[LC]

(The meeting was opened by President Wesley R. Johnson, who presented Jervis C. Webb, President and Chairman of the Board, Jervis B. Webb Company, as Presiding Officer.)

JERVIS C. WEBB: Good afternoon:

Dr. Henry Alfred Kissinger was the 56th Secretary of State of the United States from 1973 to 1977. He was awarded the Nobel Peace Prize in 1973 and the Presidential Medal of Freedom, this nation's highest civilian award, in 1977. He has a B.A. summa cum laude from Harvard College and a Master's and a Ph.D. from Harvard University.

I remember particularly his mission during the Nixon Administration which culminated in the opening of relations with the Peoples Republic of China, with tremendous possibilities toward world progress and peace. I also remember his endless patience in Middle East peace negotiations.

He comes to every task with his homework well done and applies his background and God-given native intelligence to these tasks with patience, adroitness and fairness to all. I present Dr. Kissinger.

(Applause)

DR. HENRY KISSINGER: Mr. Chairman, ladies and gentlemen:

I have been given the assignment to speak to you in 25 minutes and then to take your questions. If I fulfill the first part of the assignment, you can all say you were present at a historic occasion. (Laughter)

With respect to the second, please feel

1

Presiding Officer

JERVIS C. WEBB
President and
Chairman of the Board
Jervis B. Webb Company

The Economic Club of Detroit

920 Detroit Free Press Building, Detroit, Michigan 48226-2755

Telephone: 313/963-8547

[LC]

free to write down questions on any subject that concerns you and I'll elect to answer on any subject that concerns me (Laughter) — keeping in mind a cartoon of a De Gaulle press conference in which he allegedly began by saying, "Would somebody like to ask a question to my answer?" (Laughter)

What I thought I would talk to you about is the state of East-West relations at the recent Summit and the prospects as I see them.

First, with respect to the balance sheet of the recent Summit: If one compares what the two leaders said should happen before they met, and what in fact did happen, one has to say that both the format and the outcome of the Summit were much closer to President Reagan's ideas than to those of General Secretary Gorbachev.

President Reagan had proposed a get-acquainted summit. He had insisted that it cover a wide range of topics. And he had not particularly moderated his language about his perception of the Soviet Union in the years preceding. General Secretary Gorbachev had said that a summit had to have some agreement; that it should concentrate on arms control; and he had professed to be deeply insulted by some of President Reagan's earlier remarks.

Now we all know the results and they were to set up an agenda for future meetings and to meet again in the not too distant future; in fact, to meet again in 1986. So, from that point of view, the Summit achieved the best results attainable. The negotiations going on had not progressed to a point where the heads of government could conclude them, and any attempt to do so was bound to lead to trouble.

At the same time, we ought to keep in

2

mind a number of factors. First, I have read a great deal of speculation about the tremendous charismatic impact of the President on the Soviet leaders. I do not think that is doing the President or the perception of international affairs a favor. When the Soviets took a hard line, I said that the Soviets choose when they're insulted. And now that they are taking a softer line, I would argue that the Soviets choose when they're going to be charmed.

There are objective necessities that impose on the Soviets the need for some respite. First is the change in leadership which, in the Soviet political structure, is a much more complicated problem than with us. The Soviet system is not a constitutional system like a modern corporation – not to speak of a modern democratic state – in which obedience goes to the office. It is more similar to a feudal political structure in which obedience goes to the individual. Therefore any time there is a change of leadership, there is a massive transformation of leadership at all levels, a process that in the past has usually lasted several years until the new leader could be sure he had his own people in key positions throughout the country. This is something that is bound to preoccupy Mr. Gorbachev.

Secondly, he has an economy that is threatening to spin out of control. Imagine one in which the cost of nothing is known, in which every article of commerce moves by central allocation, and in which there are no markets whatsoever. Inefficiency, corruption, and black markets are absolutely inevitable, as the Soviet leaders themselves say in their pronouncements to their own public concerning what needs to be remedied. The problem is that it is not possible to run a modern economy by central planning. But it also may not

3

be possible to run a Communist state — cer-
tainly not a Soviet Communist state — with-
out central planning. And Gorbachev has to
maneuver between bureaucracies like the mil-
itary and the secret police — who know some-
thing about foreign affairs simply because
they are in contact with foreign countries,
and who probably want an economic reform
but who are opposed to foreign policy con-
cessions — and the Communist Party that on
the whole doesn't want much of a domestic
reform because its own status depends on
maintaining the planning system, but that
might paradoxically — because they think
history is on their side — be a little more
willing to make foreign policy adjustments.

So what Mikhail Gorbachev is trying to
do is gain time and relieve some of the pres-
sure. And I suspect that when he came home
to report to his colleagues, he claimed some
successes of his own: That he committed the
most conservative American president in gen-
erations to a policy of relaxation of tensions
with the Soviets; that, at the next summit,
he would be able to make the demands which
he deferred at this one; and that, by that
time, domestic pressures in this country and
Allied pressures might make it much more
difficult for our leadership to hold the line.
I'm not saying that this is the case but this
may be the Soviet perception of it. In any
event, the next summit will be a lot more
difficult.

