Mr. Chairman, Ladies and Gentlemen,

ich möchte mit einigen Worten auf Deutsch anfangen, denn Sie wissen
alle, daß ich in Deutschland geboren bin und ich möchte Ihnen nur
beweisen, warum es eine unglaubliche Zumutung wäre, wenn ich
verlangen würde, daß Sie mein Deutsch für 45 Minuten sich anhören
müßten. Ich stellte fest, daß ich keine Sprache ohne Akzent spreche
einschließlich der deutschen Sprache, die ich mit einem fränkischen
Akzent spreche, der ausserhalb von Franken nicht so anerkannt wird.
Vor allen Dingen denke ich auf Englisch und meine Erziehung war im
allgemeinen auf Englisch und wenn ich eine längere Rede auf Deutsch
halte, dann kämpfe ich immer verkrampfter um Worte und so werde ich
mir erlauben, auf Englisch weiterzumachen.

Ich will nur etwas zur Einführung sagen. Für einige Zeit war ich
gleichzeitig Sicherheitsberater und Secretary of State; und ich
erwähne das nur, weil nie zuvor und nie nachher die Beziehungen
zwischen dem Weissen Haus und dem State Department besser waren als
zu der Zeit, wo ich gleichzeitig beide Posten hatte.

Now, if you permit me, I will continue in English.

Since I have come to the Federal Republic I have been asked quite
frequently about so-called "Gorbamania" and what co-Americans think
about the reception for example of Gorbachev in Stuttgart or at
the city of Bonn. And I have to say something extremely impolite, in
which it is that the vast majority of Americans do not know that
Gorbachev was in Stuttgart. They have no idea what reception he
received here. So when you ask about the American reaction you will see
that the response of talking about a relatively small group that is interested in
foreign policy and thinks about these problems. Secondly, while I
think "Gorbamania" is more highly developed in the Federal Republic,
than any other place that I have seen, it also exists in the United
States and in other countries. And it really resolves itself into
this question: can one base foreign policy on one personality,
however impressive that personality may be? Or is it really the

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essence of foreign policy to analyse the permanent interests and tendencies of nations and societies? Any leader will sooner or later leave office, and if it is really true that everything depends on one man, then the peace is very precarious. So I don't believe we do ourselves a favor and I don't think we do Gorbachev a favor by putting it entirely in such subjective terms.

I said at lunch yes we should help Gorbachev. But he also should help us. Foreign policy has to be based on reciprocity and not on personalities. What produced the current respect for Mr. Gorbachev and it is important to analyse these objective realities. And so what I will do is to begin with an analysis of a discussion of what I consider, what everybody recognizes as the crisis of communism, and then I will discuss the Western response, and after that of course there will be some discussion.

Let me talk first about the crisis of communism. Every communist system has two problems: the economic system is not working and the political system is not working, except for that they are in reasonable shape. The political system is not working because after the first generation of leaders, who claim legitimacy from the fact that they have made the revolution, there are endless power struggles. So that when you get to the third and fourth generation of leaders, the question is: what is their legitimacy? From exactly do they derive their authority? From When I was in the Soviet Union in January, a Russian acquaintance who had read in the newspaper that I had been received by Gorbachev, said to me "You saw the man who has said that every leader we have had since Lenin has either been a criminal or a fool. What do you think of that?" Well, frankly, I didn't say anything. I thought that was his problem, not my problem. But it is very difficult to have a legitimate government when there are endles purges when no leader has ever survived his own death. As soon as a communist leader disappears, there is a systematic attempt to denigrate him.

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When I came to the Soviet Union as an official, pictures of Brezhnev were all over the place, streets were named after him and everything revolved around Brezhnev. Today, he is practically a non-person, as is Khrushchev, as is Stalin, becoming. So, one problem is how to achieve a legitimate political system. Or take China, the its President of the 60's was accused of making a capital planning, a capitalist revolution. The next number 2 man, Lin Piao, was accused of having tried to murder Mao. Deng Xiaoping was arrested twice as a capitalist raider. No communist government has yet managed to establish a legitimate succession, a method by which you can predict not who will be leader, but how he is chosen, on the basis of the considerations are that enter that role. That creates a very precarious political structure. Now, Gorbachev, to his credit, has made a big effort to achieve a more systematic way of defining political authority in the Soviet Union. And this electoral process - which I do not consider to be a model of pluralistic democracy and which produced an outcome in which 90% or more of the final Congress was pro Gorbachev, nevertheless has the advantage that the Office of the President of the Soviet Union is now elected by some regular procedure, for a fixed term in office, and it cannot be changed by the coup-like procedures that are characteristic of most communist systems. However, on the level of political reform, I think the West makes a mistake to consider these democratic phenomena. They are not democratic but they are more legitimate and more constitutional and they may evolve in time into something more democratic.

