Chairmen's Statement

DAVID ROCKEFELLER
North American Chairman

YOSHIO OKAWARA
Japanese Deputy Chairman

GEORGES BERTHOIN
European Chairman

The San Francisco plenary meeting demonstrated the continuing importance of the Trilateral partnership among the three great industrialized democratic regions: North America, Western Europe, and Japan. Our countries face significant political, security and economic challenges, and have unusual opportunities for progress in strengthening cooperation on a variety of economic issues and in improving the climate of East-West and North-South relations. We believe that discussion of such issues at the private level enhances the bonds among our countries and provides a forum for the consideration of innovative ideas. We are proud of the role that the Trilateral Commission has played in developing relations among our countries, and we have come to the decision that our organization should continue for another three-year period.

Our San Francisco meeting included discussion of a wide variety of issues ranging from the

problems faced by new democracies in Latin America, to the implications of unemployment/employment trends in our countries, to the role of science and technology in international relations. Two particular areas stand out as highlighting the value of trilateral consultation and collaboration: relations with the Soviet Union and the international debt crisis.

Our discussions of relations with the Soviet Union were dominated by consideration of the foreign policy implications of domestic reform in that country and the renewed prospects for an arms control agreement on intermediate-range nuclear forces. Our members, of course, expressed many different points of view on these questions, but there was a sense that Soviet leader Mikhail Gorbachev has brought a different style of leadership to the Soviet Union and, to strengthen his country, has a genuine interest in significant domestic reform. Some Trilateral members believe that his attention to

3

domestic reform requires a less tense inter-
national environment, but not at the expense of
traditional Soviet foreign policy interests.

The prospects of an INF agreement along the
lines of a zero-zero option was welcomed by
some members who regard it as a step forward
of both symbolic and substantive importance. It
is regarded with considerable concern by other
members who fear a decoupling of U.S. and
Western European security. Members of both
persuasions, however, believe that a coordinated
approach by the Trilateral nations is vital for
providing a continuing sense of confidence in
Western security and for extracting the maxi-
mum benefit from any new agreement. The
United States is negotiating with the Soviet
Union on an aspect of arms control that affects
European and Japanese security as much if not
more than U.S. security. It is essential, there-
fore, that a continuing and genuine process of
consultation among partners be carried out.
This consultation should focus on long-range
arms control and security issues and how an
INF agreement relates to these, as well as on
shorter-term questions relating to the immediate
negotiations.

We also discussed at length the evolving debt
crisis. The renewal of concern about this issue,
which has important implications for the health
of the world economy in general, reflects two
basic facts: first, there has been no new net
lending to debtor countries in the two years
before the new Mexico package—in fact, there
have been substantial reverse resource trans-
fers; and second, that slower economic growth
and protectionism in our countries have limited
the prospects for the expansion of exports of the
debtor countries and thus the prospect for for-
eign exchange needed for debt service.

Our members differ on such questions as the
desirable roles of governments and private

banks in addressing the debt problem and on the
degree of relief required, but there was broad
agreement on three matters: that beyond the
technical aspect, there is an important human
and political dimension; that a substantial rate
of economic growth is needed in the debtor
countries to allow them to discharge their debt
obligations to lenders and provide an improve-
ment of livelihood for their own peoples; and
that some level of new net credits is a prerequi-
site to growth.

One important theme underlying much of
our discussion is the continuing importance of
U.S. leadership in addressing international
issues. The United States is the interlocutor
with the Soviet Union on arms control issues.
Its banks hold 40 percent of the debt of the
developing countries, and its policies (including
the Baker initiative 18 months ago) set the
agenda in this area. Strong U.S. leadership is
also desired by the Trilateral partners so long as
it is accompanied by close consultations and
sensitivity to allied interests. In turn, America's
partners must recognize their own enlarging
roles in sharing the international responsibil-
ities before us all.

4

Henry Kissinger

After Reykjavik:
Current East-West
Negotiations

**W**hen I was asked last November to speak here today there were no negotiations going on and there seemed to be great unanimity that Reykjavik will not be recorded in diplomatic history as a stellar achievement of the art of foreign policy. So I thought I was on reasonably safe ground. Since then there has been an evolution; and I thought the most useful thing I could do is to present more or less controversial ideas. Those of you from abroad who disagree with me can console yourselves that I'm performing my usual function of uniting Americans by getting both liberals and conservatives mad at me simultaneously.