We face the following situation. Any
analysis of Soviet conditions would lead one
to believe that if we cannot get significant
concessions now, one has to ask when we are
ever going to get them. When — in this con-
junction of leadership changes, economic
troubles, rise of minorities in the Soviet sys-
tem, worry about our technological advance
— one cannot achieve an end to aggressive

4

foreign policy behavior, when will there be
a better time? On the other hand, many in
the democracies, including in this country,
seem to consider agreement an end in itself.
Those who have negotiated with the Soviets
will tell you that unless you stand firm, and
stick to your views of what a peaceful world
should be, they will try to buy a respite sim-
ply by a change in tone. So I would argue
that we face three major problems.

The first is the excessive concern with
personalities. When one reads the accounts of
summit meetings the impression is given
that the heads of government sit down to
settle the issues on the basis of how they get
along with each other. Those of you who
have conducted commercial negotiations know
that in four or five hours of meetings you
cannot settle an issue. Whatever isn't sub-
stantially settled before the meeting will not
be settled at the meeting. But what the heads
of government can do is to impart a sense
of direction.

Whenever relations with the Soviet Union
were put on the basis of personalities, they
proved shortlived. In 1955 when President
Eisenhower met Mr. Khrushchev, the New
York Times wrote that "It was Mr. Eisen-
hower's gift to draw the Soviet leaders into
the magic circle of his good will and to mod-
ify the attitudes, if not yet the policies, of
the little band of visitors from the other side
of the ocean." Life Magazine wrote that "The
chief result of the Geneva Conference is so
simple and breathtaking that cynics and com-
mentators still question it. The champion-
ship of peace has changed hands. It has
moved from the Soviet Union to the United
States."

Fifteen months later the Soviets re-
pressed the revolution in Hungary and threat-

5

ened Britain and France with nuclear war
over the Middle East. Three years later they
gave us an ultimatum over Berlin. In other
words, unless the conditions are changed,
they cannot be tranquilized by the relation-
ship of leaders.

In this connection I would like to say
that I have a lot of admiration for the Chi-
nese for a lot of reasons. But one should
look at how they handle their relationships
with the Soviets. They say they're willing to
improve their relations but there are three
obstacles: Soviet troops at their borders;
Vietnamese troops in Cambodia: and Soviet
troops in Afghanistan. Unless at least one
of these obstacles is removed, they say, no
real improvement is possible. And I think we
need an equivalent of our ideas of a peaceful
world.

The second major problem is the some-
times legalistic, mechanical approach that we
take to negotiations. There is a tendency in
this country to say, "We must make nego-
tiable proposals." That means that we must
make proposals that the Soviets might ac-
cept; that the best agreement we can get is
some variation of some Soviet scheme; or
that we must make a compromise proposal
somewhere between the two sides. That ap-
proach has the practical consequence of en-
couraging the most intransigent Soviet posi-
tion in order to draw our compromise as
close to their real position as they can get.

I negotiated for many years with the
former Foreign Minister Andrei Gromyko
and he dealt with many preceding and fol-
lowing me. Mr. Gromyko was never em-
barrassed to repeat the same proposal over
and over and over again until somebody said,
"For heaven's sake, give him this point.
Don't be as steady as he is." (Laughter) And,

6

as someone once said, "You spend a billion
here and a billion there and pretty soon
you're in some real money." You make a
consession here and a concession there and
pretty soon you have achieved a real change
in the situation.

I once had a researcher go through the
editorial pages of some of our leading news-
papers to see for how long we could gain
their support by adopting their recommen-
dations. The longest we ever got was three
months, after which we were urged to come
up with some "new" proposals.

The third problem is to apply these prin-
ciples to some specifics, and here we have two
issues. One is the issue of weapons; the other
is the issue of political relations.

On the issue of weapons, the Summit has
said there should be a 50 percent reduction
of offensive forces. And the Soviets have
said that they would not agree to any re-
duction of offensive forces unless we aban-
don all ideas of strategic defense. We have
said that we are only really engaged in a
research program and we don't know exactly
where that will lead us.

Now I think this is a crucial question for
the future of our security and the nature of
our policies. When President Reagan first
proposed the so-called Star Wars, I did not
agree with it because I had been brought up
in the conventional wisdom in which it was
believed that the capacity for mutual de-
struction is the best assurance for security.
The more I reflected about this, the more I
came to the view that that was not the cor-
rect position.

You cannot in a democracy ask your
people to base their permanent security on
the mass extermination of civilians and say

7

[LC]

you will do nothing to protect them, or seek to mitigate the assault or do anything except to remain vulnerable to allout attack; especially can you not do it when your opponent has large conventional forces and therefore can attack easily, creating the situation where you have to initiate nuclear war.

So I have to believe that the Soviet insistence that we have no defense is not based on making the world more stable but is based on keeping the democracies open to permanent nuclear blackmail. And I believe also that the President came up with the right idea. Now what can be negotiated and should be negotiated is that relationship between offensive and defensive forces that is most conducive to stability. In my view this requires not just reducing offensive forces but changing their character. This so-called 50 percent reduction in my view ameliorates no danger.

