291. Address by Secretary of State Shultz1

Meeting America’s Foreign Policy Challenges

Today, I want to talk with you about the role the United States seeks to play in the world. Overall, our foreign affairs situation is good and our prospects bright. We have a strong hand with which to influence world affairs to our benefit—but only if we are persistent, use our advantages wisely, and apply the necessary resources to the conduct of our foreign relations.

To do so, we need to have clearly in mind just where we are and where we’re going; the problems we face and the strengths we have for dealing with them; and, finally, the challenges that we should be focusing on right now. And that’s the purpose of my remarks to you today.

America’s Foreign Policy Goals

We begin with the question of our foreign policy goals. What are we, as a people and a nation, seeking to accomplish?

There is a strong consensus on our basic objectives. They are widely understood and supported by the American people. I think all of us can agree that we serve the interests of the United States best when we seek to:

  • Protect the safety of our nation against aggression and subversion;
  • Promote our domestic prosperity;
  • Foster the values of freedom and democracy both at home and abroad;
  • Act in a manner consistent with our humanitarian instincts; and
  • Combat those activities which undermine the rule of law and our domestic stability—particularly, right now, terrorism and narcotics trafficking.

Over the past four decades, both Republican and Democratic administrations have come to agree on these goals. They’re not the source of divisive partisan debate. But for that very reason, we sometimes take them for granted. We shouldn’t. We should keep reminding ourselves of them, for they represent, in effect, the compass of our dealings with other nations.

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Foreign Policy Problems

Now, how are we doing in accomplishing these broad objectives?

Clearly, we face a number of serious and immediate challenges in the world today—ones that directly affect our national interests. In the Middle East, in Africa, and elsewhere, persistent tensions threaten regional peace and stability. The continuation of conflict in the Persian Gulf raises the possibility of wider escalation of a war that threatens our energy security and that of our allies. In Central America, democracies are struggling to eliminate externally supported aggression and subversion. In Afghanistan, Angola, and Indochina, the Soviet Union and its proxies are using military force in the most brutal manner to maintain and expand their influence and control.

Elsewhere in the developing world, the efforts of local governments to address the root causes of their economic and social malaise have been hampered by large foreign debt and disappointing growth rates. The transition to greater political freedom in many of these countries continues to be a fragile process.

Current events in Beirut have yet again illustrated that no single country or its citizens are exempt from the scourge of terrorism.2 Combating that threat will continue to demand steadfast courage and expanded cooperation on the part of all civilized nations.

And among the major industrialized democracies of the world, we confront persistent pressures for thinly disguised protectionist measures. These shortsighted actions would only stimulate political confrontations among trading partners. They would have the effect of dismantling the open world trading system which has helped to generate so much of the West’s prosperity and technological advantage of the past four decades.

Positive Trends in Our Favor

Now, that’s the catalogue of problems. But more than balancing those problems is increasingly clear evidence that we are making significant progress in the world. Trends are in our favor. The movement toward expanded political and economic freedom is real and growing.

Our world is already in the midst of a scientific and technological revolution—one whose social, economic, political, and strategic [Page 1283] consequences are only beginning to be felt. Time and space are contracting as instantaneous communications make business, politics, and culture truly global for the first time. Familiar measures of economic development—and, by extension, military and political strength—are becoming outdated. This new information age is bound to have, and already has had, a profound impact on world politics and economics.

My own belief is that, having long since passed from the agricultural age—although we still produce more than enough food to feed ourselves—we in this country have left the industrial age, and we’re in a new era. No longer, if somebody asks you, “What is the symbol of America’s economy?”—well, maybe once you would have said the blast furnace and the assembly line. You wouldn’t say that today, would you? It’s different.

This new information age has the potential to be our age—a period which plays to the great strengths of the West. The productivity and competitiveness of a nation will be far more dependent on how freely knowledge can be used and shared. And unlike oil or mineral wealth, knowledge is a resource that does not diminish but, rather, increases with its use. In this sort of environment, open societies such as our own will thrive; closed societies will fall behind. What is more, this lesson—that freedom and openness are the wellspring of technological creativity and economic dynamism—is increasingly well understood throughout the world.

Recent events in the Philippines have once again demonstrated the power of the democratic idea. Throughout Latin America, we have seen a remarkable resurgence of democratic governments. Contrary to predictions of just a few years ago, the percentage of Latin America’s population living under freely elected governments has grown from 30% in 1979 to more than 90% today. In witnessing these events, we cannot be indifferent to just how positive and important a role the United States can play in supporting such developments.

At the same time, there is an equally encouraging trend on the part of many nations away from central planning toward greater economic freedom for the individual and increased reliance on free market-oriented solutions to the problems of economic growth. Few countries would now dispute that entrepreneurial initiative in a market environment is the engine of development and growth. These truths are being acknowledged even in the communist world, as demonstrated by economic reforms in China and Hungary.