Let me state my view on the current state of East-West negotiations in three propositions:

1. There may indeed be an important opportunity to make progress in East-West relations, an opportunity on two levels—to fix the basic strategic problem produced by the excessive reliance on nuclear weapons, and secondly, to begin putting East-West relations on a new basis.

2. None of the proposals now being discussed in the military field, in my view, improves the situation. And several make it worse.

3. We are witnessing a process in which arms control is being transformed from a strategy into an obsession, a process in which every intellectual current bears a part of the responsibility. Political leaders are so obsessed with public relations and short-term impact that they are not addressing the fundamental political problems.

UNDERSTANDING OUR OPPORTUNITIES

Let me say a word about the two levels of opportunity. For a decade or more it should have been clear that reliance on Mutual Assured Destruction would lead eventually to the demoralization of the West. It is not possible indefinitely to tell democratic publics that their security depends on the mass extermination of civilians, unopposed by either defenses or a mitigating strategy, without sooner or later producing pacifism and unilateral disarmament.

Secondly, I believe we do have a new situation in the Soviet Union. Gorbachev is different from any Soviet leader that I've ever seen, or that I have ever heard about. And there's no doubt that the people around him conduct themselves with an openness and flexibility that is unprecedented. But the question is, do we reward them; do we pay in foreign policy coin for their domestic reform? I would argue

5

that the task of Western leadership is to translate an
opportunity into foreign policy objectives and to fix
the problems that produced the tensions. Of course,
domestic reform in the Soviet Union has attractive
features, but if it does not lead to a change in foreign
policy conduct, we would be taking the odd position
that a strengthened adversary is better for us *per se*
than a weakened adversary—which at least is a new
theory of international relations. I repeat, I think
these reforms can be very helpful, but we must be
able to translate them into foreign policy objectives.

In this effort, we need some understanding of
what Gorbachev and his associates represent. There
are at least four possibilities: One, he is a traditional
Leninist risen through the ranks who wants to see
the Soviet Union strong, and has decided he needs
domestic reform. Two, he is caught in a bureaucratic
dilemma—on the one hand he wants to reform the
economy, on the other he cannot take on every pow-
er structure in the Soviet Union simultaneously; and
therefore, we might easily see a combination of
domestic reform and foreign policy conservatism.
(I must say that I do not find in the Soviet proposals
that have so far been made in the military field
much that is different from either the past or from
an attempt either to maintain a Soviet advantage or
to increase it.) Three, we are seeing here a new phe-
nomenon in the sense that for the first time, here is a
Soviet leader in restless motion looking for domestic
approbation among the mass of the population and
not in the party apparatus itself. (In the field of in-
ternational policy this could lead to extreme fluctua-
tions and does not at all guarantee, necessarily,
eternal conciliatory policy.) Finally, maybe there is a
genuine change.

CURRENT PROPOSALS: INF

I'm not going to choose between those four options.
But I would say that the policy of the West today
will not tell us what is really the motivation of the
Soviet Union because we are not putting forward
propositions that we can in good conscience say are
an improvement of the situation. We are putting
forward propositions that we believe will be
accepted. Or we are putting forward propositions
that satisfy short-term domestic pressures in our
countries. Let me illustrate this by some discussion
of the looming agreement on the zero option on the
INF. I will be in the tiny minority that does not con-
sider this a milestone in Western statesmanship; in

fact, I do not think it is a good agreement. And I
think it is amazing that there has been so little dis-
cussion of some of its problems.

What was the purpose of INF? It was asked for
by the Europeans, allegedly to close a gap when the
Soviet Union introduced medium-range missiles
into its arsenal in the middle- and late-'70s. That
technical military argument was always somewhat
dubious. To resist the SS-20s we could have used
sea-based missiles or our strategic missiles in the
United States. The most valid argument for placing
American medium-range missiles in Europe was to
couple the defense of Europe and the defense of the
United States in some organic manner. With
American missiles capable of reaching the Soviet
Union stationed in Europe, the Soviet Union could
not engage in nuclear blackmail against Europe
without risking American retaliation from Europe;
that would bring general nuclear war; and that is
presumably unacceptable. The same argument
could be made with respect to a conventional attack
on Europe, on the theory that a Soviet planner could
not assume that the United States would permit
these missiles to be overrun.

The fundamental argument for having these mis-
siles in Europe was to create a certain automaticity
in the American response. It was an argument, ad-
mittedly, that nobody made explicitly, and there-
fore, the whole discussion has been off on technical
military issues. This coupling is being destroyed by
what is now being negotiated.

It is perhaps useful to discuss briefly the forces in
the United States that generated the zero option.