When I was in office we had some three to four thousand warheads. Now we and the Soviets have some 12,000 warheads. If we cut by 50 percent, we will be back to 6,000 — twice as many as President Kennedy had at the time of the Cuban missile crisis when he thought he was facing Armageddon.

You cannot get from here to there simply by linear cuts without changing the composition of the forces as, for example, by limiting or eliminating multiple warheads. I don't want to get into a technical argument. I do want to warn against easy, simple-minded slogans in which people say, "If we could only get rid of our defense, we could have that great achievement of a 50 percent cut"—at the end of which we would be just as vulnerable and the world would be just as precarious and, in a funny way, in some respects, even more dangerous.

8

To give a simple example, if we cut our submarines in half, the anti-submarine forces of either side would not be cut because they're not subject to arms control negotiations because those are surface ships, small submarines, short-range airplanes. In other words, the same number of anti-submarine forces would now be chasing half the number of missile-carrying submarines. The submarines would be infinitely more vulnerable and yet they would still carry a large destructive potential. So you may have combined every disadvantage.

I am not against reductions. I am saying we should start at the other end of the equation: We should ask, what are we trying to achieve? How do we achieve it? How can we reduce the danger of surprise attack? How can we protect populations and through what mix of offensive and defensive forces, and put that forward.

I believe that the President's program gives us that opportunity and we must not let ourselves be stampeded by people or allies who seek agreement for their own sake, for the short term, and then in a year or two, or five years, when the situation deteriorates again, we ask ourselves, "What were we thinking when we had this opportunity?"

The second problem in this connection is the relationship between political issues and arms. There are endless discussions whether arms races cause wars or are caused by tensions. And there is long literature on accidental war, despite the fact that I know no student of history who has ever produced for me one example — in all of recorded human history — of a war that started by accident. Every war that I've ever heard about was started by human decision; maybe often misguided human decision, but not just as a result of a weapon fired by accident.

9

[L.C.]

It cannot be denied that Soviet political actions contribute crucially to political tensions: The Vietnamese occupation of Kampuchea; the Soviet occupation of Afghanistan; Soviet troops in Cuba; the spread of Soviet military bases around the world while ours are shrinking; or the support of guerrilla and terrorist movements all over the world. I am not at all saying that every terrorist movement or action is planned by the Soviets. But the Soviets give intelligence support, training and general encouragement. Then they put themselves in the position of a man who stands at the side of a mountain slope covered with boulders, throws a rock and then claims that he isn't responsible for the death of a passerby because the boulder that hit him was not the rock he threw.

Something has to be done to bring about some political restraint. It is argued that the Russians have a long history of invasions and therefore have a reason to feel insecure. There is something to that. But if you take the historical atlas of the world and compare the boundaries of Russia at the end of every century with the boundaries of Russia at the beginning of any century, you will find that their neighbors have had even more to fear. And if you compare where the Soviets were in 1945 with where they are in 1985, it would be hard to prove that they got there by defensive measures, or else it is a comfortable defense in which they feel secure only when they have troops on both sides of the border. So of course we should take into account reasonable security concerns. But there is a need for a political dialogue and, again, the framework for it has been created at the Summit.

On balance I would say this: I cannot think of a moment in the postwar period in which by drawing a balance sheet one could

10

find a better opportunity for a breakthrough. The Soviets cannot get around the problem that if they do not reform their economy they will fall further and further behind. Theirs is a country that is producing intercontinental rockets but has not yet been able to produce one manufactured article for export that can compete in world markets with the manufactured articles of any market economy, no matter how small. Theirs is a country in which it was reported a few weeks ago in *Pravda* that a train left a railway station in 1983 and never arrived at its destination — and now they can't find it any more (*Laughter*) because the paperwork relevant to it has been destroyed. There is something wrong with such a system.

There is no way of getting around that problem except if we are emotionally so exhausted that we will settle for any agreement; that we do not ask the question of what is a secure world, but ask only the question of what among the plethora of ideas in circulation can be accepted to produce some cuts but which doesn't really transform the situation. It can come about only if we won't talk about the political issues.

But I think if we develop a just and fair program and stick to it, as so far the President has steered his course, we have a great opportunity to bring about a real transformation in the international situation. And what makes that encouraging is that all the issues that I have described to you are within our power to solve. They require our imagination, our ability and our willingness for an intellectual daring commensurate with our opportunities. And there is no other nation in the world today that can make this claim.

And I tell you I feel so intimidated by your Chairman that I am ending exactly at

11

[LC]

1:10 p.m. Thank you very much. And now I'll take your questions.

(Applause)

JERVIS C. WEBB: There are a great many questions on the resignation of your friend, Robert McFarlane. Would you please comment.

ANSWER: I've known Bud McFarlane for nearly 15 years. He was my Executive Assistant when I was Security Adviser. We worked together for six years and I have followed his distinguished career ever since. He is a very quiet man who has rendered distinguished service to his country. I know only what I read in the newspapers. I regret his departure. I regret it because he has a lot of experience in the foreign policy field, and because the position of the National Security Adviser is one of the key, if not the key, positions in the formulation of our foreign policy. The reason is that the heads of the Departments of State, Defense, and the Central Intelligence Agency, that of course play a major role on the National Security Council, represent huge bureaucracies and they would not be human if they did not become advocates of the point of view of their bureaucracy. What they put forward is what they believe to be in the national interest. But what the President requires is somebody who is not part of this occasional conflict; who makes sure that options are put forward that do not emerge simply out of the bureaucracies; who makes sure that everybody gets a hearing; and who has enough weight to insist on the best possible work.

