HONORARY CHAIRMAN:
Ambassador William J. Croe Jr.
American Ambassador
in The Court of St. James'

PRESIDENT:
Sir Brian Goswell

VICE PRESIDENTS:
R. Andrew Barnett
William C. Chairman
Nicholas Will

HONORARY SECRETARY:
William C. Chairman

HONORARY TREASURER:
R. Andrew Barnett

BOARD OF DIRECTORS:
Chin P. Adamson, Senior Vice President &
Regional Manager
Head of America NT & SA
Graham Abbassian, Vice President -
Atlantic, United Airlines
J. David F. Barnes, CBE
Chief Executive Zeneca Group PLC
Karen Rosham, Associate Director
Hampton PLC
Richard Bransby, Chairman,
Virgin Atlantic, Airways
Michael Brignola, Director,
Imperial Chemical Industries PLC
R. Andrew Barnett,
Partner, Price Waterhouse
William C. Chairman, Chairman & CEO,
Foster Wheeler Energy Ltd.
Lyn Edgington, Vice President
Government Relations
Northern Telecom World Trade
Stefan Garev, Senior Vice President & General Manager
Stefan Garev, Senior Vice President & General Manager
Stefan Garev, Senior Vice President & General Manager
Sir Paul Girardot,
Director
Sir Brian Goswell, Deputy Chairman

Michael Mawes, Chairman, Director of Marketing
IBM United Kingdom Limited
Jan G. McMillar, Chairman & Chief
Encounter Ford Motor Company Ltd
John M. Farlane, Executive Director
Standard Chartered Bank
Charles S. McWeigh III, Chairman,
Solomon Brothers International Ltd
Niall A. Meinenketh,
UK Director Equitable Tax Services.
Arthur Anderson & Co.
Don J. Neese, Vice President United Kingdom,
Lockheed Martin SA
Tom Pinner, Vice President & General Manager
Health & Beauty Care UK
Privity & Gamble Limited
Christopher Rees, Chairman,
Merrel Lynch Europe Limited
John T. Reid, Chairman & Managing
Director, Colgate-Palmolive Limited
Brian Richard, Director & General
Manager, McDonnell Information Systems Ltd
Bernard Schulte, Managing Director
Korn/Ferry CarroOrban International
Stewart Siddall, Vice Chairman UK
Small-Size Beecham
Robert A. Seberg, Chairman
Telex Limited
Ambassador Edward Street, Condigns,
Thompson Syvert, Amro Executive Europe/
Middle East, Chairman Manhattan Bank, N.A.
Dr. Keith "Sylker" Chairman & Chief
Executive, East UK plc.

Jean Wadley,
Jean Wadley, Associates Limited
Ronald Waters, European Financial Director
Gillette Management Inc.
Nicholas K. S. Will, MA, Chairman,
N.K.S. Will (International) Consulancy

DIRECTOR GENERAL:
Robert B. Brack
COMMITTEE CHAIRMEN:
Eames/West Trade - Robert Stuer
Environment - Martin Hoiden
Financial Affairs - Robert Garland
Financial Services - Jonathan Loss
Technology Investment - Michael McMurdy
Tatacon - Walter A. McEuen/Hugh

COMMITTEE CHAIRMEN:

Apple Computer U.K. Limited
Arthur Andersen & Co.
Bank of America NT & SA
Bectel Group
Chibac N.A.
Colgate-Palmolive Limited
Esso UK Plc.

Ford Motor Company Limited
Foster Wheeler Energy Limited
Gillette Management Inc.
Glasgow Holdings plc.
Goldman Sachs International
Helene Curtis UK
IBM United Kingdom Limited

Imperial Chemical Industries PLC
International Herald Tribune
Investcorp
Korn/Ferry CarroOrban
McDonnell Information Systems
Limited
Merrill Lynch Europe Limited

Northern Telecom World Trade
Price-Waterhouse
Privity & Gamble Limited
Salmon Brothers International
Limited
State Street Bank & Trust
Company

Telexo Limited
The Chase Manhattan Bank N A
The Callig Organization
United Airlines
Zeneca Group PLC

AN AFFILIATE OF THE CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, WASHINGTON, D.C. • INCORPORATED WITH LIMITED LIABILITY IN THE DISTRICT OF COLUMBIA U.S.A.
MEMBER OF THE EUROPEAN COUNCIL OF AMERICAN CHAMBERS OF COMMERCE.