"...the Soviet Union is on the verge, and may have already achieved a veto over nuclear deployments within NATO."

Among the principal forces were people who,
throughout the '70s, opposed arms control agree-
ments as a snare and as a delusion and as encourag-
ing a misapprehension of Soviet motives. They
argued not that they were against arms control, but
that they were against arms control that only froze
the existing programs. They were in favor of reduc-
tions; this became an article of faith. (Others argued

6

in a similar manner for on-site inspection.) Thus zero became symbolically a desirable goal whatever its political or even military significance. Other forces in the generation of the zero option were military technicians who say it doesn't make any difference where the weapons are stationed, as long as we use them. And finally, there were neo-isolationists, who really want Europe to take care of itself. You non-American Trilateralists therefore confront a coalition of neo-conservatives, neo-isolationists and arms controllers who have come together on this proposition and who will give it momentum, especially in the absence of anybody making explicit what they're privately thinking.

The zero option originated in the Defense Department; it was opposed by Secretary of State Haig. It was packaged by public relations people whose knowledge of strategy was minimal, and of arms control was less. But it had the great advantage that it was not possible to top a proposal that offered to go down to zero. Europeans, rattled by their own domestic opponents, followed the same strategy. They applied the hoary well-established doctrine of the Harmel Report that we simultaneously pursue negotiations and armaments. And therefore, the zero option was supported on both sides of the Atlantic with the confidence that probably the Soviets would never accept it, and as a device by which we could proceed with the deployment.

Let me explain my concerns about the consequences of this agreement. It is said that the Soviets are giving up more warheads than we are. That's probably true, though it should give us some pause

> **"What is the purpose of symbolic agreements that you cannot explain in substance?"**

because I do not believe anyone here who has ever negotiated with the Soviets has seen them eager to make disproportionate cuts in their forces. The cuts in warheads barely reduce the Soviet capability to attack Europe with nuclear weapons. They'll still have hundreds of short-range weapons, thousands of ICBMs, hundreds of airplanes and an arsenal useful for that purpose of some 20,000 warheads—while eliminating the U.S. capability to retaliate

from Europe. That is a psychological not a numerical fact. It discredits and discourages those who have elaborated the existing defense doctrine.

For the third time now in the last 25 years the United States has unilaterally reversed—in different Administrations—decisions which it had urged on the Europeans. It withdrew the Thors and Jupiters in the context of the Cuban missile crisis, within less than five years of deployment. It abandoned the neutron bomb within two years of committing Europeans to it. And it is now well on the way to withdrawing the INF within three years of its deployment—indeed, before its deployment is even completed. Therefore, it is unlikely that any European leader will again stake his political future on following American strategic prescriptions opposed by the Soviet Union. This is another way of saying that the Soviet Union is on the verge, and may have already achieved a veto over nuclear deployments within NATO. This is all the more true because this decision also forecloses important European alternatives. I do not see how the Federal Republic can agree to the stationing of French medium-range weapons on its territory, were that ever offered, after having just got rid of the American ones. Indeed, the long-range strategy of the Soviet Union must now be to accelerate the denuclearization of all of Germany; and therefore, to heighten the psychological distinction between the Federal Republic and those European countries that have nuclear weapons.

The Asian part of the agreement gives me great worry as well. It permits 100 Soviet medium-range warheads in Asia balanced, if that is the proper word, by 100 American warheads that the Soviets insist be in the continental United States. From there they cannot reach the Soviet Union in case of a Soviet attack on China, Japan or Korea. Even if the Soviets should make one of their famous concessions and permit the stationing of these warheads in Alaska, I believe that those who know something about our military budget will agree that it is highly improbable that the United States would for long maintain 100 warheads in Alaska which can cover Soviet territory only at huge expense, when there are so many other means available.

The Soviet Union does not need 100 warheads aimed at China, Japan and Korea for military purposes. It has a surplus of warheads for that purpose. What it does need is our approval of that deploy-

7

ment, because that shows that we are making a dis-
tinction between Europe and Asia. And it is there-
fore a political weapon.

For all these reasons I am extremely worried, and
I'm even more worried about the fact that there has
been no serious debate going on. We are told that
the argument in favor of the zero option is that the

"I do not see how Mutual Assured Destruction the-
ory can end in anything
else but unilateral disarm-
ament and pacifism...."