All this reflects that the great ideological struggle that has marked this century ever since the Bolshevik revolution of 1917 has essentially been decided. In the contest between the Western values of democracy and individual freedoms and Soviet-style, party-dominated centralized collectivism, the trend is in our favor, and it’s clear. In contrast with [Page 1284] earlier decades, no one speaks today of communism as the wave of the future. The battle of ideas will doubtless continue, but we have the winning hand.

As a consequence, it is the Soviet Union’s massive military might alone—and not any inherent economic advantage or political appeal—that underlies its status as a global competitor. The Soviet Union possesses a clear and sobering strategic threat to the United States and its allies. It has the capability to intervene with conventional military force, directly or through proxies, in many regions of the world and to threaten and to try to intimidate our allies and friends in these areas. It commands a massive nuclear arsenal and, in particular, an offensive ballistic missile force able to inflict great destruction on the United States and our allies.

We must be prepared to counter these threats. We must be prepared to deter Soviet aggression against the United States or its allies, by whatever means. We must have the defensive strength necessary to demonstrate that we and our allies would be able to respond instantly, and with enormous effectiveness, should we be attacked. That’s the way to keep the peace, to have the capacity to deter.

Why Our Approach Works

As a nation, we have the ability to meet these challenges. We can capitalize on the foreign affairs opportunities before us. To do so, we have to show patience and determination—but we have powerful advantages in our favor.

The first of these advantages is our democratic vision. The effectiveness of our foreign policy reflects our confidence in our beliefs and values and in our purposes and priorities as a society. People throughout the world look to us for a vision of the future, precisely because so many individual Americans—such as Martin Luther King, Jr., whose birthday we celebrated recently—have worked to extend the promise of our beliefs to everyone, regardless of race, creed, or class. And by so doing, they have made America stronger in the world: stronger in our own sense of solidarity as one people and stronger as a precious source of hope—realistic hope—for oppressed people everywhere.

And we gain strength from our tremendous economic capabilities. America’s economic capacity—its ability to support ambitious national objectives, to advance the edge of technological creativity, and to support increased domestic prosperity—can only be described as awesome. Of course, we have our problems—and not the least is a Federal budget deficit that we must address promptly and effectively, and I’m confident we can. And by doing so, we will be better able to draw upon the powerful economic advantages that we possess in the pursuit of our foreign policy objectives.

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We are also benefiting from a renewed sense of hard-headed realism about the importance of our own military strength. Healthy American defenses are the indispensable underpinning for any American foreign policy seeking a safer world and a more durable peace. Our weakness invites challenges and intransigence; our strength deters aggression and encourages restraint and negotiation on the part of our adversaries. But we face entirely new security challenges in today’s world, including protracted armed subversion, state-sponsored terrorism, or the political disruption and violence associated with large-scale narcotics trafficking. If we are to be effective in meeting these threats—as well as in deterring more traditional forms of aggression—we have to be steady in supporting our commitments and ready to act decisively when necessary. We have to show the political will to use our military strength intelligently and effectively in defense of our most vital interests. And we have to be clearly perceived by both friends and adversaries as having that will.

Now let me turn to our diplomatic efforts. Power and diplomacy are not contradictory alternatives in our dealings with the world. They are complementary and reinforcing components of our foreign policy. Military preparedness alone is not enough. Diplomacy is an essential and cost-effective means of accomplishing our objectives. But diplomacy that is not backed up by military strength is usually ineffective. And so, as a first resort, we seek to meet our objectives with diplomacy. It can encourage like-minded nations to join with us in common effort and bring a greater sense of predictability and stability to our relations with potential adversaries. If we attempted to deal with the diverse threats to our interests on a unilateral basis, this would demand great effort and enormous expense on our part. But there is a more efficient strategic alternative. Our diplomacy—along with its various tools such as security assistance and economic support funding—seeks to maximize our effectiveness in the world through cooperation with those nations with which we share basic values and common interests.

The Foreign Affairs Resource Crisis

Thus far, I have spoken about America’s winning hand in world affairs because I am personally confident about our national strengths and the wisdom of our general approach. But I also have to sound a warning note as well. Just as we should be consolidating our recent gains, we are in danger of undercutting our position in the world by denying ourselves the necessary resources. Any strategy is only as good as the tools provided to work toward its objectives. And we are fast approaching a situation in which the United States will simply not have the foreign policy tools needed to get the job done.

