Foreign Relations of the United States, 1981–1988, Volume I, Foundations of Foreign Policy

215. Information Memorandum From the Assistant Secretary of State for European and Canadian Affairs (Burt) to Secretary of State Shultz¹

Washington, November 5, 1984

SUBJECT

• The Transatalantic Relationship: The Next 12 Months

Introduction

For the first three years of the Reagan Administration US-European relations were dominated by the challenge of implementing the December 1979 Dual Track decision on INF in the face of unprecedented Soviet intimidation. 1984, however, ushered in a relative calm after the storm as the Alliance demonstrated a high degree of unity over basic East-West issues and economic concerns diminished with the worldwide recovery. Given the expected continuity of leadership in key countries on both sides of the ocean, the generally favorable state of relations should continue to pertain well into 1985 if not somewhat beyond. There are, however, areas—the East-West relationship, conventional defense, and trade—which possess the potential to disrupt Alliance solidarity. In addition, difficult to resolve bilateral issues, many involving disputes over extra-territoriality, could have a cumulative souring effect on relations with many European countries if they are not managed with considerable dexterity at this end. Finally, the calm of 1984–1985 could be only the prelude to renewed strains in the years to follow.

A Snapshot Of Where We Are:

Any attempt to describe the current state of the transatlantic relationship must answer the question why the Alliance is in the relatively good shape that it is. The answer is two-fold, involving what might be termed “objective conditions” as well as successful policy management.

A major factor in the current calm is Moscow. By being so heavy handed during the run-up to INF deployment and by leaving Geneva afterwards, the Soviet Union has demonstrated that it is to blame in large part for the current tensions between East and West and for the lack of progress in arms control. Indeed, Soviet policy has been so unyielding that traditional European concern over East-West relations (and their tendency to blame us equally while they try to act as go-betweens) have been muted. The softening of US rhetoric and the demonstrations of flexibility (and hence credibility) of US arms control proposals have contributed to this European tolerance of the East-West impasse.

A second factor has been economic improvement. Criticism of a strong dollar and high deficits notwithstanding, Europeans have come to admire US job creation and growth and to depend on the latter for the stimulus their economies need. Although unemployment remains high in much of Europe, the miasma of Europessimism has lifted a little.

The Alliance has also benefited from good management. Real problems have been kept in check and potential problems nipped in the bud. The pipeline dispute was settled, and progress in COCOM has been achieved. The Administration defeated the Nunn Amendment and avoided establishing formal quotas on imported steel. Similarly, the EC has avoided taking certain restrictive measures against US agricultural exports which could trigger a confrontation over trade. And beyond Europe, whether in the Red Sea or Chad or Lebanon, the US and key allies have demonstrated an ability to act together or in parallel on behalf of common interests.

The current constellation of conservative leadership in Europe has helped keep relations on an even keel. Conservatives are heading three of the key countries (the US, UK and FRG) while French President Mitterrand is not only stalwart in his support of Western defense efforts but also increasingly attracted to economic policies which roll back the role of the state. Each of these leaders has been in power for some time now, and the working relationships between them are generally good. The existence of a number of responsible and pragmatic leaders elsewhere in the Alliance only reinforces this pattern. Underpinning this compatible leadership is a set of shared attitudes. Many people in Europe and the United States have come to share support for free enterprise economies mixed with a healthy skepticism of the intentions of the Soviet Union.

The President’s, and the administration’s, contribution has already been touched on. But, aside from Soviet clumsiness, the main explanation for good Alliance relations is the performance of the President, in making the United States militarily stronger, in producing a rate of economic growth that exceeds Europe’s (and that of the Soviet Union), and in creating an image of resoluteness. Europeans sometimes find it frustrating to be junior partners of the United States; but they fundamentally prefer, and respect, a strong America.

Long-Term Trends

The current state of transatlantic relations also needs to be seen in the context of longer term trends in economic growth, and in public attitudes toward the Soviet Union.