Soviet Union is giving up more warheads than we
are giving up—I've already dealt with that. We're
also told that the impending agreement will permit
verification. But verification, which was used by so
many conservative opponents of arms control to kill
what they didn't like, is not an end in itself. Verifica-
tion depends on whether you understand what scale
of violation is needed to upset the agreement and
what measure you can take to respond and how
quickly you can respond. I would be astonished if it
were possible to reintroduce American medium-
range missiles in Europe after they have been with-
drawn. And therefore, what exactly are we going to
do if it turns out that the verification procedure tells
us that there is a violation. (Incidentally, I do not
assume that there will be violations, given the bal-
ances that I have described, at least not in the im-
mediate future.) We are told also that the impending
agreement is a test towards something more useful.
I would ask this question: When are we going to do
something useful? What is the purpose of symbolic
agreements that you cannot explain in substance?
Why not make a substantively important agreement
now?

I have spent this much time on INF because it
shows the intellectual problems all of us are facing. I
believe it would have been infinitely better to pro-
pose a 50 or 75 percent reduction which kept some
American missiles in Europe, and make the rest of
the withdrawal conditional on some amelioration of
the conventional balance. We would have had all
the benefits that I've described and few of the pen-
alties. We cannot blame the Soviets for the zero op-
tion proposal since we put it forward. So we'll prob-

ably have to go ahead with it. If we do, it would be
highly desirable to find ways of stationing aircraft
carriers or cruise missile ships close enough to
Europe to make it clear that we are still physically
committed, or to accelerate the creation of European
forces—in other words, to undo in part what we
have inflicted on ourselves. But, in the atmosphere
that will be generated, I doubt that this will happen.

CURRENT PROPOSALS: START and SDI

Now, I would argue that some of these attitudes are
reflected, as well, in the general negotiations on
START and on SDI, which I cannot cover in detail.
With respect to START, I do not oppose a 50 percent
reduction, but I defy anybody to tell me, except
symbolically, in what way it improves the situation
—given the way it is now being negotiated, in which
all essential weapons are being maintained, except
at a lower level. It neither reduces the danger of
surprise attack nor does it reduce the danger of civil-
ian devastation. I have no problem living with this
as a symbolic move. I would have preferred a nego-
tiation designed to abolish MIRVs, which would
have made a difference.

Now let me say a few words about SDI. SDI has
become an almost mythical issue. Much of the oppo-
sition to SDI is generated by the conviction that it is
an obstacle to arms control agreements, an obstacle
to the very agreements that I have analyzed previ-
ously. I am generally in favor of SDI, though not of
the arguments that the Administration has ad-
vanced on behalf of it. I am in favor of SDI because I
do not see how democratic leaders can insist for the
indefinite future that their populations must live in a
world in which they are forever exposed to mass
extermination. I do not see how Mutual Assured
Destruction theory can end in anything else but uni-
lateral disarmament and pacifism; and in that sense
the left wings in many countries have carried the
argument to its logical conclusion. I do not under-
stand why it is immoral to have weapons aimed at
weapons but it is moral to have weapons aimed at
people. I do not accept the proposition that strategic
defense must lead inevitably to an escalating arms
race. Why is it not possible to have a negotiation to
establish a balance between offense and defense that
maximizes obstacles to aggression by either side?
One reason it is not possible is because more intel-
lectual energy is expended on either proving that
SDI is technologically feasible or ridiculing it, so that

8

in the process we are building what I believe is a
major trap for ourselves. I do not think we can get to
the right conclusion by the legal exegesis of ambig-
uous clauses in an agreement. We can get to it only
by stating a definition of the various objectives we
want to serve and beginning a discussion, hopefully
on a nonpartisan basis, of the various goals—from
preventing limited attacks and third country attacks,
to protecting retaliatory forces—and how these
could be related to offense/defense relationships.

What bothers me is that we are sliding into a
situation where the Administration has already ac-
cepted in effect a twelve-year moratorium: ten years
of moratorium plus two years of negotiations—in
other words, three presidencies from now. This is
now being reinforced by Congressional pressures
that will make testing very difficult, if not impossi-
ble. We would be unilaterally abandoning SDI with-
out negotiation, without clarifying its possibilities

CONCLUDING THOUGHTS

How comfortable can we all be when at a period of
maximum Soviet weakness we solve for them the
problem of European missiles and the problem of
strategic defense without getting anything for it ex-
cept a 50 percent reduction of strategic forces which
a) solves no danger, and b) should be symmetrical?

