Ottawa summit: allies get a chance to size up Reagan
President Reagan is setting out for his first summit meeting. The leaders of six other nations who meet with the President for two days at Chateau Montebello in Ottawa this weekend principally want three things: reduced US interest rates; a cheaper dollar; and assurance that America will undertake nuclear arms control negotiations with Soviet Union. They also want to size up Mr. Reagan.Skip to next paragraph
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Reagan's fellow heads of government -- representing West Germany, France, Britain, Japan, Italy, and Canada -- appreciate his political battle at home. Reagan hopes that if he can get his budget-tax cut package through Congress, the effect will be to control inflation, reduce interest rates, and open the world to better trade. As a preliminary he takes with him to Ottawa the new midyear economic forecast, which shows sluggish growth, an inflation rate that seems to have dropped slightly, and an interest rate that continues high.
Four of the seven leaders at Ottawa have not attended a meeting of big industrial democracies before, including Reagan himself; newly elected French Socialist Francois Mitterrand; Japan's Zenko Suzuki, whose economy is more dependent on exports than any other; and Italy's giovanni Spadolini, who comes from a nation wrenched by 19 percent inflation.
The Ottawa atmosphere is expected to be cooperative but with what has come to be called ironically in Washington the "summit syndrome" -- the tendency by other nations to look to the United States as leader but at the same time as a scapegoat for what goes wrong. Two years ago, the US was criticized for not mastering inflation, and for a "week" dollar. Americans now argue that they are being blamed for doing what their partners previously advocated. The US has tightened interest rates to combat inflation, and now the relative value of the dollar has soared, with far-reaching effects on international trade.
The Reagan-Mitterrand relationship will be watched particularly closely at Ottawa. Both men are newcomers, deeply committed to radical economic programs, which happen to be nearly opposite in approach.
Reagan wants to reduce the size of government, rejects centralization, and would slash the budget. Socialist Mitterrand advocates nationalization of some industries and would extend social services. He places job-creation first and faces an inflation rate that averaged 11.75 percent last year (US equals 9 percent).
It will be the quiet personal exchanges between leaders which, in the long run, may be more important than specific plans. An underlying feature is the enigmatic nuclear relationship with the Soviet Union. Reagan will quietly note that of a federal budget of $700 billion next year, the US proposes to spend $ 184 billion for defense.
Helmut Schmidt may bring to Reagan's attention West Germany's economic difficulties -- a deficit gap four times the US in comparison with gross domestic product. Germany is weary of defense costs and wants assurance that the US will reopen arms limitation talks with Moscow. It is significant that Secretary of State Alexander M. Haig Jr. made his New York speech on arms control just before Ottawa. For the first time he set a target for talks with Moscow, "between mid-November and mid-December." But these are negotiations for reducing nuclear weapons in Europe. Talks on overall s trategic arms limitation are still not in sight.