China went the other route, China did not change its political system. The Soviet Union has not done much yet in the economic field, China has done a lot in the economic field but very little in the political field. Now, in the economic field, communist societies face a terrible problem: that central planning simply does not work. In fact all communist governments lose any control over their economy in the effort of achieving central planning. When there are no markets, and when there is no credit system, when there is no measure of economic performance, there is a collusion between every level of the bureaucracy to minimize innovation and

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Mao's number
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The Cultural
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- 4 .

This produces
Consider
objectively to produce stagnation. If one reads the reports of by
Soviet leaders to their own party congress of things that have gone
wrong in industry if any Western had said he would be accused of
rabid anti-communism. I mean, where they described non-existent
have been carried on the books that didn't exist. And of oil
refineries that didn't exist that were carried on the books for
many years, if any Western had said this, he would be accused
of rabid anti-communism

If you have an economy in which you can lose factories and oil refineries, you have a very unpredictable situation. The major problem in every communist economy is that there are no incentives for innovation. Secondly, there is no standard by which you can measure performance. When I was in the Soviet Union in January I was told talking to very high officials about the economic problems they told me about the fact that they had produced hundreds of thousands of pairs of shoes that nobody would buy. It is almost inconceivable, unless they were all left shoes of mismatched, different sized. But that isn't my concern. In an economy whose leaders talk to you about shoes, if that problem requires discussion with foreigners, what must be going on in the more complicated parts of the economy. One of the results of an economy in which hundreds of thousands of bureaucrats and in China millions of bureaucrats have the right to make essentially arbitrary decisions is that there must be a large amount of corruption. In fact, in a totally centrally planned economy, corruption is the only free market that exists and it is the only way you can get anything done. So it is inevitable that there is corruption, black markets and that managers are not entrepreneurs but politicians.

In the Soviet Union, or in any of these centrally planned
communist systems, the risky occupation is politics. If you lose in
politics, you lose totally destroyed. And therefore the people who
enter politics must have an enormous amount of power. The safest
occupation, until recently, anyway, was a factory manager. How could one
you lose? Every raw material was allocated, every output was
bought by some ministry and you could set your own quota in
consultation with the planners and the ministries, all of whom had

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establish a that could be met. a common interest with you to set the quota at a level that you were sure to meet. Because otherwise everybody would go down together. simultaneously, so corruption and black markets and enormous inefficiency are built into the system. They are systemic. And the personalities that emerge are unsuited for market economies. The problem then comes when they understand this theoretically. When I was in the Soviet Union. I talked to one of their leaders and I said, "How is it that you. who have been a communist all your life, how is it that now you want to change so many things?" And he said to me very disarmingly, "I said, "Where did you get this idea?"" he said, "It wasn't hard to know what was wrong. My problem is to know what is right." I was very touched by this. I don't say this as a criticism, it is true. How do you go from central planning to a market economy when the population doesn't understand markets when there is no credit system, when you don't know the value of your money and you don't understand it?" The result is a deterioration in all of these activities because real cause and nominal cause have no relationship to each other. And along in Moscow, today its subway fare is exactly the same as in 1928. and so is a pound of potatoes.

In China, I was in China last year, and Zhao Ziyang, who was then in government, still in office, described the price reform program in which they were going to abolish all subsidies in a period of three years. It was a heroic measure. I asked him how long can you stand this?" He said, "We can stand it until fiscal and monetary policy can take over." The reality, however, was that, exactly 7 weeks, because prices inevitably went up, savings were withdrawn, there was a classic inflationary pattern. Some factories had to close,

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which was the purpose of the exercise, but to which nobody is used
in a communist state. and after 7 weeks they stopped and put on
price controls, which made it even worse because now all goods
disappeared. So the Soviet Union hasn't even started down this road.
So when you go from central planning to a market economy involves
there is a transition period of enormous vulnerability, both for the
economy and for the political system. And I believe that much of
the turmoil in China was caused not by things they did wrong, but
by things they did right. It was caused by an effort to go to a
market economy. When there are complaints about corruption in
China, of course there was a lot of corruption, and it was genuine
there was corruption for the reasons that I described plus Chinese
reasons. But what they really meant in my view, is inflation. In that
they could have lived with corruption, alone, if it had not
been accompanied by a major inflation. And yet how do you remove
subsidies without having inflation. That is the big problem that
the Soviet Union still faces. And China had many advantages: China
has a homogeneous population, it has an entrepreneurial tradition, a
the central planning mechanism was never so firmly established, and a
government that has never had the overpowering role that it had in the
Soviet Union. I wrote in my memoirs an episode in which President
Nixon met Mao, and he said to Mao, "The Chairman's teachings have
transformed a billion people," and Mao said "No, I have changed
Beijing and a few of its suburbs." This was at the height of the
cultural revolution. No Soviet leader would say that, and it would
wouldn't be true in the Soviet Union. either. So, with all of these
things in China. Nevertheless, the Chinese leaders thought economic
reform and political reform could not be carried out simul-
taneously. They carried out economic reform first and now they have
their current crisis. The Soviets have carried out a measure of
political reform first, but very little economic reform. And now
the challenge remains what happens if they really start on the economic
reform and when they face exactly the same problems that the
Chinese face plus a national problem.