It's a tricky business because most Security Advisers wind up being accused of being either too strong or too weak. But I would rather err on the side not, I would say, of one that's too strong but of one that can

12

perform the function I have described. And it will be very tough for a new man to come in and establish sufficient authority to do this, especially if it is true that part of the quarrel in the White House was between the Chief of Staff and Bud McFarlane because McFarlane was allegedly too assertive — which I know is not accurate, having worked with him.

At any rate, Bud McFarlane has the goodwill of the country and we should wish his successor, whomever he is, every good luck because in preparing for the next negotiations his role will really be central.

QUESTIONS: "Do you think the current swing towards individualism in China is shortlived, or is it a reflection of a major change in ideology?"

"Do you believe China and the Soviet Union will come together again?"

"With the new Soviet leadership and the new Chinese attitudes, where are Sino-Soviet relations now?"

"Will Gorbachev bring a better understanding between the two nations?"

ANSWER: Let me deal with the foreign policy questions first. That is, what do I think of improved relations between the Soviet Union and the Peoples Republic of China. I have now known personally three generations, three successive waves of Chinese leaders, and I have had many long conversations with people at the next level. And I must say, the most sophisticated, clear-headed, unsentimental, unemotional analysis of foreign policy that I have seen is to be found in Beijing. They demonstrate that a country that has survived with uninterrupted independence for 3,000 years did not do so by accident.

13

[L.C]

Now they will undoubtedly attempt to improve their relations with the Soviet Union, and the Soviet Union will try to improve their relations with China because they don't want us to be without worries in the world. On the other hand, I believe that the Chinese leaders are sophisticated enough to realize that no amount of rapprochement with the Soviet Union is going to shorten the frontier between the Soviet Union and China, which is 4,000 miles long.

Secondly, while I think they will try to improve relations and may even succeed, they will not in my view improve them to the point where the United States will lose its interest in the territorial integrity and security of China; in other words, where we begin to think of China as a committed adversary. So I think we should be relaxed when we read in the newspapers about talks between the Soviets and the Chinese.

I think there are objective limits beyond which they cannot go and the Chinese, I believe, have a very clearheaded understanding of the dangers they may face as their development continues, and will not risk everything on becoming partners with a country that has a million troops on its frontiers and is surrounding it with military bases.

With respect to the trend toward individualism in China, I would rather put it another way. Are the reforms that are going on in China now likely to be long-lasting? Well, the problem of economic development in China is one of unprecedented complexity. When Europe industrialized, it did so in packages of 30 million. I don't think that Great Britain in the Industrial Revolution had more than 20 to 25 million in population. And when we industrialized, we had maybe 50 to 60 million people. Those of you who

14

have been in China know that it is almost impossible to find a province that has so few people. And there are many provinces that have 100 million people and the total population is a billion. How to move that mass forward more or less simultaneously is a huge problem.

Secondly, when you have such a huge society, the balance between centralization and decentralization is extremely difficult to establish. If you centralize too much, you run the risk of stagnation. If you decentralize too much, you run the risk that it will fly apart. What one can say is that no Communist country has had the courage to free itself from the shackles of its economic theory the way China has. To establish markets in a planned economy, it takes an almost heroic step and runs up against the opposition of all the bureaucracies that have a vested interest in the previous system.

So, my guess is that there will be many zigzags, there will be many ups and downs, but that over a period of 10 to 15 years we will see continuing progress. I don't think one should say that China is moving towards capitalism. I don't think it is. I think China is moving towards market-oriented economies, which does not necessarily require that all the industries are privately owned. But they are attempting to orient them towards markets rather than towards central planning, and that is a huge undertaking in which progress is uneven but is going forward. And that I believe will continue.

QUESTION: "When you were here in October 1975, you told us the Russians were using surrogate Cuban soldiers in Angola. Where else in the world today are the Russians using surrogate soldiers?"

ANSWER: Well, they are still using the

15

[LC]

Cubans. What started in Angola, we at-
tempted to resist at that time with a ridic-
ulously small sum of money — which we
couldn't get from the Congress. There are
still 35,000 Cuban troops in Angola. There
were at one point 25,000 Cuban troops in
Ethiopia or, at any rate, enough to preserve
the Marxist government there. There are
Vietnamese troops equipped by the Soviets
in Kampuchea, and there are Cuban troops
or intelligence personnel in Nicaragua num-
bering about eight to ten thousand. So the
danger against which we warned in 1975
has now become a global one. And what
could have been resisted at small cost, with-
out American forces, in 1975 has become
infinitely more complex, indicating the prob-
lem of foreign policy: When your scope for
action is greatest, you cannot prove it is
necessary. When you can prove it is neces-
sary, the price has gone up enormously.

QUESTION: "What do you feel a comprehensive, forceful United States policy should be in combating the rise of terrorism in the world?"