Economically, the United States has been growing at a faster rate than either Europe or the USSR for the past decade, and this U.S. lead has widened over the past couple of years. Probably more than any other factor, this long-term economic trend explains the current sense of optimism in the United States, of pessimism in Europe, and of even deeper gloom in Moscow. We thus see today a dramatic reversal of the situation in the mid-1970’s, when America, after a generation of slower growth than the rest of the world, found itself riven by self-doubt, and perceived by others, as we perceived ourselves, to be weak and indecisive. Nearly twenty years of relatively slow U.S. growth—from 1957–74—led to a loss of respect for America by its adversaries, and a loss of confidence in America by its Allies. The current, U.S.-led growth cycle, if it continues, will produce the reverse—enhanced Soviet respect for and European confidence in America.

This phenomenon will, of course, bring its own problems. As it falls still further behind the United States economically, the Soviet Union may become even more paranoid and intractable—as indeed they were through much of the 1950’s and ’60’s. The Europeans, for their part, will complain—as they are already—of American arrogance and inadequate concern for the impact of our policies on them. On balance, however, it is better to cope with the problems of U.S. strength than the problems of U.S. weakness.

The second long-term trend affecting the transatlantic relationship has been the evolution of Western public opinion on the Soviet Union and the East-West relationship. Polling data, as well as more impressionistic evidence, indicate that the gap which opened in the mid-1970’s between the U.S. and European views of the Soviet Union has now narrowed substantially.

In the early ’70’s the United States and Europe worked together to improve East-West relations. But the respective experience of the United States and Europe with detente was very different.

— The U.S. embarked on detente during a period of internal division and self-perceived weakness. We failed to achieve our principal objective—moderation by the Soviet Union on a global basis.

— Western Europe embarked on detente at the height of economic prosperity and growing self-confidence. Western Europe succeeded in achieving its primary objective—limited and regional modus vivendi with the USSR (e.g., the Berlin and Helsinki accords).

As a result, the Europeans have looked back at the early 70’s with nostalgia, while Americans recall the same period with distaste.

These different perceptions of detente led to a decade of bitter transatlantic debate and divergent policies. As the Soviet Union launched surrogate interventions in Angola and Ethiopia, as Soviet troops invaded Afghanistan and intimidated Poland, the West dissipated its energies in debilitating bickering over responsibility for the collapse of detente, and disagreement over the appropriate response to Soviet adventurism.

The great pipeline debate of 1982 was perhaps the last great spasm of this transatlantic rift. It is indeed interesting to compare the heat and duration of these earlier debates to the swift, united and substantial Western reaction to the KAL shootdown—including an air transport boycott of the Soviet Union by 22 nations. Such comparison provides a measure of progress by Western nations toward a new consensus.

The newly emerging transatlantic consensus on East-West relations results from changes in attitude on both sides of the Atlantic, with both European and American attitudes toward the Soviet Union moving from opposite extremes toward the center.

In Europe there is a new realism about the nature of the Soviet Union. Polling data shows dramatic shifts in European attitudes.

— In 1978, 42% of the French people said they were favorable to the USSR, whereas only 38% said they were unfavorable.

— By 1982, the 42% favorable to the USSR had dropped to 13%, while the 38% who were unfavorable rose to 73%. This is a net shift of 64% of the French people away from favorable attitude toward the USSR.

— In the UK, the shift against the USSR over the same period was 29%, in the FRG 26%, and in Italy 60%. These are all striking figures.

Polls in the United States show a reverse trend among the American people:

— In 1980, 67% of the American people felt the U.S. should get tougher with the USSR. By February of this year, this figure had fallen to 30%.

— Conversely, in 1980 only 20% of the American people felt the U.S. should reduce tensions with the Soviet Union. Today, that figure is 57%.

These figures illustrate that, after a decade-long transatlantic rift in public and governmental attitudes on the central question of how to manage relations with the USSR, Western peoples are coming together toward a common view. These trends in public opinion have been paralleled by a substantial diminution in the transatlantic debate among governments, and the emergence of a new policy consensus. In consequence, provided the second Reagan Administration carries through on the pledges of the first regarding arms control and East-West dialogue, we should be able to sustain the current high level of European support for U.S. policies in this area.

The Next 12 Months—Context and Concerns

Except in Italy, where Craxi could lose the Prime Ministership, it is highly unlikely that leadership will change in any of the key Allied countries over the next year; elections are neither scheduled nor probable in any major country in 1985. Moreover, what changes have taken place—Carrington coming to NATO, Mulroney winning in Canada—augur for continued “conservative” domination of the Alliance.