What bothers me is that we are caught in a dilem-
ma of our own making. The arms controllers are
caught in the categories of the '50s, when there were
single warheads, fixed missiles and relatively few
warheads. The opponents of arms control are caught
in the categories of the '70s, in which they attacked
what they wanted to kill with technological argu-
ments which are now coming home to roost. And
the politicians are more interested in what they can
say than in what they can think. There are no incen-
tives for dealing with the long-term future. It is odd
that with two summits coming up we have been so
reluctant, all of us, to raise any political issues. Link-
age has been condemned for 30 years, and yet, when
are we ever going to speak about the political
projection of Soviet power abroad, from Nicaragua
to Angola to Cambodia? Great fun has been made of
the attempts of the Nixon Administration to begin
talking about rules of conduct, but nobody has yet
come up with any other kind of discussion.

So, we are living in a period in which the Soviet
Union is in great difficulty. It may or may not have a
leader interested in serious change. Surely, they can-

not undertake their domestic program and sustain
aggressive international policies simultaneously. I
could use a phrase that President Reagan used in his
campaigns, "If not now, when? And if not we,
who?" When are we ever going to make a differ-
ence?

I would like to conclude with two quotes. One is
from a Swiss play called "The Arsonist." A Swiss
bourgeois in a town which is reported to have
arsonists takes two people into his house; and it
gradually dawns on him that maybe these are the
arsonists. The arsonists become more and more
confident and more and more aggressive and keep
asking him for proofs of his good faith—that he
doesn't suspect them of being arsonists—culminat-
ing in their asking him for matches, which he then
hands over. His wife says, "You must be crazy,
handing over matches to arsonists;" and the play
ends with him saying, "If they were arsonists would
they be asking me for matches?"

The second quote I would like to mention is from
Prime Minister Lee Kwan Yew from Singapore, who
alleges that there exists the following Chinese pro-
verb: "When there's turmoil under the Heavens,
little problems are turned into 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 should not
obsess us." What worries me more than I have ever
been concerned in my political life is my fear that we
are not turning big problems into little problems. I
wonder whether we are contributing to order under
the Heavens.

■ Henry Kissinger was U.S. Secretary of State in the
Nixon and Ford Administrations.

After Reykjavik:
Discussion

The "After Reykjavik" session of the San Francisco meeting opened in plenary with Dr. Kissinger's address and some discussion. After lunch, the plenary broke up into three sub-groups, in which members reacted to Dr. Kissinger's remarks and spoke more generally—and informally—about the state of East-West relations. There was discussion about strategic weapons and SDI. There was also considerable discussion of current developments in the Soviet Union and the possible international implications of Soviet domestic reform. The discussion concentrated on the likely "zero option" INF agreement and its implications—on which Dr. Kissinger also concentrated his remarks. What follows is a sampling of comments in this last area.

A German member "shares Henry Kissinger's concern about decoupling. I happen to believe that these systems do have a coupling effect, and that they also have it in the Soviet mind, and that removing them does raise serious problems." To stop here, however, "leaves out the politics of where we stand...This is the proposal on the table and we are committed...So the question to be asked at this stage is: how do we go on from here?"

This participant did see advantages in the agreement: If we succeed in getting down to zero on INF, that presupposes a degree of verification that we have never had in the history of arms control and disarmament. It means that there will be inspectors poking their noses in all kinds of places in the Soviet Union and in Western Europe, and in the United States. If that happens, I would argue we are in a different political environment. Now it may not occur. My argument would be to test it, to try it out—that is absolutely vital. It's possible that for the first time in history we will have the scrapping of a new weapons system, which has never occurred before. That would have an effect on East-West relations.

Even on the coupling issue, this participant offered moderating arguments: I would like to add an argument that is not very often considered. I have the hunch that after Chernobyl, the lesson has been brought home to the Soviets—as much as to us, but particularly to the Soviets—that it doesn't make much difference, as far as damage is concerned, whether a weapon explodes on Polish territory or on Soviet territory. Put differently, the SRINF that we retain will still have a coupling effect in that sense, in that the damage they can create to the Soviet Union is enormous. We always tend to believe that they only come down on East German or Polish or on other allied territory, but the impact would also be on their territory.

Finally, the coupling effect is also a political one. I think that under all these circumstances the most coupling effect from the European perspective is the

American troop presence. And that is why I am very concerned that at this moment, as we discuss taking out certain nuclear systems, we have a debate beginning about reducing the conventional presence of the United States. I think it comes at the worst possible moment.

A British member shared Henry Kissinger's dismay about Reykjavik, but was quite positive about the likely INF agreement and rejected the decoupling argument: I've never accepted the political argument about decoupling. It never occurred to me that the Alliance was going to be decoupled. One, because there are some 350,000 American troops—and a whole mass of tactical nuclear weapons which would have to be dealt with first in any Soviet advance. And secondly, because we have the security and service of France and Britain possessing their own independent nuclear weapons as well. It never occurred to us that this was a very serious argument, frankly, for deploying American intermediate range missiles.

