating or strengthening international institutions that can give effect to these interests. This takes time. But if you stick with it (instead of being diverted by media demands for instant and superficial successes)—in short, if you do as well in the next 3½ years in focusing on structural problems as you did in the first six months, even the press will admit by 1980 that your Administration has accomplished more than any President since Truman, who also focused on architectural improvements rather than cosmetic gestures.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 26, Foreign Policy: 5/77–11/29/77. Confidential. Sent for information. The President wrote “Good. J” in the top right-hand corner of the first page of the memorandum. In his July 29 weekly report, Brzezinski offered his assessment of the first 6 months of the administration in the “form of a report card, self inflicted.” Carter added the following notation at the end of that report: “You’re too generous—We must a) have clear goals & b) be tenacious.” (Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 125, Weekly National Security Report: 7–9/77)
2. See footnote 3, Document 53.
3. See Document 38.
4. Reference is to the Witteveen facility, named after IMF Managing Director H. Johannes Witteveen, allowed the IMF to borrow funds from member countries to disburse to other member nations. The facility became operative in February 1979.
5. At a July 11 meeting in Brussels with representatives of the European Commission, Strauss outlined a timetable to continue the Tokyo Round talks (see footnote 4, Document 6 and footnote 11, Document 29), which had been stalled, in part, due to issues relating to agricultural goods, and expressed his hope that negotiations could be concluded in 90 days after January 1978. (“Strauss Hopes Talks on Trade Will Bring an Accord by Spring: Negotiator Outlines Four ‘Phases’ in Bargaining—Confers With Common Market Leaders,” The New York Times, July 12, 1977, p. 35) In late July, U.S. and EC negotiators agreed to a series of negotiating procedures concerning agricultural products, thus allowing the talks to go forward. (“U.S., Common Market Settle 4-Year Dispute On Agricultural Talks,” The Wall Street Journal, July 28, 1977, p. 8)
6. See footnote 4, Document 47.
7. In 1976 World Bank officials sought an increase in the bank’s capitalization. The Ford administration, however, approved a lower level than desired by McNamara. (Thomas E. Mullaney, “Carter and World Bank Goals: Leaning Toward More Cost Aid,” The New York Times, March 18, 1977, p. 83) In his message to Congress on foreign assistance, released on March 18 (see footnote 9, Document 29), Carter indicated that the administration would increase the amount of aid to the international financial institutions.
8. At the CIEC meeting in Paris May 30–June 3, Vance announced that the administration planned to seek an increase in bilateral and multilateral aid over the next 5 years; see Foreign Relations, 1977–1980, vol. III, Foreign Economic Policy, Document 265.
9. Presumable reference to the DCC development assistance review and a Brook-ings Institution study entitled An Assessment of Development Assistance Strategy. For summaries of each study, see Foreign Relations, 1977–1980, vol. III, Foreign Economic Policy, Document 282.