248. Talking Points Prepared in the Policy Planning Staff1



Today I wanted to talk about where we are heading over the next few months. A number of tough issues face us. But before I get to specifics, I want to make a few general points.
By and large, we can face these issues from a position of strength. We are in a good position objectively, and we have the opportunity to turn many of these issues to advantage.
On many of these issues, the key will be our domestic and Congressional situation. If we can maintain solid support at home, we’re in a very good position abroad. E.g., Central America, arms control, even South Africa.
One of the President’s strengths is that he is seen as a man of conviction and principle. People know he stands for something. He can compromise when it’s necessary, but people know there has to be reciprocity. The American people respect this, and foreign governments respect this.
One of our principles is that we don’t cave in under pressure. We don’t yield to terrorism; we don’t automatically cave on arms control or South Africa sanctions or aid to the contras just because the pressures are great. This is a great asset.
As we look ahead to the long-term future, there are many trends in our favor:
  • One is the trend toward democracy. We often cite the figure that over 90 percent of the population of Latin America is now governed by democratic systems or systems in transition to democracy.
  • There is also the remarkable historical phenomenon of anti-Communist insurgencies in many parts of the world. Perhaps it is all [Page 1086] a product of the Soviets’ overreaching during the period of American weakness in the 1970’s. In any case, they are finding that they cannot digest all of their gains, and people are fighting back.
  • The technological and telecommunications revolution is a powerful tide that works in our favor. The creative genius of free societies is in the best position to nurture this revolution and profit from it. Closed societies will either have to fall behind, or else open themselves up to major social transformations that could jeopardize state monopoly control of information and social life.
  • There’s a revolution also in economic thinking. It’s interesting that the economic crisis of the 1930’s led to an expansion of state control, to put a floor under public welfare and put some order into the economic system. The world clearly went too far in the direction of regulation and state control; many rigidities were built into the system over the decades. Then the economic crisis of the 1970’s (prompted by the energy shocks) has helped to reawaken everyone to the basic realities: productivity and creativity don’t come from the state but from free economic forces, given free rein to operate. This is now being widely recognized, in both developed and developing countries (e.g., Bonn Summit declaration,2 ASEAN).
All these trends mean that the U.S. really has what could be a winning hand, if we play our cards right.
So, as we face our current problems, we can face them with a lot of self-confidence. We have overcome many seemingly insurmountable problems in the past. This should be our attitude.

South Africa

We have just been through a critical period with respect to South Africa. We have bought some breathing space at home by virtue of the President’s Executive Order of September 9.3 But obviously our ability to maintain domestic support for the President’s approach will depend [Page 1087] on how well we manage over the coming months to show that we are getting somewhere.
Therefore we sent Herman Nickel4 back and we are urging the SAG to move quickly and decisively toward political accommodation. This is probably the SAG’s only hope for long-term peace in that country.
Change is inevitable; apartheid is probably doomed. The only question is whether change will come about through violent convulsion or political accommodation. If it comes through violence, we could get the worst outcome: a race war, bloodbath, radicalization of the blacks, a revolution that in the end replaces one oppressor with another, one possibly friendlier to the Soviet Union. If it comes through negotiation, there is at least a chance for maintaining the country’s economic prospects and preserving the hopes for a moderate outcome. We have enough recent experience of putting pressure on regimes (Iran, Nicaragua) and inadvertently ending up with something much worse.
So the centerpiece of our program is political dialogue between the SAG and representative blacks on a new political future for South Africa, one in which apartheid is gone and all races have real participation. In other words, a peaceful transition and strengthening of moderate forces.
The President has been right to seize the initiative, so we can continue our policy of constructive involvement and resist the more extreme and harmful measures proposed by some of our critics.
Economic sanctions that destabilize the South African economy would only hurt the blacks, exacerbate tensions and possibly worsen the violence. They could also do enormous harm to neighboring black states whose economies are heavily dependent on South Africa.
The measures decided upon by the President on September 9 are targeted at the machinery of apartheid, not at the victims of apartheid.
If we can maintain some degree of bipartisan consensus at home, we will be better able to encourage a positive evolution in a thoughtful, constructive way. That’s what the Presidential advisory commission will attempt to do.
We face a long-term problem, and a high risk that things will go wrong. But we now have the high ground—political negotiation, to avoid a bloodbath—and we are heading in the right direction.
[Page 1088]

