Europe and US: managing differences. Europeans admire the United States, though they don't always get along with it. They agreed last year to mute differences over President Reagan's `star wars' program and over economic sanctions against Libya. But they compete vigorously in trade. In economic matters especially, hard work is needed before there can be a return to economic growth.

BONJOUR, l'am'ericain.'' Raymond Volant's greeting exuded genuine warmth. Spurred by the overvalued dollar, more Americans last year visited Paris -- as well as the rest of Western Europe -- than ever before.

When customers spoke English in the past, Mr. Volant and the small staff at his delicatessen might have complained about the danger of ``American imperialism.'' But not now.

``Bonjour,'' Volant said once again. ``I like Reagan. I like Americans.''

The new friendly welcome was heard often, from the street level of Volant's shop to the elegant salons of European ministries.

It was a good year overall for the alliance. The Europeans stood united with the United States over how to respond to the dynamic new Soviet leadership. They applauded the warm words of the Geneva summit. And they managed to mute differences over secondary issues such as Libya and major issues such as the Reagan administration's controversial Strategic Defense Initiative (SDI, or ``star wars,'' as it is popularly called).

Economic progress also was evident. The Europeans saluted the US plan to defuse the debt bomb. They joined with the Americans to reduce the dollar's value and convene a new round of free-trade negotiations. They welcomed Spain and Portugal into the Common Market. And they made important, if limited, progress toward getting their economies growing again, closing their worrisome technological gap, and forging a freer intra-European market.

Problems remain. Critics charge that this year's good vibrations only have delayed setting off the mines lying ahead. The most explosive potential charges concern the dollar's value, the protectionist menace, and SDI's strategic revolution.

``No one denies the difficulties,'' acknowleged one high-ranking European Community official in Brussels. ``But this has been an encouraging year. The alliance is on the right track.'' Europeans admire America

Much of this good news reflects an important, and often overlooked, long-term shift in attitudes. According to studies released recently by two prestigious think tanks, the Paris-based Atlantic Institute and the Indianapolis-based Hudson Institute, European and American values about politics and economics are converging.

This was not always so. For years, many in the European left admired Soviet communism. Because of Vietnam, many Europeans saw the US as the major warlike menace to world power, and because of its failure to provide minimum social services to large parts of its society, many questioned the value of American-style capitalism.

Today West European communist parties are losing ground fast. The Soviet Gulag provokes widespread horror among European publics. The invasion of Afghanistan and the declaration of martial law in Poland made the Soviets appear the world's most menacing aggressors. And the stagnation of the Soviet economy ended its usefulness as a frame of reference.

The US, in contrast, explodes with vigor. Europeans look with envy toward an economy that has created 30 million jobs since 1970 while unemployment on the Continent soared. They admire the rugged individualism and high-tech wizardry of Silicon Valley.

European policies reflect both this admiration for the US and disillusion with the Soviet Union.

In France, for example, President Fran,cois Mitterrand's Socialist government has proved much firmer against the Soviets and much more aggressive in executing job cuts and market-oriented reforms than his conservative predecessors.

``Europe and America are almost on the same ideological wavelengths,'' says Richard Vine, director of the Atlantic Institue. ``That's big news.'' The Gorbachev challenge

Mikhail Gorbachev's rise to power tested this ideological consensus. Even before assuming power, the new Soviet leader set out to woo the Europeans.

Stylistically, the seduction succeeded. In contrast to a series of doddering Soviet leaders, the young, vigorous Gorbachev responded to questions without reading prepared statements. After meeting him, British Prime Minister Margaret Thatcher concluded, ``We can do business together.''

But the Europeans refused to grant unilateral concessions. When Mr. Gorbachev visited Paris last October and offered to open separate negotiations with the French and the British on their nuclear forces, the Europeans politely, but firmly, said ``no.''

``The two major parties must reach a reasonable compromise,'' Mr. Mitterrand explained. ``We are not the decisive party in the arms race.''

At Geneva, President Reagan picked up the cue. Beforehand, Europeans were frightened that he might engage in a shouting match with Gorbachev. The pictures of the US President and Soviet leader sitting before a warm fire exchanging warm words calmed these fears.

To preserve this tranquillity, Reagan must now walk a tightrope. Any real move forward on nuclear weapons goes to the heart of alliance's central political tension that Europe's defense depends on decisions by a far-away country. The Europeans say they want an arms control decision. But when in February the US began talking about the possibility of withdrawing its medium-range missiles from the continent, the Europeans rumbled with anxiety.

