Post-summit: Reagan digs in on Begin and tight money; Summit balance sheet

By , Senior economics correspondent of the Christian Science Monitor

The seventh economic summit has passed into history. Attending presidents and prime ministers have flown to far corners of the world. And what is the balance sheet on the Ottawa talks?

The debit side of the line is easy to draw. It is symbolized by European Commission President Gaston Thorn's anguished response to American officials when they pledged to reduce US interest rates as quickly as they could:

"Hurry it up, will you? We can't wait too long!"

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Mr. Thorn's urgent cry, reported by US Treasury Secretary Donald T. Regan, hinted at the pressures that underlay the two days of talks -- pressures not evident in a surface reading of the communique.

French President Mitterrand and Mr. Thorn fear that social unrest -- fed by burgeoning unemployment among european youth -- could spill over into street violence and threaten the fabric of European society.

President Reagan could help, European leaders beleive, by moving swiftly to bring down US interest rates, thus allowing Europeans to ease their own rates and pump more money into creating jobs.

The Reagan administration moves on a different track -- one fixed on the goal of defeating inflation. Only when financial markets are convinced that inflation truly is fading, US officials claim, will interest rates subside.

"No one," said Treasury Secretary Regan, "is happy about high interest rates. But I know of no economist in the world who knows of a way to have low interest rates at a time of high inflation."

The President yielded not an inch to European pleas at Ottawa that he compromise his program to help his colleagues put people back to work.

On other issues, too, the strong-minded government chiefs who came to Ottawa went home with their views essentially unchanged.

* Mr. Reagan and West German Chancellor Helmut Schmidt went head to head on the question of a Soviet natural gas pipeline to Western Europe with the President opposed and the chancellor insisting he will move ahead with the plan.

* American officials dragged their heels on the concept of "global negotiations" between rich and poor lands, designed to put new life into the flagging North-South dialogue.

Though Canadian Prime Minister Pierre Trudeau claims "significant progress" on the issue, American officials say privately that the matter effectively is shelved, at least until a planned summit conference of rich and poor nations in Mexico this October.

The phrase "global negotiations" troubles President Reagan and his advisers, who prefer to increase the flow of private rather than official aid, trade, and investment to developing countries, and to do this as much as possible bilaterally, between the United States and recipient lands.

These and other controversies -- representing the debit side of the line -- were muffled by the carefully stitched words of the Ottawa communique, sifted, amended, and finally approved by the seven government leaders.

Does this mean that the Ottawa summit -- and by extension the six others that preceded it -- failed, because sharp differences of view persisted in each one?

On the contrary, according to most participants, who say the summit process has been useful in ways that may be hard to quantify, but nonetheless are real.

"It was good," said Mr. Thorn, "to understand each other's limits -- to know what each leader can and cannot do."

"Although no one changed his mind on deeply held conditions," said a senior American official, "summitry survives. Indeed, it was healthy for Reagan and others to explain face to face the rationale behind their programs."

"Sensitive" is a word often heard in summit talk -- meaning that heads of government and their aides take on clearer notions of their foreign colleagues' domestic needs.

Imperceptibly, it is felt, this may help in each of the seven lands to shape government policies that may affect summit partners.

Certainly, for example, Mr. Reagan and his officials -- while still convinced of the rightness of their views -- have been made acutely aware of the effect of their economic policies on Washington's allies.

Decisions taken at summit meetings, said a senior US official, often have made it easier for a leader to go home and urge an unpopular step on his parliament.

He cited as an example successful pressure from summit partners on West Germany and Japan to stimulate their economies, partly to expand their markets for goods from slower-growing allies.

The US, the source said, was prodded to do more on cutting back oil imports and conserving energy than it might have done without intense summit pressure from Japan and Western Europe.

Summit agreements, says Assistant Secretary of State Robert Hormats, have helped to blunt the tendency of governments to protect ailing domestic industries by putting up barriers against imports.

"Without a political seal of approval from the summit top," said Robert Strauss, former President Carter's chief trade negotiator, "there might never have been an MTN."

MTN, standing for multilateral trade negotiations, was the successful effort by roughly 100 nations to erase at least some barriers to trade. At the Ottawa summit, as at previous such gatherings, the seven government heads pledged continuing efforts to avoid protectionism.

With Ottawa, the first cycle of summits drew to a close, each nation having played host to a meeting since France started the process in 1975. Succeeding summits took place in Puerto Rico, London, Bonn, Tokyo, Venice, and Ottawa.

Already the summit partners have accepted President Mitterrand's invitation to begin a second cycle by meeting in France next year.

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