ANSWER: On terrorism I make my ac-
ademic friends extremely unhappy. My view
on terrorism is that there must never be
any negotiation with terrorists. (Applause)
There must never be any concession to ter-
rorists and there must be punishment for ter-
rorists. I know in any one case this creates
a terrible dilemma because they always take
innocent people as hostages and all instinct
cries out to see whether one can meet some of
the demands.

I believe that the only way we can stop
that kind of terrorism is to make clear that
the terrorists gain nothing — but nothing —
because at any one moment there are millions
of Americans around the world and any one

16

plane can be hijacked. So in all the recent
terrorist crises I have supported forceful
action, hopefully more efficiently done than
the Egyptian one in Malta, and I have op-
posed any attempt to negotiate. I got myself
into terrible trouble with the media by sug-
gesting that maybe the terrorists should not
be put on television to state their demands,
in order to remove an incentive for them to
engage in terrorism.

But I have to admit, I have not had to
make the actual decision and I don't know
whether I would have the courage to carry
it out. I must say in incidents when there
were terrorist actions in the Nixon and Ford
Administrations, we did follow these prin-
ciples. We refused to negotiate and we suc-
ceeded in liberating many hostages, while also
suffering a few casualties.

QUESTION: "In your opinion, will Tai-
wan become a part of Mainland China in the
near future?"

ANSWER: My guess is not in the near
future, and I think the best position the
United States can take is to let the Taiwa-
nese and the Chinese work this out in some
sort of Chinese solution. I notice that the
Peiping Government has already suggested
that Taiwan might even keep its own armed
forces if it became part of the mainland.

I'm not arguing for the merit of any one
position, but I think as the mainland evolves,
and as Taiwan evolves, the many contacts
that are now going on via Hong Kong and
other places might evolve also into some po-
litical discussions. But I think it will take a
decade or more.

QUESTION: "What political diplomatic
decision do you most regret making?"

ANSWER: I'll tell you, what I most re-

17

[L.C]

gret is that in Indo-China we did not do in
1969 what we did in 1972: that we did not
blockade North Vietnam and return to bomb-
ing as soon as we came in, when we still
had 500,000 troops in place. As it was, we
achieved what I thought was a maintainable
settlement, but then it got so mixed up in
Watergate that we could not enforce the set-
tlement. If we had done this when we came
in, I think the Indo-China War could have
been ended more rapidly and many divisions
in our country could have been avoided. We
would have taken a terrible beating from the
demonstrators — but we took a terrible beat-
ing from the demonstrators anyway. And in
that respect I think you get no awards for
losing with moderation; if we are involved
in a war, we have to win it. We did not even
start the war; we inherited it. I must say
it's perhaps not the most elevated position,
but that's the one I regret most.

(Applause)

WESLEY R. JOHNSON: Thank you, Dr. Kissinger, for a most interesting and informative talk. Thank you, Jerv Webb, for serving as our Presiding Officer. This meeting is adjourned.

[L.C.]

I remember particularly his mission during the Nixon Administration which culminated in the opening of relations with the People's Republic of China, with tremendous possibilities toward world progress and peace. I also remember his endless patience in Middle East peace negotiations.

I present Dr. Kissinger.

(Applause)

With respect to the second, please feel free to write down questions on any subject that concerns you and I'll elect to answer on any subject that concerns me (Laughter) -- keeping in mind a cartoon of a De Gaulle press conference in which

-2-

[L.C.]

First, with respect to the balance sheet of the recent Summit. If one compares what the two leaders said should happen before they met, and what in fact did happen, one has to say that both the format and the outcome of the Summit were much closer to President Reagan's ideas than to General Secretary Gorbachев's.

General Secretary Gorbachев had said that a summit had to have some agreement; that it should concentrate on arms control; and had professed to be deeply insulted by some of President Reagan's earlier remarks.

Now we all know the results and they were to set up an agenda for meetings and to meet again in the not too distant future; in fact, to meet again in 1986.

At the same time, we ought to keep in mind a number of factors. First, I have read a great deal of speculation about

-3-

[Lc]

the tremendous charisma impact of the President on the
Soviet leaders. I do not think that is doing the President
a favor or is doing the perception of international affairs
a favor.

When the Soviets took a hard line, I said: "The Soviets
choose when they're insulted." And now that they are
taking a softer line, I would argue that the Soviets choose
when they're going to be charmed.

There are objective necessities that impose on the Soviets
the need for some respite. Those necessities are the change
in leadership which in the Soviet political structure is a much
more complicated problem than with us. The Soviet system is
not a constitutional system like a modern corporation -- not
to speak of a modern democratic state -- in which obedience
goes to the office. It is more similar to a feudal political
structure in which obedience goes to the individual. And
therefore any time there's a change of leadership there is a
massive transformation of leadership at all levels that
in the past has usually lasted two or three years until the new
man could be sure he had his own people in key positions
throughout the country. So this is something that is bound
to preoccupy Gorbachev.

Secondly, he has an economy that is threatening to spin
out of control. Imagine an economy in which the cost of nothing
is known, in which every article of commerce moves by central
allocation, in which there are no markets whatsoever. Inefficiency,
corruption, black markets are absolutely inevitable as the
Soviet leaders themselves say in their pronouncements to their

-4-

[L]

own public of what needs to be remedied. But the problem
is that it's not possible to run a modern economy by central
planning.