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Last month, the President submitted to the Congress his fiscal year (FY) 1988 and FY 1987 supplemental requests for the foreign affairs budget—some $19.6 billion.3 I can assure you, the budget request was no pie-in-the-sky wish list. It reflected a number of tough choices that we had to make as part of our contribution to reducing the overall Federal deficit. As a result, our request for FY 1988 is $1.6 billion lower than for the previous year. Our total request amounts to less than two cents on every dollar proposed to be spent by the Federal government.

This year, as the Congress begins to review our foreign affairs budget request, there is no fat to be cut—we’ve already gotten to the bone and well beyond. Over the past 2 years, Congress has made devastating cuts in our foreign affairs budget proposals. We have lost over $3.3 billion from the resources we were operating with in FY 1985, and we’ve had mild inflation since then, but some inflation, so the real value is even less. And, remember, a portion—roughly 40% or so—of that budget is fixed. It doesn’t get cut. So the cuts get borne heavily by the remainder. And if you are trying to operate an embassy in Japan or in Western Europe where the currency cross-rates have changed drastically, you’re in tough shape.

But these drastic reductions were not generated through any careful determination of national priorities. They didn’t reflect any lessening in the importance or number of foreign policy challenges that this nation faces in the world. These cuts were more severe, in percentage terms, than the reductions in any other function in the President’s budget requests. And, as I was saying, for our key posts in Europe and Japan, they have been even more damaging as a result of the recent decline in the dollar.

But what do these figures really mean? These draconian budget reductions are forcing us to play Russian roulette as we shortchange our various foreign policy interests. If massive cuts are continued this year, they will directly undermine our ability to exercise effective leadership in the world.

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This budget crisis is perhaps the most urgent—and the least recognized—foreign policy problem facing our nation today. These cuts have seriously impaired our ability to provide necessary economic and military support for our allies and friends in need. By doing so, they risk our continued access to vital military bases and facilities overseas that would require tremendous expense and effort for us to try to replace or compensate for. They signal—correctly or not—a declining U.S. interest in supporting our friends and allies in strategically important regions.

And the effects of these cuts go further. They hamper our war on drug traffickers and on terrorists. They restrict our attempts both to promote democratic values and reforms overseas and to expand trade and develop jobs. And, by forcing us to close overseas posts and to curtail necessary training, such as language training, they are weakening not only our career Foreign Service but the government’s very ability to follow, analyze, and understand developments in a fast-changing international environment.

Let there be no mistake: the expenditure of resources in support of our foreign policy objectives is not any sort of a “giveaway.” Our foreign affairs programs are designed to advance U.S. national security interests. They’re a cost-effective way of doing so, and they make less likely the possibility that we will have to fall back on military means to counter threats against us. They are an investment in a better future for ourselves and our children. Attempting to save some dollars in the short run through deep cuts in these programs may turn out to be a very expensive illusion. Over the longer term, these cuts may cost us much more—in money, in jobs, and even in lives.

Challenges Before Us

And that should be an important lesson for all Americans. The pursuit of an effective foreign policy—one that seeks meaningful progress toward our basic goals—doesn’t lend itself to quick fixes. Americans have to be prepared to conduct foreign relations on a coherent, long-term basis. But that requires a special steadiness and persistence on our part. A world of peace and security will not come without considerable exertion or without our facing up to some tough choices.

In particular, we cannot allow ourselves to lose our sense of focus on what we are seeking to achieve in the world and what is required to reach those ends. It would be all too easy for us as a society to become distracted from what is truly at stake in the most urgent foreign policy challenges now facing us.

The first such challenge lies with our firmness and reliability in promoting the cause of democracy, national self-determination, and individual freedom in various parts of the world. In some cases—as [Page 1288] in the Philippines today—this will involve our continued support and assistance for the efforts of the Filipino people to strengthen democratic institutions in the face of a bitter communist insurgency and economic problems. It is in our strategic interest to do so and to do all we can to support President Aquino’s government in promoting democracy, stability, and prosperity in the Philippines.

Where necessary—as in Central America—we must be prepared to assist friendly governments in dealing with externally generated threats to their political stability. We desire a peaceful and negotiated resolution to such regional tensions and will work, and do work, actively to those ends. But we should never forget that the firmness of our support for threatened democratic governments is a necessary incentive for potential aggressors to refrain from threats and attempts at subversion.

Today, we also see the power of the idea of freedom calling into question the old assumption of the inevitable permanence of dictatorships of the left in various countries. Soviet-sponsored aggression in Afghanistan, Angola, and Cambodia, and the oppression of a Marxist-Leninist regime in Nicaragua, have given rise to resistance movements. These men and women are struggling for the rights denied them by communist rule. And, as such, they deserve our support.

We should be under no illusions. Over the longer term, our reliability in supporting those who believe in freedom in the face of communist totalitarianism is an important element in securing and ensuring our own security. It encourages our friends and gives our adversaries a reason for restraint. And conversely, if we fail to support those struggling for freedom in their own countries, we will only face more daunting challenges to our security over the longer term.