This is not to say that the existing governments have no problems:

— The still unfolding political scandals in Germany could rock the Government, and put Kohl’s own future in jeopardy.

— While Mrs. Thatcher is strong and determined, the continuing miners’ strike will strain Britain’s policy; the disarray of the opposition parties renders them impotent, but “wets” in the Tory party could seek to pull off a palace coup.

— Mitterrand’s growing European prestige is counterbalanced by his domestic unpopularity; earlier than the others, he faces an electoral test in the parliamentary elections of March 1986.

— The Craxi government in Italy faces a daunting array of legislative challenges and will have to deal with the potentially destabilizing effects of several brewing scandals.

— Spain, and more especially Portugal, suffer from deep economic difficulties, prospective problems in facing European competition as they enter the Community, and political systems that may have difficulty weathering such storms.

Even though it is a reasonably safe bet that most of Europe’s governments will survive the year without major changes, certain developments, particularly in the economic sphere, would increase the potential for tensions and disagreements in the Alliance.

1984 has been a year of recovery for the European economy, and 1985 should see the recovery continue. But the European recovery has been very different from our own. The average growth rate has been about 2 percent in 1984, and 2 to 2½ percent seems likely in 1985. This sort of growth fits the label “growth recession”: it is inadequate to reduce the rate of unemployment, which, indeed, is likely to rise from its current 11 percent to 11½ percent.

These hardly dazzling economic prospects-depend heavily on the assumption that the U.S. economy will have a soft landing in 1985—that U.S. growth will be on the order of 3–4 percent. Should American economic performance be weaker than that, the stimulus Europe can expect to get from exporting to the United States—which has made the difference between moderate growth and stagnation for Europe—will shrink. In that event, scapegoating of the United States for Europe’s economic plight will once again be popular.

Even on more favorable assumptions, Europeans may become increasingly critical of the United States. While the drumbeat of protest about our budget deficits has slowed in recent months, Europeans will almost certainly resume the attack if the Administration does not act during the first months of 1985; the Bonn Summit could be a livelier encounter than we want.

Particularly as 1985 draws to its close, the potential for economic friction will increase. The Europeans will be drawing closer to the end of the window of political freedom which the absence of elections gives them, and continued economic sluggishness and poor prospects may stir even conservative governments to consider alternative policies—or seek for foreign culprits.

The European Community barely skinned by this year, one in which it came closer to falling apart than it has since DeGaulle’s walkout in 1965. It will have a new and more vigorous Commission President, Jacques Delors, but what even he can make of the continuing problems of the Community remains to be seen. Will the Community continue the modest progress it began this year toward restraining agriculture spending and production? Will it manage the feat of smoothly incorporating Spain and Portugal—or will formal agreement to their entry be only the beginning of a difficult digestive process, one which produces minimal economic benefits and maximum political strain? The example of British entry is an unhappy precedent.

At the very least, domestic economic concerns and intra-European haggling are likely to put limits on the amount of sensitivity that Europe has for American commercial concerns. The handling of issues like corn gluten and soybeans may suffer as a result.

The U.S. side of the trade relationship may also grow more difficult to manage. Protectionist forces have, with difficulty, been kept under some control. But this has been during a period of falling unemployment. What will happen, if, as is possible, 1985 sees a combination of continued high trade deficits, and rising unemployment?

A second overriding influence will be the state of East-West relations. It was noted earlier that the Europeans have been understanding and patient over the lack of progress in the arms control field; over the next 12 months, this is likely to give way to greater frustration which could manifest itself in numerous “initiatives” by European foreign ministers and heads of state to bridge the gap between the two superpowers. It could also result in pressures on us to make concessions so that the Soviet Union can return to the negotiating table in a face-saving way. The Europeans will seek to insulate themselves from the chill. We can look for renewed activity between the two Germanies and increased interaction between Western and Eastern Europe. Maintaining any semblance of a united front vis-a-vis Poland is likely to prove increasingly difficult. (Less significant, but equally possible, is a revival of European activism in the Middle East—possibly at cross-purposes with us.)