But it also may not be possible to run a Communist state --
certainly not a Soviet Communist state -- without central
planning. And Gorbachev has to maneuver between bureaucracies
like the military and the secret police -- who know something
about foreign affairs simply because they're in contact with
foreign countries, and who probably want an economic reform
but who are opposed to foreign policy concessions -- and the
Communist Party that on the whole doesn't want much of a
domestic reform because its own status depends on maintaining
the planning system, but that might paradoxically -- because
they think history is on their side -- be a little more willing
to make adjustments.

So what Gorbachev is trying to do is gain time and take
off some of the pressure. And I suspect that when he came
home and reported to his colleagues, he claimed some successes
of his own. He probably claimed that he committed the
most conservative American president in generations to a
policy of relaxation of tensions with the Soviets. And that
at the next summit he would be able to make the demands which
he put back at this one. And that by that time domestic
pressures in this country and Allied pressures might make
it much more difficult for our leadership to hold the line.
I'm not saying that this is the case . . . I'm saying that the
difficulty is true, but this may be the Soviet perception of it.

-5-

[L.C]

So in any event the next summit will be a lot more difficult.

We face the following situation. Any analysis of Soviet conditions would lead one to believe that if we cannot get significant concessions now, one has to ask when ever are we going to get them? When in this conjunction of leadership changes, economic troubles, rise of minorities in the Soviet system, worry about our technological advance, one cannot get an end to aggressive foreign policy behavior, when will there be a better time?

On the other hand, many in the democracies, including in this country, seem to consider agreement an end in itself. And anybody who has negotiated with the Soviets will tell you that unless you have in there, and stick to your views of what a peaceful world should be, they will try to buy a respite simply by a change in tone.

So I would argue that we face three major problems. The first is the excessive concern with personalities. When one reads the accounts of summit meetings it gives the impression that these heads of government sit down and are going to settle the issues on the basis of how they get along with each other.

Now those of you who have conducted commercial negotiations know that in four or five hours of meetings you cannot settle an issue. Whatever isn't substantially settled before the meeting will not be settled at the meeting. What the heads of government can do is impart a sense of direction.

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[L]

Eisenhower met Khrushchev, the New York Times wrote: "It was Mr. Eisenhower's gift to draw the Soviet leaders into the magic circle of his good will and to modify the attitudes, if not yet the policies, of the little band of visitors from the other side of the ocean."

Life Magazine wrote: "The chief result of the Geneva Conference is so simple and breathtaking that cynics and commentators still question it. The championship of peace has changed hands. It has moved from the Soviet Union to the United States."

Fifteen months later the Soviets repressed the revolution in Hungary and threatened Britain and France with nuclear war over the Middle East. Three years later they gave us an ultimatum over Berlin. In other words, unless the conditions are changed, they cannot be tranquilized by the relationship of leaders.

In this connection I would like to say that I have a lot of admiration for the Chinese for a lot of reasons. But one should look at how they handle their relationships with the Soviets. They say they're willing to improve their relations but there are three obstacles: Soviet troops at their borders; Vietnamese troops in Cambodia; and Soviet troops in Afghanistan. Unless at least one of these obstacles is removed, they say, no real improvement is possible. And I think we need an equivalent of our ideas of a peaceful world.

The second is the sometimes legalistic mechanical approach that we take to negotiations. There is a tendency in this country to say, "We must make negotiable proposals." That

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[L.C]

means that we must make proposals that the Soviets might accept. That means the best agreement we can get is some variation of some Soviet scheme. Or it is that we must make a compromise proposal somewhere between the two sides. That has the practical consequence of encouraging the most intransigent position in order to draw our compromise as close to the real position as they can get.

I negotiated for many years with the former Foreign Minister Gromyko and he dealt with many preceding me and following me. And Gromyko was never embarrassed to repeat the same proposal over and over and over again until somebody said, "For God's sake, give him this point. Don't be as steady as he is." (Laughter) And, as somebody once said, "You spend a billion here and a billion there and pretty soon you're in some real money." You make a concession here and a concession there and pretty soon you have achieved a real change in the situation.

I once had a researcher go through the editorial pages of some of our leading newspapers to see for how long we could gain their support by adopting their recommendations. And the longest we ever got was three months. After that they said, "For God's sake, can't you come up with some new ideas?"

The third problem is to apply these principles to some specifics, and here we have two issues. One is the issue of weapons; the other is the issue of political relations.

On the issue of weapons, the Summit has said there should be a 50 percent reduction of offensive forces. And the Soviets have said that they would not agree to any reduction of

[L.C.]

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offensive forces unless we abandon all ideas of strategic
defense. And we have said that we are only really engaged
in a research program and we don't know exactly where that
is going to lead us.

Now I think this is a crucial question for the future
of our security and the nature of our policies. When President
Reagan first proposed the so-called Star Wars, I did not
agree with it because I had been brought up in the conventional
wisdom in which it was believed that the capacity for mutual
destruction is the best assurance for security. The more
I reflected about this, the more I came to the view that
that was not the correct position.