The Europeans also continue to worry about SDI. Although they agree that the US should proceed with SDI research, that support may vanish if research turns into testing and a violation of the Anti-Ballistic Missile treaty. Such deployment would throw into jeopardy the Europeans' reliance on nuclear deterrence. Technological worries, economic hopes

Despite these deep doubts about SDI, the Europeans did decide to let their companies participate. Why? Simple economics, according to the experts.

``The Europeans already were obsessed that they are behind America and Japan in the technology race,'' explains Stan Woods of the Atlantic Institute. ``If they passed on SDI, they feared they would never be able to catch up.''

European economic progress is crucial to the alliance's strength. Without it, Mr. Woods and other experts fear that economic weakness will make the continent unable to contribute to its own defense and vulnerable to Soviet intimidation.

For this reason, the most important alliance news this year might be the glimmers of light now appearing on the European economic horizon. Growth is up. Inflation is down. Trade is better balanced.

Long hard work contributed to the improved figures. Government spending has been brought under control and working and wage practices made more flexible. In the past, European wage increases were tied to price increases, a practice which ate away at competitiveness. Now even socialist governments in France and Italy have broken that connection.

Cooperation in high technology is increasing. The European Community (EC) launched its ``Esprit'' high-tech project. It also agreed to work on the French-designed ``Eureka'' research program, which hopes to put Europe at the cutting edge of 10 fields of research, among them lasers and silicon chips.

More needs to be done. The Europeans acknowledge the need to integrate their markets further. Although Spain and Portugal joined the EC on Jan. 1, bringing the population of the world's largest trading power from 280 million to 325 million people, a mass of nontariff barriers prevents the most efficient expoitation of this union.

At the Milan summit last June, the members agreed to strive for a genuine common market by 1992, and at the Luxembourg summit in December, the members committed themselves to drop the crippling privilege of one-nation vetoes over most EC decisions in favor of majority voting. Despite Danish hesitations, the community has decided to proceed.

``What the Danes have done is damaging, but I think they'll eventually go along,'' said Claus-Dieter Ehrleman, the community's legal director. ``Then out of every 350 proposals to create an internal market, 200 will be by majority.'' Economic cooperation or confrontation?

Greater European cooperation often confronts US interests.

The fate of the financially troubled British helicopter firm Westland illustrates the problem. Should it have merged itself into a European consortium instead of accepting a US-led bid by the Sikorsky Company? The decision to go with Sikorsky -- and the scandal which preceded it -- showed how difficult it is for Europeans to accept US industrial leadership.

The US and the European Community compete in trade, and often the competition turns nasty. US agricultural exports are falling and Americans blame the EC's policy of subsidizing its agricultural exports. In a headline-making response, the Reagan administration decided to limit Italian pasta imports. US steelmakers also complain that EC subsidies constitute unfair competition. A previous agreement by the Europeans to limit their exports across the Atlantic ended at the end of the year.

But these problems are far from the entire story. Last year, the allies took important, positive steps to reduce trade, monetary, and debt tensions.

A new session of the General Agreement on Tariffs and Trade (GATT) has been organized for 1986 to combat the threat of world protectionism. Although the French blocked this session for a while, quiet diplomacy brought them around by the end of the year.

US, British, German, French, and Japanese central bankers met in New York's Plaza Hotel and agreed to work together to bring down the exchange rate of the over-valued dollar. This so-called Group of Five agreement succeeded by year's end in cutting the dollar's value by a quarter -- silencing European complaints that their savings were being drained across the Atlantic while promising to help reduce America's dangerous trade deficit.

US Treasury Secreatary James Baker also silenced many European complaints by unveiling a salvage plan for the world-debt crisis. At the annual gathering in Seoul of the International Monetary Fund last October, Mr. Baker called on the World Bank to expand its lending while urging commercial banks, which have largely stopped lending to developing countries, to return to the market in force. This marked an about-face from the Reagan administration's previous reliance on the free market to defuse the debt bomb, a policy which Europeans long had criticized as unfeasible. As one EC financial expert said, ``It's an important event. The Americans have finally discovered the problem.''

Will these positive steps be followed up with concrete solutions? European thinkers say much of this year's good news could prove ephemeral unless it is followed up by hard, constructive work. On the political and military fronts, arms control and the future of SDI remain big question marks. On the economic and commercial fronts, the US budget deficit must be reduced, Europe must realize its ``Common Market,'' and, on both sides of the Atlantic, protectionist pressures must be withstood.

Nevertheless, good momentum was achieved last year. Volant claims himself to be a firsthand witness. Until recently, he had kept saying that America scared him too much. ``I don't speak English,'' he said ``The buildings are too big.''

With the dollar down, he expects fewer American visitors this year. Instead, he is thinking about traveling across the Atlantic.

``The Americans who come here are nice,'' he explains. ``J'aime l'Am'erique.''

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