L'encountered by
with the addition of

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Now I have spent this much time on these subjects because I think it is important to understand that there is an objective crisis in these systems. When Gorbachev wants a period of peace, it is not because he had a sudden inspiration and became a Western liberal pacifist. I think it is because he or I think almost any other Soviet leader would have to take account of the realities that I described. Now, not every Soviet leader would do it with the panache and the courage that Gorbachev has shown, for which he deserves high marks. But the Soviet leader could continue the Brezhnev methods without reducing the Soviet Union to the level of an underdeveloped country. So that is the motivation and that is the necessity.

Now What does that mean for the Western countries, first all of them and then I will talk about separate aspects. I have already indicated that we do not do ourselves a favor, and I don't think we do Gorbachev a favor, by focussing it entirely on one personality. Foreign policy is not a subdivision of psychiatry. Foreign policy should deal with the permanent interests of societies. And they must therefore be analysed and understood. Even if communism is diminated, there is still the fact of a Russian state of a size large enough to have 11 time zones, of a size in which Leningrad is closer to New York than it is to Vladivostok, and Vladivostok is closer to Seattle than it is to Leningrad. We are dealing with a huge state out of any proportion to any European country or to any of its neighbors, and such a state, whether it wants to be or not, is a weight on all its neighbors. The Russian state in 400 years of its history, 400-plus years of its history, has expanded from the area around Moscow to the Elbe and to Vladivostok. And it did not get there by plebiscite. And to the gates of India. That is a reality. It has in fact nothing to do with the personal intentions of any one leader. When you look at European history, when a European country won a war, it took a province; when Russia won a war, it took the country. It is a different approach to security. Therefore, I would say, everybody focusses on what happens - do we live in peace if communism ends? I don't think communism is going

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to end all that quickly and easily, but even if it does, we still
have the problem of equilibrium between the other nations and the
Soviet Union. It is a problem that should be as much in the Soviet
interest as in ours. Just as we have a right to feel secure in our
borders, I think the Soviet Union has a right to be made to feel
secure in its own borders, Provided it does not insist that it has
a right to impose its government in foreign countries as an
expression of its security. Anything else it is reasonable to
discuss.

Now I apply these principles to a new situation that is arising, a situation in which there is a change within the United States, a change within Europe, West and East - and a change in the Soviet Union. How can all these elements be related? What is the change in the United States? The United States In the immediate post-war period America lived in a world which corresponded very much to American traditions in this sense: America fought two world wars to prevent the domination of Europe by one country, and especially the Second World War was conceived as a struggle of good against evil and presented no moral complexities from the point of view of whether it was justified or not. So, It was natural to think that if one faced the danger of aggression, one would mobilise the maximum amount of military force. Second, the American experience had been, that when there was domestic unrest, then one could solve it by improving the economy. And NATO represented the military aspect of the American experience, and the Marshall plan the social experience. But what America was not used to was that the beneficiaries of the Marshall plan, who were totally dependent on us in the Fifties, and Sixties and part of the early Seventies became strong enough to conduct their own policy and to create their own identity. I think this is a good development. In the long run it is a benefit to everybody. But it requires a psychological adjustment on both sides of the Atlantic. On the American side, to be used to equal partners; on the European side, not to make domestic politics depend on proving that one can challenge the United States. In addition, in America the leadership group that dominated events in the immediate post-war period, which