US-Soviet Relations and Arms Control

The main event is the President’s meeting with Gorbachev in Geneva two months from now. But this should be viewed in the perspective of the recent past and the prospects for the future.
The U.S. in the past five years has been rebounding from its self-paralysis in the 1970’s. Our economy is strong, we have had five years of a major military buildup, and the country seems once again supportive of an active world role for the U.S. Now the Soviets, under a new and vigorous leadership, may want to rebound as well, after a period of economic stagnation and decrepit leadership. They will be formidable adversaries—but they may also be eager to focus on domestic priorities. They have a big Party Congress coming up in February and have some big domestic decisions ahead of them.
Thus we cannot exclude that they might be interested in some serious negotiation. At least we must approach the November meeting in that spirit. We might as well test them. If they’re just interested in political warfare, we can deal with that too.
We have to be realistic about the chances for progress, and it’s probably wise to dampen public expectations (e.g., Bud’s speech of last month).5 A better relationship will require reciprocity. We will not concede our positions preemptively in advance of the meeting (e.g., SDI, ASAT).
Nor should we have illusions about Gorbachev and the new generation he represents. He is a tough bird, and he’s very slick in working the Western media. His actions so far (threats vs. Pakistan, domestic crackdown) give no reason to think he’s a closet liberal.
We will explore the possibilities when Shevardnadze is in New York and then in Washington next week.6 We can test whether [Page 1089] there is serious business to be done in the Gorbachev meeting, or whether it will really be a “get-acquainted” session.
The agenda with Gorbachev will cover the obvious:
  • Arms control: Here, the new Geneva NST round begins today, and we will find out there whether real progress can be made. We want more specifics on what reductions they are willing to make in offensive forces. Also CDE, MBFR.
  • Regional issues: The Middle East, Afghanistan, Cambodia, and other areas can be discussed.
  • Bilateral accords may be reached—new consulates, cultural exchanges, etc.
If no progress is achieved before the meeting, perhaps the meeting itself can give impetus to progress in existing channels afterwards. Though, obviously, even this kind of outcome would benefit from some advance preparation.

Middle East

The reasons why a Mideast settlement is in our interest haven’t changed. The absence of a solution will pose enormous risks: radicalization, growth of Soviet influence, threats to moderate Arab regimes. So, we’re still leaning forward.
The idea of a Murphy meeting (with a joint Jordanian-Palestinian delegation) started out as something relatively non-controversial but turned out to be something quite complicated:
  • It was designed to keep a dialogue going while finessing or postponing the thornier issues like the US relationship to the PLO. Then the Jordanians and PLO come up with a list of names that tried to bring the PLO into the picture at an early stage. They clearly had in mind a scenario that made a US dialogue with the PLO a key, pivotal step in the process.
  • Our aim had been something different: a process leading quickly to negotiations with Israel. The Arabs continue to be hung up on this crucial point.
  • PLO terrorism against Israel also made the problem much more difficult. The PLO is hardly earning a reputation for moderation. Our conditions for dealing with the PLO remain the same: no negotiations with them until they accept 242, 338, and Israel’s right to exist.7
But the process is continuing.
  • We will explore various ideas with King Hussein when he gets here.8
  • The Egyptian-Israeli relationship has a chance of making progress if Taba can be finessed by sending it to arbitration.
The obstacles are apparent. But there is still a great commitment on the part of both Hussein and Peres to keep the process going. The Arabs still see the “Peres window” as an incentive to get their act together as soon as possible.