AMERICAN CHAMBER OF COMMERCE (UK) JULY 1995

"Consulting Partners to Business"

75 Brook Street, London, WIY 2EB

Telephone: 0171-493 0381. Fax. No: 0171-493 2394.
E-mail: acc@amcham.demon.co.uk

To Readers of The Official Journal of The American Chamber of Commerce (UK) on
International Business Policy

This is the second issue of what we intend to be a quarterly Journal on International Business Policy. A number of comments were received on the first issue in April for which we are grateful. These comments have enabled us to partly redesign the Journal and I hope you will find this format an attractive one.

We intend that it should emphasise the global nature of the major international issues facing businesses today as well as the global nature of the interests of the American Chamber located here in the UK.

I hope that you will feel that we have attracted some outstanding contributors to give us their views on the major international business issues of today. We shall continue to work on the format of the magazine and we have, since the last issue, sharpened the distinction in the body of the publication between our reports and advertisements.

May I invite you to write to me on any issue discussed in this July Journal. The purpose of the publication is to provide a forum for members to comment upon the major contemporary problems which need resolving if we are to move the world's economies forward.

Yours sincerely,

Sir Brian Goswell
President

US/EU RELATIONS

# For US Leadership, A Moment Missed

By Dr Henry A. Kissinger

President Clinton's attendance at the V-E Day celebration in Moscow aroused ambivalent emotions. No doubt Soviet sacrifices contributed decisively to victory over the Nazi dictatorship. But it is also true that the Nazi-Soviet Pact had made the war possible; that Stalin had divided Eastern Europe with Hitler; that he then supplied the Nazi war machine until the Soviet Union was attacked; and that upon victory, he occupied Eastern Europe, launching four decades of Cold War.

The Yeltsin-Ch Clinton summit, moreover, took place at a moment of extraordinary uncertainty in US-Russian relations. There are disagreements over Chechnya, nuclear sales to Iran and NATO expansion - all issues deserving high-level attention. The question remains whether V-E Day celebrations, with the presence of so many other heads of state, was the most auspicious occasion for addressing these controversies. Even more fundamentally, the visit to Moscow reveals the lack of balance in the priorities of the administration's foreign policy.

If any European city deserved to be singled out by America for an allied remembrance, it was London. Capital of the nation that steadfastly resisted Nazi aggression from the beginning, it became America's most reliable ally, both in the war and in the Cold War that followed. No better occasion is likely to arise to celebrate Great Britain's unique contribution to the cause of freedom or to express America's appreciation for two generations of steadfast co-operation.

That the moment was not seized - even as a stop on the way to Moscow - was no more

oversight. One of the curious attributes of the leaders who grew up during the Vietnam protest movements is that their obsession with transcending the categories of the Cold War imprisons them in the debates of the Cold War period. One of their articles of faith seems to be that the Communist (or Soviet) menace was overdrawn, indeed that the Cold War could have been most effectively ended - if it need ever have been waged - by reassuring Russia rather than confronting it.

In that spirit, Deputy Secretary of State, Strobe Talbott, the principal architect of Washington's European policy, argued in *Time magazine* as late as 1990 that the doves had been right all along and that the Soviet Union had never been the threat it had been cracked up to be. Western policy had been, at best, irrelevant when it had not actually delayed the Soviet collapse. Thus Cold War attitudes and institutions, including the North Atlantic Treaty Organisation, needed to change their character.

This indeed has been the rationale behind the administration's Partnership for Peace proposal, which, whatever the rhetoric to the contrary, transforms NATO from an alliance into an instrument of collective security akin to the United Nations, thereby depriving North Atlantic relations of their special character.

While these attitudes are not uniformly held throughout the administration, they are sufficiently powerful to explain the solicitude shown to Yeltsin's personality and Moscow's sensitivities compared with the tone deafness exhibited towards West European - and especially British -

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US/EU RELATIONS

concerns. Washington-Moscow relations are treated as the keystone of America's European, if not global, policy.

A good illustration is the administration's attitude toward NATO expansion. Senior officials have claimed that the issue is when to expand NATO, not whether to. They have also indicated that they would go along with Yeltsin's request that NATO expansion proceed slowly and that Russia's eventual membership in NATO not be foreclosed.

Briefings prior to Clinton's Moscow trip put the 'when' at five years and left open the possibility of a 'reformed' Russia joining the alliance. The long hiatus guarantees that the issue of NATO expansion will continue to fester, while Moscow will be encouraged to pressure the NATO allies and the nations of Eastern Europe. At the same time, there is not one of Russia's western neighbours seeking to join NATO that would not regard offering Russia membership as the wolf's being asked to guard the lambs.