A French member shared Henry Kissinger's concerns. However, although I have doubts over the results of Reykjavik and misgivings about the zero option, I do not want to appear panicky. I don't think it means the end of the Atlantic Alliance. As long as the Atlantic Alliance exists, as long as there are American forces in Europe with nuclear weapons, there is really no reason why the Soviets should embark on a rash and dangerous policy.

My misgivings about the zero option were said this morning, that it would remove from Europe U.S. weapons capable of reaching the Soviet territory. This has been an objective of the Soviet Union ever since the discussion started between the two countries. Twenty years ago they wanted to remove the FBS (Forward Based Systems), and now they want to remove those American systems capable of reaching their territory. Now it is not true—although it appears so—that removing Pershings and cruise missiles on one side and SS-20s on the other is a balanced reduction. Removing the Euro-missiles diminishes considerably the vulnerability of the Soviet Union; whereas the vulnerability of Europe would be exactly the same from the threat of the SS-21s, 22s and 23s as it is from the SS-20s. And we must remember that for political and geographic reasons the Atlantic Alliance has to prepare a forward defense—which means that the forces of the Alliance are gathered within 100 kilometers of the dividing line. With a range of 120 kilometers for the SS-21, more than 50 percent of the forces of the Alliance are under the threat of the remaining Soviet weapons. This move will weaken deterrence by removing a very important rung on the ladder of deterrence, which goes from the first platoon in Berlin to the strategic systems of the United States.

So, **what should we do?** It's not enough to criti-
cize. Are there measures that we could take or that the
Europeans could insist upon that would mitigate the dan-
ger of the situation? I think that if it were possible, the aim
should be an agreement which leaves both sides with fifty
or a hundred weapons—that would be make us feel
better. But that's probably not possible. What is possible
is that we delay fully completing the zero option until the
new U.S. weapons—the Stealth airplane, the cruise
missiles on maritime platforms (whether submarines or
surface ships)—can be deployed close to Europe, or in
Europe. That would be something that would be comfort-
ing.

We should insist that we are dead against denuclear-
ization of Europe because of Soviet superiority in conven-
tional weapons, and because denuclearization of Europe
would probably mean the end of the Atlantic Alliance.
Because if American nuclear weapons are taken back
over the ocean, and if Soviet nuclear weapons are just
withdrawn a few hundred kilometers to the east, it's very
unlikely that the American people and government would
feel that they have a situation which is acceptable.

Finally, the situation will call for a certain **change in the strategy** of the Alliance, which is now that of flexible response—with the end of the ladder the threat of escalation to the strategic level. With the impending changes there's absolutely no doubt that the importance of nuclear weapons will diminish, while the importance of conventional weapons will increase. Now, it's the policy of the Soviet Union to achieve enormous superiority in the field of conventional weapons, telling us that they will not use nuclear weapons first, but that if we do then the punishment on Europe will be frightful. On our part we must put in the minds of the Soviet leaders, both military and civilian, a serious doubt as to their capacity to implement their own strategy, which is one of scoring an immediate, decisive, disarming blow. And that means on our side improving our air defenses, improving our defenses against missiles, having counterforce capability against the rear of the enemy, and improving our conventional forces. I think if we do these things then we will restore a certain balance. And as long as the Soviets think they do not have a serious chance of being able to impose their conception of warfare, the chance that they would put pressure on us in peacetime to attain victory without war is unlikely.

A Belgian member was amazed that the West would
consider going back on its own "zero option" proposal.
"We are going simply to tell European public opinion
that it is a trap and that we must not do it? That's sur-
realistic." He knows many people, himself included, who
would have much preferred sea-launched (not ground-
launched) cruise missiles in the first place. "The