Central America

Central America is an example of a number of key principles: the importance of staying power, the importance of domestic support, the importance of having a framework of diplomatic objectives in the name of which to exert our influence. All these things are related, and together they add up to a successful policy.
Duarte has helped us turn everything around. In El Salvador, the government has popular support, the army is doing better (with our support), the guerrillas are weaker, and Duarte has taken the political as well as the military initiative. He also has a good prospect of long-term Congressional support.
The problem is Nicaragua—but Nicaragua, too, is on the defensive. The democratic resistance is growing: It is entitled to a role in Nicaraguan political life and should have a greater role diplomatically. We now have Congressional support (NHAO). We will try to raise UNO’s political profile here and internationally.
The centerpiece of our position is internal dialogue. Nicaragua must talk to its internal opposition just as Duarte has talked to his. There can’t be peace in the region without internal peace in Nicaragua.
The Contadora process is still the overall framework. There should be a regional, comprehensive solution covering all the key issues. (21 objectives)9
We may have some new ideas to promote Central American regional cooperation.
Five years ago, and even three years ago, things looked grim in Central America. Now they look much better.

The Global Economy

A stronger global economy helps us with all our objectives. A weaker global economy will complicate all our foreign policy problems.
The US economy is still vigorous, but interrelated problems remain: budget deficit, trade deficit, high dollar, capital inflows. Budget deficit is pivotal for long-term health of our, and world’s, economy.
Main danger now is protectionism. The President remembers Smoot-Hawley.10 Protectionism is a destructive force. We have a trade strategy:
  • new GATT round11
  • actions against countries that restrict market access
  • negotiations with Japan
  • adjustment measures at home
  • cut the budget deficit, to help lower interest rates and bring dollar down
Trade and debt problems are related. Protectionism in OECD is devastating to debtor countries’ hopes for growth.
Key to debt strategy is LDC adjustment to restore growth. Austerity is not an end in itself. Aim should be internal policies that stimulate investment, raise productivity, free up market forces.
Also some new ideas on expanding World Bank role.
[Page 1092]