So long as the cohesion of the Atlantic Alliance is not given anything like the priority the administration attaches to placating Moscow, Russia will find ways to avoid the key challenge presented to it by the collapse of its empire: whether it can be satisfied to live as a normal state within non- imperial borders - even though it comprises eleven time zones and huge resources. A country of such size and possessing some 20,000 nuclear weapons should not need additional territory to feel secure. A Russia that abandons imperial pretensions would soon deflect concerns from the field of security to political and economic co- operation, for example the European security conference or the G-7.

From this point of view, how much better it would have been for Clinton to stop in London - even on the way to Moscow - and use the occasion of its V-E Day celebration to outline a new vision of the North Atlantic relationship, something his administration has so far refused to do.

A new initiative is needed, above all, to restore a sense of direction to American foreign policy. It has become axiomatic that the next phase of international relations will be shaped by a limited number of power centres: the United States, Europe, Russia, Japan, China and possibly India and Brazil. Theoretically it is possible for the United States to conduct its policy purely on the basis of national interest, not unlike what Great Britain in the 19th Century termed the

policy of 'splendid isolation'. This would require a careful assessment of rewards and penalties for each region of the world and a balancing of them to produce actions most compatible with America's national interest. In the abstract, such a policy should be tenable because, on the face of it, all the major actors enumerated above have greater conflicts with each other than with the United States.

But in fact the United States lacks a tradition of foreign policy based entirely on the national interest. There is little bureaucratic skill in so cold-bloodedly equilibrating rewards and penalties on a global basis. A country founded by peoples who had turned their backs on inherited tradition and who believed in the universal application of the values of their society cannot simply abandon the Wilsonianism that has dominated 20th Century American foreign policy.

Though I believe the time has come for America to develop a concept of the national interest and apply it in a balance-of-power context, this will work only if we reduce the regions for this kind of foreign policy as much as possible and extend the areas where a more co-operative - even Wilsonian - approach is feasible.

Russia is, as yet, too inchoate and unformed to function as the anchor of American foreign policy. The two regions where moral consensus can undergird co-operative relationships are the Western Hemisphere and the North Atlantic area. In both, the key countries have, to all practical purposes, forsworn the use of force in their relations with each other. In each, institutions already exist capable of serving as building blocks of a co-operative world order: NAFTA and Mercosur in the Western Hemisphere, NATO and the European Union in the Atlantic region. But while the Clinton administration has put forward an imaginative vision for the Western Hemisphere, it has failed to do so for the North Atlantic area, in part because of the intellectual legacy described earlier.

Unless America assumes a real leadership role, the nations bordering the North Atlantic will gradually drift apart. America will become increasingly marginalised; the two sides of the Atlantic will grow more conscious of their rivalries than of their common purposes.

I strongly favour NATO expansion. The current policy of carrying water on both shoulders, of hinting at expansion to Western and Central Europe while trying to placate

Russia with prospects of a protracted delay - of which the Moscow summit is a prime example - is likely to accelerate the disintegration of Western unity without reassuring Russia. NATO expansion requires a decision, not a study.

Nevertheless, by itself it will not create a new sense of Atlantic community. Security can no longer be the principal unifying bond of the Atlantic nations because, fortunately, there no longer exists a unifying threat. Common purposes, not common fears, must provide the cohesion in the new era in which economic and social issues are becoming dominant.

The time has come to put into effect a North Atlantic Free Trade Area for manufactured good and services, with negotiations regarding agriculture to follow. Such a grouping would accelerate the movement toward the principle of free trade to which the members of the World Trade Organisation have committed themselves. In the meantime, it would foster co-operation among the nations of the North Atlantic. In a world with massive growth in Asia, with ethnic conflicts and religious fundamentalism, the Western democracies cannot afford their historical proclivities to national or regional rivalries.

The conditions are propitious. Labour standards and wage scales on the two sides of the Atlantic and environmental concerns are comparable. Prime Minister John Major of Great Britain and Foreign Minister Klaus Kinkel of Germany have expressed their interest in such a project. A major American initiative would be received as was General George Marshall's speech for European recovery and would almost surely produce a creative response.

In time, NAFTA and the North Atlantic Free Trade Area could be merged, and new consultative machinery in the political and social fields could emerge between the Western Hemisphere and the European Union. As Russia's economy develops and this policy becomes more national, associate membership for it in such a free trade area would be a distinct possibility - much more so than in NATO.

America should return as quickly as possible to what it has traditionally done best: to put forward its vision for how the nations of the North Atlantic can create a new world worthy of their democratic principles.

Copyright 1995 Dr Henry A. Kissinger. Distributed by the Los Angeles Times Syndicate.

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