**ground-launched cruise missiles** were a
requirement of the American military people. We did not
want them."

A Danish member's strong views were in another direction: What sent chills down the spine in all the European chancellories after Reykjavik was the fact that somebody had called our bluff. We have been criticizing the United States over the years almost systematically, with no restraint, and all of a sudden we had publicly to admit that we had been living all these years in a protectorate status. We are not willing to sacrifice economically what it costs to put up sufficient conventional forces. We certainly are not going to develop chemical weapons in Europe. Now, we had at least a social democratic chancellor, Helmut Schmidt, who finally called it correctly—who invited the Americans to deploy the Pershings and the cruise missiles. That was a very brave action. Now, whether or not it was a military necessity, I shall not be the judge of that. While I am willing to accept the view that it was not a military necessity, it was a **psychological and political necessity**. We cannot live without the coupling effect of the present weapons. And when people talk so, they seem to underestimate the importance of the political work put in by people who had to fight their own public opinion for the deployment of the Pershings and the cruise missiles, and now talk about withdrawing them before they have even been fully deployed. I don't think those in favor of withdrawing these weapons know what they are talking about. The question is that no European leader, as Henry Kissinger said this morning, will ever again stick out his neck under these circumstances. He cannot. I would even go further than Kissinger and say that there is a psychological and political necessity to have the Pershing IIs and the cruise missiles, even if the Russians had never deployed even one SS-20. The political-psychological balance would have required it.

A number of differing American views were expressed.
An American member agreed with some of Henry
Kissinger's concerns, but felt the focus now should be on
where we go from here. The interesting question is what
are the military effects, and then what are the political
effects, and then what should we do? The military effects
are really very slight. These were political weapons first
and foremost. You could hit any target you wanted in
Europe with systems already devoted to NATO. The mil-
itary effects are secondary to the political effects. And the
most important of the political effects is the question of
coupling.

Now **what is coupling?** It's the feeling that the
Americans will indeed come to the defense of Europe.

That essentially is the whole theory of extended deterrence. All too often we talk as though it depends upon some particular weapon system. The credibility of extended deterrence rests upon the demonstration that we have high stakes in Europe. It rests upon the fact that we have conventional forces there, which are a way of showing that if something happens we are immediately involved. And it rests upon the fact that we also have a nuclear capability to back that up. The removal of one or another weapons system—a nuclear weapons system—need not have a decoupling effect.

That brings me to my next point: What happens to these weapons, whether they have a decoupling effect or not, depends on how we handle it. Instead of complaining about what would've been the ideal agreement—I would rather leave 100 weapons there—one has to ask if it would be better for Alliance cohesion to try to reverse gears. And it strikes me as absolutely clear that to reverse gears at this point would probably be a way to bring about Alliance incoherence and disunity, which really would have a weakening effect on extended deterrence.

These were political weapons going in; they're political weapons coming out. We managed to have effective extended deterrence up to 1983 without them; again we can have very good extended deterrence without them. The key is to maintain **Alliance cohesion**, which means not speaking too much with alarm, but asking about the practical merits of how we go about keeping the Alliance together on the issue.

Another American member discounted the military importance of INF in Europe, but gave great weight to political perceptions in Western Europe: I don't believe there is any merit whatsoever to the argument that the INF force is required in order to couple U.S. forces to the defense of Europe. I think it's generally agreed that we have sufficient numbers of strategic warheads (some 11,000) to offset the SS-20s. The problem is that Europe feels we won't use them. Now why does Europe feel we won't use them? For the very simple reason that they feel the President—before he'd launch Minutemen from Kansas or SLBMs from off the coast of Belgium in response to a threat from the SS-20s—would be concerned how the Soviets would respond. But what do you think the President will think when he's about to authorize a launch of the Pershings? The Soviets have said that they don't care whether a warhead coming towards the Soviet Union comes from the Pershings or from the Minutemen. So the President is going to think of exactly the same factors and forces in determining his decision. In that sense, I think there is no merit whatsoever to the point that the Pershings and cruises missiles couple us to the defense of Europe. Having said that, if Europe nevertheless believes these weapons are critical, I am for putting the

Pershings and cruise missiles in Europe. Why? Not because that couples us, but because the **foundation of NATO's security** is unity, and we must have unity in the Alliance; and if Europe has the misperception that these INFs couple us to them, then I want them there. And frankly, I wouldn't take them out now.

Another American member posed a question to the Japanese: I have a specific question for our Japanese friends with respect to the Asian side. I can understand why the preference would have been zero SS-20s in Asia as well as in Europe. But, if there's to be a hundred on each side, and **if the U.S. puts a hundred in Alaska** would that U.S. move be applauded in Japan, or would it be disliked? Do the Japanese specifically worry about being involved in a Far Eastern war that the U.S. gets involved in—and that the Japanese would prefer not to be in. What about that kind of coupling? That may or may not be affected by INF deployments, but I would not be surprised if the question came up if the U.S. actually deployed cruise missiles in Alaska.