If economics and East-West concerns stimulate renewed European dissatisfaction with America, conventional defense could well become an area of American frustration with Europe. Only with massive effort was the Administration able to hold off Senator Nunn and his colleagues; unless short term measures (such as increases in ammunition stocks and reception areas) are implemented, and a longer term look at how NATO organizes its conventional defense launched, we could find ourselves in the middle of an Alliance contretemps over burden-sharing. Assuming we do succeed in initiating a comprehensive new look at NATO’s conventional defense, we will need to push this to a meaningful conclusion, a process which will require continuing ingenuity and persuasiveness on our part over the next 18 months.

Just as important might be frictions that arise from specific issues that seem to plague our relations with one or several allies. Many of these come under the heading of “extra-territoriality”, a rubric that covers many disputes ranging from anti-trust to strategic trade controls. In particular, US technology transfer controls remain a major source of anxiety in Europe; depending upon the zeal with which we pursue our objectives, we could create bilateral replicas of 1982’s pipeline dispute. Pegard provides but the most recent indicator of the potential for trouble here. And there are some signs that the Europeans are beginning to come together over this issue, in opposition to U.S. pratices. This could make the problem more difficult to manage.

There will be other sources of friction as well. Our proposals for “star wars” are sure to raise concerns in the UK and elsewhere either that we are abandoning Europe, creating new forms of dangerous superpower military competition, or both. Commercial aircraft access will prove a thorny issue with the Scandinavians, just as their continued endorsement of nuclear weapon free zones will with us. With Spain we will have to ensure it does nothing to preclude full military integration in the Alliance; with Turkey, that it continues to improve its political and economic performance while promoting compromise in Cyprus. And we cannot assume that the major accomplishment of the past four years—INF—will not unravel a bit, particularly in the Netherlands.

These frictions will occur within the framework of an alliance that shares fundamental attitudes—support for the market economy and suspicion of the Soviet Union. There is one glaring exception. Papandreou’s government adheres to the Alliance only out of fear of Turkey; meanwhile, it tests our patience—and that of other Europeans—with outrageous posturing. This is a special problem, and a serious one—but fortunately not of formidable dimensions.

Conclusion

This is not an effort at prescription, and in any case we have given you our ideas elsewhere about how we might attempt to steer East-West and West-West relations. The key point to make in this analytical context is that while the next 12 months should not produce any crisis on the scale of the pipeline dispute, or any challenge equal to that of INF, increased Alliance discomfort and tension could develop as 1985 goes on. It is clear, furthermore, that our ability to manage our interests in Western Europe will in large part reflect developments in East-West relations and in the economy.

Nevertheless, it is important to point out that the potential for a really difficult year in trans-Atlantic relations remains limited. Helpful leadership remains in place and we should not underestimate our capacity to shape what happens. Indeed, the real problems may not arrive until later in the decade, when problems that now are “manageable” demand solutions, and when current leaders may be replaced by opposition figures who no longer share so much the traditional Atlanticist posture. Then, the parochialism that is always present on both sides of the ocean could come to the fore, bringing with it difficulties far beyond those we can expect to see over the next year.

1. Source: Department of State, Executive Secretariat, S/S Files, Executive Secretariat Sensitive (ES) and Super Sensitive Documents, 1 January 1984–21 January 1989: Lot 92D52 November 1–9 1984 ES Sensitive Documents. Confidential. Sent through Armacost, who did not initial the memorandum. Drafted by Haass, Holmes, and Dobbins on November 1. McKinley initialed the memorandum and wrote “11/6.” Armcost sent the memorandum to Shultz under a November 7 covering note, writing: “This is a thoughtful overview of the potential problems coming at us within the Atlantic world. I was struck in talking to the Quad Ambassadors yesterday by the upbeat attitude they expressed about prospects for transatlantic cooperation. If we are able to manage a soft-landing with the economy and follow through effectively on the future agenda we’ve been discussing with Bud, we should be in good shape. But there is little ground for complacency. Protectionist pressures, residual anxieties about SDI, limits on European defense budgets, differences of approach to Libya, impatience in some quarters with Israel and our tilt in that direction, etc. will provide plenty of challenging problems.” (Ibid.)