You cannot in a democracy ask your people to base their
security for all eternity on the mass extermination of civilians
and say you will do nothing to protect them, to seek to
mitigate the assault or to do anything except sit there open
to all out attack. Especially can you not do it when your
opponent has large conventional forces and therefore can attack
easily and procure the position where you have to initiate nuclear
war.

So I have to believe that the Soviet insistence that
we have no defense is not based on making the world stabler
but is based on keeping the democracies open to permanent
nuclear blackmail. And I believe also that the President came
up with the right idea. Now what can be negotiated and should
be negotiated is that relationship between offensive and
defensive forces that is most conducive to stability. In my
view this requires not just reducing offensive forces but

[L]

-9-

When I was in office we had some three to four thousand
warheads. Now we have some 12,000 warheads. And so have the
Soviets. If we cut by 50 percent, we will be back to
6,000 -- twice as many as President Kennedy had at the Cuban
missile crisis when he thought he was facing Armageddon.

You cannot get from here to there simply by linear cuts
without changing the composition of the forces as, for example,
by limiting or eliminating multiple warheads. But I don't want
to get into a technical argument. I want to warn against easy,
simple-minded slogans in which people say, "If we could only
get rid of our defense, we could have that great achievement
of a 50 percent cut" -- at the end of which we'd be just as
vulnerable and the world would be just as precarious and, in
a funny way, in some respects, even more dangerous.

To give a simple example, if we cut our submarines
in half, the anti-submarine forces would not be cut of either
side because they're not subject to arms control negotiations
because those are surface ships, small submarines, short-range
airplanes. In other words, the same number of anti-submarine
forces would now be chasing half the number of missile-carrying
submarines. The submarines would be infinitely more vulnerable
and yet they would still carry a large destructive potential.
So you may have combined every disadvantage.

I'm not against reductions. I'm saying we should start
at the other end of the equation. We should ask, what are we
trying to achieve? How do we achieve it? How can we reduce
the danger of surprise attack? How can we protect populations

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[L.C]

And I believe that the President's program gives us that
opportunity and we must not let ourselves be stampeded by
people or allies who seek agreement for their own sake, for
short term, and then in a year or two, or five years, when
all hell breaks loose again, we ask ourselves, "What were
we thinking when we had this opportunity?"

The second problem in this connection is the relationship
between political issues and arms. There are endless
discussions whether arms races cause wars or are caused by
tensions. And there is long literature on accidental war,
despite the fact that I know no student of history who has
ever produced to me one example -- in all of recorded human
history -- of a war that started by accident.

Every war that I've ever heard about started by human
decision; maybe often misguided human decision but not just by
a weapon going off by accident.

Now, it cannot be denied that Soviet political actions
contribute crucially to political tensions. The Vietnamese
occupation of Kampuchea; the Soviet occupation of Afghanistan;
Soviet troops in Cuba; the spread of Soviet military bases
around the world while ours are shrinking; or the support of
guerrilla and terrorist movements all over the world. I'm
not saying that every terrorist movement or action is planned
by the Soviets. Not at all. But the Soviets give intelligence
support, training and general encouragement. And then they
put themselves in the position of a man who stands at the

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[L]

side of a mountain slope covered with boulders and throws a rock and then claims that he isn't responsible for the death of a passerby because the boulder that hit him was not the rock he threw.

Now something has to be done to bring about some political restraint. People say that the Russians have a long history of invasions and therefore have a reason to feel insecure. There's something in that. But if you take the historical atlas of the world and compare the boundaries of Russia at the end of every century with the boundaries of Russia at the beginning of any century, you will find that their neighbors have had even more to fear.

So on balance I would say this. I cannot think of a moment in the postwar period in which by drawing a balance sheet one could find a better opportunity for a breakthrough. The Soviets cannot get around the problem that if they do not reform their economy they will fall further and further behind.

Here is a country that is producing intercontinental rockets but has not yet been able to produce one manufactured article for export that can compete in world markets with

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[L.C.]

Here is a country in which it was reported a few weeks ago
in Pravda that a train left the railway station in 1983 and never
arrived at its destination -- and now they can't find it any
more (Laughter) because the paperwork relevant to it has been
destroyed. There's something wrong with such a system.

There's no way of getting around that problem except if
we are emotionally so exhausted that we will settle for any
agreement; that we do not ask the question of what is a secure
world but simply ask the question of what in that plethora of
ideas that is around can be accepted to have some cuts but
doesn't really transform the situation. It can come about only
if we won't talk about the political issues.

And I tell you I feel so intimidated by your Chairman
that I am ending exactly at 1:10 p.m. Thank you very much.
And now I'll take your questions.

(Applause)

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ANSWER: I've known Bob McFarlane by now for nearly 15 years. He was my Executive Assistant when I was Security Adviser. We worked together for six years and I have followed his distinguished career ever since. He is a very quiet man who has rendered distinguished service to his country. I know only what I read in the newspapers. I regret his departure. I regret it because he has a lot of experience in the foreign policy field. And because the position of the National Security Adviser is one of the key, if not the key, positions in the formulation of our foreign policy. The reason is that the heads of the Departments of State, Defense, the Central Intelligence Agency, that of course play a major role on the National Security Council, represent huge bureaucracies and they would not be human if they did not become advocates of the point of view of their bureaucracy. What they put forward is what they believe to be in the national interest. But what the President requires is somebody who is not part of this occasional conflict; somebody who makes sure that options are put forward that perhaps do not emerge out of the bureaucracies, and who makes sure that everybody gets a hearing, and who has enough weight to insist on the best possible work.