The second pressing challenge is that of our response to terrorism. In recent years, we have seen new and ever more virulent forms of this modern-day barbarism. These include the emergence of narcoterrorism, where the narcotics traffickers provide the money and the terrorists provide the muscle—the use of such violence in association with narcotics trafficking to undermine local governments. Quite simply, terrorism is war. It’s a shadow war involving direct and brutal assaults on the lives of our citizens, on our national interests overseas, and on our basic values.

It’s vital that we win this war. But to do so, we have to be prepared for a long, tough effort. It’s inevitable that, as a people, our hearts go out to the individuals directly affected by terrorism and to their families and friends here at home. But we cannot allow our sympathies to overshadow the pressing need for us to stand firm behind our principles and to deny international terrorism further leverage against us. Our foremost priority must continue to be to demonstrate, through word and action, that there are no rewards for terrorist violence. We have to [Page 1289] see to it that the terrorists not only don’t get rewards, they pay a price. We have to redouble our cooperative efforts with other nations in dealing with this scourge.

The third pressing challenge we face lies with the management of our relations with the Soviet Union. The Soviet Union poses the primary threat to our security, yet our two countries share a basic interest in ensuring that—as the President and General Secretary Gorbachev agreed at their Geneva summit in 1985—they said, “A nuclear war cannot be won and must never be fought.”

In our dealings with the Soviet Union, we have pursued a four-part agenda of issues that are important to us, including arms control, regional conflicts, bilateral matters, and human rights. In the field of arms control, the President’s discussions with General Secretary Gorbachev at Reykjavik last October revealed potential areas of agreement on substantial and verifiable mutual reductions in offensive nuclear weapons that would enhance strategic stability. We are committed to pursuing these opportunities at the negotiating table, even as we will also continue our efforts—consistent with the ABM [Anti-Ballistic Missile] Treaty—to research ways of strengthening that stability through greater reliance on defenses. Both efforts are complementary and necessary.

But this places special demands on us. We need a sustained effort that is firm, realistic, and patient. We can’t afford to become either disheartened or euphoric with each week’s news out of Moscow. Agreements for their own sake are of no interest. It is the content that counts. Nailing down the details of any meaningful agreement with the Soviets will take time and tough negotiating. And for that sort of negotiating to be successful, we have to be prepared to take the necessary steps to keep America strong.


And so, as Americans, we have our work cut out for us. We have to use our power and our diplomacy with exceptional skill in a highly competitive international environment. But if the problems before us are great, so, too, are our strengths and our opportunities. Our political and economic freedoms are those which hold the greatest promise for the future. Our diplomacy is active in seeking practical, negotiated solutions that might strengthen the peace, and we have rebuilt our military strength so that we can better defend our interests and discourage others from violence. And we have allies with whom we share common purposes and ever more effective cooperation.

The test for us will be whether—in the conduct of our foreign policy—we continue to make the best use of our energy and creativity as a people in the service of peace and our democratic ideals. I, for one, am confident that we will meet that challenge.

  1. Source: Department of State Bulletin, April 1987, pp. 5–8. All brackets are in the original. Shultz spoke before the Institute of International Education and the World Affairs Council.
  2. Presumable reference to the continued seizure of hostages in Beirut. On January 24, three American teachers and one Indian teacher at Beirut University College were kidnapped. (Bernard Gwertzman, “U.S. Aides Link Latest Seizures to Extradition: Hijacking Suspect Held in Germany Is Focus,” New York Times, January 25, 1987, pp. 1, 13) It is also possible that Shultz is referring to fighting that broke out in West Beirut February 17–18; see Ihsan A. Hijazi, “Unrivaled Clashes Raging in Streets Of Western Beirut: 50 Dead in the Fighting: Shiites and Druse Are Battling With Tanks and Artillery—Many Shops Burn,” New York Times, February 19, 1987, pp. A1, A14.
  3. Shultz presented a statement in support of the administration’s FY 1988 request for the foreign affairs budget before the Senate Budget Committee on January 23. In his statement, Shultz indicated that of the $19.6 billion requested by the administration, $15.2 billion was earmarked for foreign assistance, with $4.4 billion in budget function 150 operations to finance the Department, USIA, and BIB. He indicated that the administration sought $1.3 billion in supplemental funds for FY 1987, noting that this was “the minimum amount necessary to protect our core interests until the completion of the FY 1988 budget process. The supplemental funds will help meet critical unexpected needs, major shortfalls from absolutely essential projects where there are firm commitments to key allies, and projects which Congress has asked us to consider and fund.” (Department of State Bulletin, March 1987, p. 9)