A number of Japanese members spoke up in this debate, and in another sub-group a Japanese member addressed the matter of the 100 Soviet INF warheads remaining in Asia. If there is a zero option in Europe and a 100 option in Asia, Dr. Kissinger argued that, because the United States would not deploy a hundred missiles in Alaska, there would be an INF imbalance in Asia. The Soviet Union would have a hundred in Asia and the United States would have none. He said this would **worry the Asians**. I think it might worry the Japanese, but maybe not as much as he has suggested. Before the SS-20s were deployed in Asia, there were SS-4s and SS-5s, and the Japanese did not make a big issue out of those missiles. Likewise, when the SS-20s were deployed (there are currently about 172), the Japanese tried not to make a big issue out of it, so the public would not make a big issue out of it. Therefore, although the Soviets may be left with 100 missiles in Asia and the Americans none, this will not be a big issue for Japan. A qualification is that if Mr. Nakasone was publicly accused of not adequately conveying Japanese worries and concerns to the American government—given the differential treatment that Japan got compared to the Europeans—he might be in a difficult position.

Another Japanese member "quite agree[d] with the analysis of Henry Kissinger" on the question of 100 Soviet warheads remaining in Asia. He also pointed out how much more difficult the verification issue is with these 100 warheads. Then he turned to decoupling and the possible effects on U.S.-Japan relations of what might happen in

*Europe.* The Japanese are afraid that the possible U.S.-Soviet agreement may bring some sort of decoupling between the United States and Western Europe—if not of a military character then of a political character. If so, that might lead to a **U.S.-Japan decoupling** of the same character. U.S.-Japan security relations as of now are quite good and stable; the Japanese don't want them to be hurt, ironically, by nuclear arms reductions.

In order to prevent Euro-American decoupling it is more or less essential for Europe to take a more positive posture on conventional capabilities. The Japanese are worried about what kind of impact a possible build-up of conventional capabilities in Western Europe would have on Japan, which has already been under pressure to increase its **self-defense capabilities**. Japan would be driven to face the problem of whether it can follow Europe in the future. The Japanese government has recently finally decided to spend more than one percent of its GNP for defense under severe opposition from various groups. It may not be politically possible for Japan to further increase its defense expenditures significantly.

*In closing, this member noted:* as a whole, the Japanese people do not want the United States to make haste to reach a nuclear agreement with the Soviet Union that puts priority on (American) domestic considerations rather than the considerations of its allies.

TASK FORCE REPORT:

Restoring Growth in the Debt-Laden Third World

13

A draft of this task force report was discussed at the San Francisco meeting. Much of the draft was devoted to analyzing a variety of debt reform options, from the baseline of the strategy that evolved in 1982-83 after the onset of the crisis. Another key chapter sought to provide the conceptual tools for thinking about the situation of individual countries. The authors decided to draft their conclusions chapter after the meeting. There were differences among the authors on the appropriate conclusions, differences set out in opening remarks that framed the subsequent discussion.

Martin Feldstein

Martin Feldstein, lead author of the report, spoke first:

I am relatively optimistic about the prospects for the major Latin American debtors—Mexico, Argentina, Brazil, Venezuela and Chile—and I’ll concentrate my remarks on them. I believe that it is possible to restore satisfactory growth in those countries in a way that is consistent with continued cooperation of the debtor governments and creditor banks. I believe that achieving satisfactory strong growth does not require forgiveness of debt or any fundamental change in the nature of debt rescheduling. But it does require three things for at least the remainder of this decade and probably until the mid-1990s.

First, the debts must be rolled over as they become due—that is, no repayments of principal. Second, interest rates on new loans must remain very close to the cost of funds for the banks—that is, a small spread relative to LIBOR. Third, and most important, net new credit must be extended; debt must grow in nominal terms.

The critical point is that although the debts of the debtor countries must increase in nominal terms, the relative magnitude of that debt will decline—that is, the debt may grow at, say, four percent a year, but debt as a percentage of the debtor’s ability to service debt in the future will decline. (Debt can decline as a percentage of the debtor’s GNP; it can decline as a percentage of the debtor’s exports.) Roughly speaking, I think we can have satisfactory growth in the next years if debt remains roughly constant in real terms—growing just enough to keep up with inflation. Growth of debt at such a slow rate also means that the banks’ positions will improve over time. Debt will increase on their books but will decline as a percentage of the banks’ assets.

In short, I think we can restore satisfactory growth in the debt-laden LDCs if the creditors are prepared to provide moderate amounts of additional debt, if the banks are willing to return to lending. I emphasize the word "return"—because for the last two years the banks have done no new net lending to these debtor countries. So, we really are talking about a substantial change in the behavior of the