Now it's a tricky business because most Security Advisers wind up being accused of being either too strong or too weak. But I would rather err on the side -- not I would say on one that's too strong but one that can perform this function.

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[LC]

And it will be very tough for a new man to come in there and establish sufficient authority to do this, especially if it is true that part of the quarrel in the White House was between the Chief of Staff and McFarlane because McFarlane was allegedly too assertive -- which almost boggles my mind, having worked with him.

At any rate, McFarlane has the goodwill of the country and we should wish his successor, whoever he is, every good luck because in preparing for these next negotiations his role will really be central.

ANSWER: Well, let me deal with the foreign policy questions first. That is, what do I think of improved relations between the Soviet Union and the Peoples Republic of China. I have now known personally three generations, three successive waves of Chinese leaders, and I have had many long conversations with people at the next level. And I must say, the most sophisticated, clearheaded, unsentimental, unemotional analysis of foreign policy that I have seen is to be found in Peiping. They demonstrate that a country that has survived with

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[L.C]

Now the trend toward individualism in China, I would rather
put it another way. Are the reforms that are going on in
China now likely to be long-lasting? Well, the problem of
economic development in China is one of unprecedented complexity.
When Europe industrialized, it did so in packages of
30 million. I don't think that Great Britain in the Industrial

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[LC]

Revolution had more than to 20 to 25 million population. And when we industrialized, we had maybe 50 to 60 million people. Those of you who have been in China know that it is almost impossible to find a province that has so few people. And there are many provinces that have 100 million people and the total population is a billion. And how to move that mass forward more or less simultaneously is a huge problem.

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[L.C.]

ANSWER: Well, they are still using the Cubans. What started in Angola, we attempted to resist at that time with a ridiculously small sum of money -- which we couldn't get from the Congress. There are still 35,000 Cuban troops in Angola. There were at one point 25,000 Cuban troops in Ethiopia; at any rate, enough to preserve the Marxist government there. There are Vietnamese troops equipped by the Soviets in Kampuchea, and there are Cuban troops or intelligence personnel in Nicaragua to the tune of about eight to ten thousand. So that the danger against which we warned in 1975 has now become a global one. And what could have been resisted at small cost, without American forces, in 1975, has become infinitely more complex, indicating the problem of foreign policy that when your scope for action is greatest, you cannot prove it is necessary. When you can prove it is necessary, the price has gone up enormously.

QUESTION: "What do you feel a comprehensive, forceful United States policy should be in combatting the rise of terrorism in the world?"

ANSWER: Well, on terrorism I make my academic friends extremely unhappy. My view on terrorism is that there must never be any negotiation with terrorists. (Applause) There must never be any concession to terrorists and there must be punishment for terrorists. I know in any one case this creates a terrible dilemma because they always take innocent people as hostages and all instinct cries out to see whether one can meet some of the demands.

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I believe that the only way we can stop that kind of terrorism is to make clear that the terrorists gain nothing -- but nothing -- because at any one moment there are millions of Americans around the world and any one plane can be hijacked. So in all the recent terrorist crises I have supported forceful action, hopefully more efficiently done than the Egyptian one in Malta, and I have opposed any attempt to negotiate.

And I got myself into terrible trouble with the media by suggesting that maybe the terrorists should not be put on television to state their demands, in order to remove an incentive for them to engage in terrorism.

But I have to admit, I have not had to make the actual decision and I don't know whether I would have the courage to carry it out. I must say in the two incidents when there were terrorist actions, one in the Nixon and one in the Ford Administrations, we did follow these principles. We refused to negotiate and we liberated the hostages, in one case, however, also suffering casualties.

QUESTION: "In your opinion, will Taiwan become a part of Mainland China in the near future?"

ANSWER: My guess is not in the near future, and I think the best position we can take -- the United States can take -- is to let the Taiwanese and the Chinese work this out in some sort of Chinese solution. I notice that the Peiping Government has already suggested that Taiwan might even keep its own armed forces if it became part of the mainland.

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[Lc]

many contacts that are now going on via Hong Kong and other places
might evolve also into some political discussions. But I think it
will take a decade or more.

ANSWER: I'll tell you, what I most regret is that in Indo-China we did not do in 1969 what we did in 1972: that we did not blockade North Vietnam and return to bombing as soon as we came in, when we still had 500,000 troops in place. As it was, we achieved what I thought was a maintainable settlement, but then it got so mixed up in Watergate that we could not enforce the settlement. If we had done this when we came in, I think the Indo-China War could have been ended more rapidly and many divisions in our country could have been avoided. We would have taken a terrible beating from the demonstrators -- but we took a terrible beating from the demonstrators anyway. And in that respect I think you get no awards for losing with moderation, and if we are involved in a war, we have to win it. And we did not even start the war, we inherited it. And I must say it's perhaps not the most elevated position, but that's the one I regret most.

(Applause)