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was mostly from the Eastern seacoast, who took vacations in Europe and had friends in Europe, has been replaced by leadership groups drawn from the Southwest and West, who don't take vacations abroad, and who don't have foreign friends and who by instinct, are much more isolationist than the first group. I have said to many foreign friends, European and otherwise, "For 30 years you could all live on the proposition that you could make any proposal you wanted. And you could play domestic politics with your proposals and we wouldn't accept it. And so you could win both ways." But I also say, "Be careful what you recommend now; we're likely to accept it." So this is an important change on the American side. I don't have to lecture you on the changes in Europe. There is now a unified, hopefully a unified Europe, or a unifying Europe, and it has economic problems and political problems. I'm not excessively worried about fortress Europe or about the discussions of discriminatory practices. It is the nature of a common market that it is somewhat discriminatory, and that makes it a common market. So the real issue between America and Europe is not whether the external barriers of Europe are higher than the internal barriers, of course they are. That's how the common market was created. But whether the American barriers can be negotiated together with the European barriers in a way that is of benefit to everybody. And that involves competitiveness in America and many other factors. I believe that is a solvable problem. What is more difficulty is to define the nature of East-West relations, and the nature of the common defense. And within that, what is also important is the relationship of Germany to the Common Market and to the East-West relations.

Now, in Eastern Europe we see many changes. In Russia, it is possible for a patriotic Russian to take pride in at least some of the things that the communist party has achieved, in development of some of the industry and in holding the country together in a better way. In Eastern Europe there is no such feeling, in Eastern Europe, the communist party has not been able in any country, except perhaps Bulgaria, to achieve any legitimacy. It is considered a foreign product. And nationalism cannot be identified with communism.

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There is a special problem in the German Democratic Republic. In Eastern Europe, when the communist parties grow weaker, the national solidarity can grow stronger. In Eastern Germany, if the SED grows weaker there is no longer any reason for the State to exist. There can't be any national feeling that attaches to that State independent of the SED. I have already discussed the changes in the Soviet Union. Now, how should we all deal with this? I go back to my original point. I consider frankly, tactlessly, that "Gorbamania" is a form of romantic escapism, whether it exists here or on our side of the Atlantic. It sort of expects that history will do our work for us, and that we don't have to do much, except maybe, perhaps, give a little economic help to the Soviet Union. We have endless discussions in America, and I'm sure you have it here. I just don't follow it here, as to whether we should help Gorbachev. I think that is the wrong way of looking at it. Certainly we should support any effort towards peace, but for that we have to know what we mean by peace. And we need some a concrete conception of what we want the world to look like in 10 years and how we are going to get there from here.

Now let me begin with the most obscure, the most complex subject, which is the Common Defense. Certainly, the growth of nuclear weapons has produced a situation quite different from the fifties. When the United States had a huge nuclear superiority, it was a different problem to look at defense than under current conditions, when a nuclear war involves such huge risks. And it is natural that one should want to escape the risks of nuclear war. And I do not want to get into a debate which has become so esoteric that one can say about it what Lord Palmerston said about the Schleswig-Holstein question in the fifties. He said, "Only three people had ever understood this. One is dead, the second is in a lunatic asylum, and I am the third," he said, "and I have forgotten it."

But I will simply make this observation: Too much of the debate between Europe and the United States in the nuclear field concerns the issue of who is going to run the risk of nuclear war. I can understand Germans who say, "We don't want to become a nuclear

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battlefield." That is a very correct attitude. On the other hand, it is not possible to tell the American public that America has to become a nuclear battlefield in order to defend a country that will not run a nuclear risk in its own defense. What this means for specific weapons would take hours to discuss, but as a concept it isn't possible to have a common defense if one part or the other tries to base defense on achieving immunity for itself.

Secondly, there is this complexity: all of European history shows that conventional weapons are not enough to guarantee the deterrence, for the simple reason there have been a thousand years of European wars when technology was conventional. And equality doesn't guarantee deterrence in conventional weapons, because very often inferior forces have defeated superior forces. Some nuclear component has contributed to the longest period of peace in European history since Waterloo, and it should not be lightly discarded, and we cannot have a nuclear debate every six months just because one country or another has an election and needs a fix, and needs to be able to say it extorted something from somebody else. We need some settled view on a common strategy, which must include nuclear weapons and conventional weapons, and on what kind of nuclear weapons and in what mixture. I'll be glad to give you my views in the question period, that's not my major point now.

My major point is just to ask the right question and not to insist that my answer is necessarily the right one. But that is not the key issue. In fact, I hold the view - I see the American Consul General here X and I just want to tell you, for the sake of his sanity, that I do not speak for the American administration, he does. They are friends of mine but sometimes I agree with them and sometimes I don't. But I largely agree with them right now, but not necessarily on everything. I do not believe that Fast West relations can be dealt with exclusively and in time even primarily by arms control. Arms control runs the risk of becoming a political football in every country in a way that the public cannot understand, and the leaders sometimes can spend only as many hours on studying the subject as their experts have had years. What is the real problem in Europe? The real problem in Europe is the

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disintegration of Eastern Europe and the potential political crisis in the Soviet Union. Now we can of course say everything in Eastern Europe is going along fine and one day they will all go on to come over to us. I do not believe that Eastern Europe can be eased out of Soviet control without the Soviet Union noticing it. And therefore the question of the evolution of Eastern Europe and the relationship of Eastern to Western Europe is part of the relationship of Europe and America to the Soviet Union.