Other Issues Down the Road

New Zealand still a problem, but some possibility of progress. We will be open to GNZ ideas on settling ship visit problem, though we won’t compromise on NCND.12 Lange has new ideas on giving PM discretion in context of new legislation. We shall see.
Philippines a serious long-term problem. Need to urge Marcos to move on military reform, fair elections, and economic reforms. He’s stubborn. Communist insurgency is growing, and Marcos’s government is incapable of handling it. We will have to intensify our efforts and exert our influence, or else we face ominous prospects.
South Asia: Armacost/Fortier trip to ease “nuclear tensions” between India and Pakistan: to encourage them to take steps to reassure each other, slow down nuclear programs.13
  1. Source: Department of State, Executive Secretariat, S/P Files, Memoranda and Correspondence from the Director of the Policy Planning Staff to the Secretary and Other Seventh Floor Principals: Lot 89D149, S/P Chrons 9/1–30/85. No classification marking. Rodman sent the points to Shultz under a September 13 information memorandum, indicating that Shultz could use the points at the September 19 monthly large staff meeting. Rodman added, “The theme is an autumn preview, looking ahead to the big issues on our agenda over the coming months.” (Ibid.) No minutes of the September 19 meeting have been found.
  2. For the text of the Bonn G–7 “Economic Declaration,” issued on May 4, see Department of State Bulletin, July 1985, pp. 3–6.
  3. On September 9, the President signed Executive Order 12532, “Prohibiting Trade and Certain Other Transactions Involving South Africa,” which imposed sanctions against South Africa. For the text of the order, see Public Papers: Reagan, 1985, Book II, pp. 1058–1060. In his personal diary entry for September 9, the President wrote: “Saw our Ambas. off on his return to S. Africa. Then at 10:30 I went before the press & read a statement about the exec. order I would sign listing things we were going to do with regard to apartheid in S. Africa. Many were things included in the Cong. bill calling for sanctions. I explained these were things I could agree to but eliminated parts of the bill I did not favor and that I would veto the bill if it came to my desk. This wouldn’t have been necessary if I had line item veto.” (Brinkley, ed., The Reagan Diaries, vol. I, January 1981–October 1985, p. 494)
  4. Ambassador to South Africa from April 20, 1982, until October 4, 1986. Telegram 275938 to Pretoria, September 9, contained the text of a letter from Shultz to Nickel “outlining instructions for the Ambassador during the period immediately following his return to post.” (Department of State, Central Foreign Policy File, Electronic Telegrams, [no N number]) Nickel returned to South Africa on September 10.
  5. McFarlane delivered an address, entitled “U.S.-Soviet Relations in the Late 20th Century,” to the Channel City Club and Channel City Women’s Forum in Santa Barbara, California, August 19. According to the New York Times, McFarlane “said today that ‘even incremental improvements’ in the relations between the United States and the Soviet Union would be hard to achieve without changes in Moscow’s approach to major issues.” (Gerald M. Boyd, “Soviet Must Shift on Major Issues, M’Farlane Insists: Arms and Rights Cited: The National Security Adviser Draws Dark Picture in Talk on Russian Motives,” August 20, 1985, pp. A1, A11) The address is printed in Department of State Bulletin, October 1985, pp. 34–38.
  6. Shevardnadze was scheduled to meet with the President on September 27, in preparation for the upcoming Geneva summit meeting between Reagan and Gorbachev scheduled to take place that November. The memoranda of conversation are in Foreign Relations, 1981–1988, vol. V, Soviet Union, March 1985–October 1986, Documents 105106. In his September 28 radio address, the President indicated that his and Shultz’s conversations with Shevardnadze “covered a broad global agenda, including the four major areas of the U.S.-Soviet dialog: human rights, regional and bilateral issues, and security and arms control matters. They enabled us to discuss at the most senior levels the key issues facing our two nations. I told the Foreign Minister I’m hopeful about my upcoming meeting with General Secretary Gorbachev, and I put forward some new ideas as well as my plans and expectations for that meeting.” (Public Papers: Reagan, 1985, Book II, p. 1150)
  7. See footnote 9, Document 63.
  8. Hussein was scheduled to meet with the President in Washington on September 30. The memoranda of conversation is scheduled for publication in Foreign Relations, 1981–1988, vol. XIX, Arab-Israeli Dispute. Following their meeting, the President and King Hussein offered remarks at 10:52 a.m. at the South Portico of the White House. For the text, see Public Papers: Reagan, 1985, Book II, pp. 1156–1157.
  9. See footnote 2, Document 214.
  10. Reference is to the Tariff Act of 1930 (P.L. 71–361; 46 Stat. 590), commonly known as the Smoot-Hawley Tariff, which President Hoover signed into law on June 17, 1930. The act raised tariffs on goods imported into the United States.
  11. In the declaration released at the Bonn G–7 Economic Summit meeting (see footnote 2, above), the G–7 leaders endorsed the relaxation and dismantling of trade barriers, noting: “We need new initiatives for strengthening the open multilateral trading system. We strongly endorse the agreement reached by the OECD Ministerial Council [Organization for Economic Cooperation and Development] that a new GATT [General Agreement on Tariffs and Trade] round should begin as soon as possible. Most of us think that this should be in 1986. We agree that it would be useful that a preparatory meeting of senior officials should take place in the GATT before the end of the summer to reach a broad consensus on subject matter and modalities for such negotiations. We also agree that active participation of a significant number of developed and developing countries in such negotiations is essential. We are looking to a balanced package for negotiation.” (Department of State Bulletin, July 1985, p. 5; brackets are in the original) The Uruguay Round of multilateral trade negotiations began in September 1986. Documentation on GATT and the Uruguay Round is scheduled for publication in Foreign Relations, 1981–1988, vol. XXXVII, Trade; Monetary Policy; Industrialized Country Cooperation, 1985–1988.
  12. See footnote 8, Document 242.
  13. Armacost and Fortier were scheduled to visit Pakistan and India, September 14–19. Documentation on their visit is scheduled for publication in Foreign Relations, 1981–1988, vol. XXXIII, South Asia.