Now that means two things, first: we keep reading in America that the Germans may one day be lured by the prospect of unification into some form of neutralism. I don't believe either that the Soviets will offer this or that the Germans will do it. I don't think that's a realistic prospect. [Certainly. I don't think the Soviets will ever offer this.] That's a theoretical point. But think it is not a theoretical point whether the unification of Europe, which is a realistic issue, is pursued as a national German policy or as a common European policy. I think it's a fact, although it is tactless to say so, that no European country has a huge stake in German national unification on a national basis. The United States certainly has no objections to it, but many European countries have actually objections: so that any attempt of a solitary national policy could lead to the isolation of Germany, from everybody. On the other hand, when one looks at the evolution in Eastern Europe, it is self-evident that something has to be done to enable both countries to relate themselves to the countries of Western Europe, including of course the Federal Republic. And the Federal Republic as economically the strongest of the West European countries has a very important role to play in this. So it seems to me, one of the tasks of a politically unifying Western Europe is to come forward with some vision for the relations to eastern Europe, and that the German unification should be handled in that context, and also the evolution of these East European countries.

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Then there is the problem of what about the Soviet Union. There are
two schools of thought in America. Some who say just let nature
take its course and say nothing to the Soviet Union. There is a
second school of thought, to which I belong. that thinks it not
possible to be silent about the most important political evolution.
Certainly we cannot let the Soviets dictate to Europe and the
United States how Eastern Europe should evolve. But we should give advance
some idea of how we visualize it. And we can visualize it on two
levels: One, that those East European countries that developed
towards market economies and democratic institutions could form
some kind of association with the European Community, that is for
the European Community to decide. Second, that arms control
negotiations be changed from these abstract topics of counting
tanks, and artillery pieces, and others, to have a political content
in the sense that they seek to remove Soviet troupes [first] from
specific countries like Czechoslovakia and Hungary, for example,
And reduce those that remain to defensive positions from which
intervention in the domestic affairs of another state would become
very difficult.
So there is a lot that the European countries and America need to
talk to each other about. What I think is dangerous is to say that all
we have to do is to give economic help to the Soviet Union and then
everything will solve itself automatically. I think that's not even
helpful to the Soviet Union, partly because their domestic problems
are too great, and partly because, in my experience, I always
believe that the thing one has to avoid is that statesmen take
decisions under crisis conditions and don't understand what the
other side is doing.

Everybody is worried about the repetition of World War II.
I'm not worried about that at all. That kind of war, of a mass
attack to conquer the world, is unlikely. But if you look at the
6 weeks prior to World War I: which of the statesmen that went to
war on August 1, 1914, would not have recoiled with horror if he
had known what the world would look like 2 years from then? None of
them wanted a world war, if you look at what happened in that
month, but none of them understood what everybody else was doing.

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They slid into a crisis over an issue that, 6 months later, nobody could explain anymore. And now we are in a situation where there are many potential crises of unforeseeable consequences and this is what we should all address. In this, I think we in the West can make a great contribution to a more peaceful world. And I repeat, it is not in anybody's interest to humiliate the Soviet Union, or to threaten its national security. What we want to do is to remove the unnatural consequences of the division of Europe under circumstances in which the security of the West, as well as of the Soviet Union, is improved. But we shouldn't do this entirely by relying on personalities or by giving money. We should assume we are dealing with serious people who can understand serious arguments.

Now I have been told to talk for 45 minutes and I want to show, especially since the chairman is from my home town in Fürth, that I have learned at least something in German school: to have a minimum of discipline. I would like to conclude with a Chinese proverb which goes like this: it says: When there is turmoil under the heavens, little problems are dealt with as if they were big problems and big problems are not dealt with at all. When there is order under the heavens, big problems are reduced to little problems and little problems need not obsess us.

Now, I think we live in a period in which there is an opportunity to contribute to what the Chinese call 'order under the heavens'. But to do this, we have to make sure that we deal with big problems and that we really reduce them to little problems, and that we do not engage in escapism, and that we can describe to ourselves what the world is like that we want to create or build ten years from now. I believe we do a service to our previous adversaries, as well as to ourselves, and I think that is the great opportunity of our period, and let me stop here and take some of your questions,

Thank you very much.