After Williamsburg

By WALTER ISAACSON

The summit brings a show of unity, and the Soviets adopt a friendlier tone

The seven world leaders came, ostensibly, to thrash out differences in trade policy and currency rates. But the most important consensus emerging from the ninth annual economic summit in Williamsburg, Va., last week had nothing to do with economics at all. In the hall that once reverberated with Patrick Henry's revolutionary oratory, the U.S., with the stout help of the British, forged an agreement among the allies to support resolutely NATO's plan to deploy nuclear weapons in Western Europe this year if no arms agreement can be reached with the Soviets.

The unified stand was, in part, an acceptance of President Reagan's oft-repeated contention that the Soviets would not seriously pursue arms control until the West resolved to build up its own nuclear arsenal. In Williamsburg, Reagan made a 20-minute plea for solidarity on the missile question. "We've fought together and we've fought each other and now we must stand together," he said. If the allies backed away from their deployment plans, he warned, "there will be laughter in the Kremlin tonight."

Several days later, the Kremlin proffered a sudden and surprising olive branch. The wartime U.S. Ambassador to Moscow, W. Averell Harriman, met for 80 minutes with Soviet Leader Yuri Andropov and quoted him as saying that "the Soviet Union is ready and interested in searching for joint initiatives, which would make the present situation easier." There was no way of knowing whether Andropov's conciliatory tone was prompted by Williamsburg, or whether it was even genuine. Some diplomatic sources were cynical about Andropov's arms, suggesting that he was merely firing another salvo in his "peace offensive" to undercut support for the missile deployments this fall.

Officially the Administration appeared willing to accept Andropov's overtures as a tentative thaw in East-West tensions. If Moscow was ready "to take concrete steps" to improve relations, said State Department Spokesman Alan Romberg, it would find "a ready partner" in the Reagan Administration.

Each of the leaders left quaint, historic Williamsburg in a position to claim at least token success. The French, fearful for their falling franc, won an agreement, albeit a decidedly vague one, that measures would be studied to stabilize currency markets. The Japanese escaped direct criticism of their own trade policies while joining in a general condemnation of protectionism. And all of America's trading partners extracted an admission from Washington that uncontrolled budget deficits contribute to rising interest rates and threaten to sap the strength of the budding global recovery. The conferees made no concrete pledges about how these problems would be specifically solved, but they at least came away with a greater sensitivity to one another's concerns.

The significance of the economic declaration will depend on events in Washington, where the White House and Congress have yet to work out a way to deal with the budget deficit, and in the currency markets, where it will soon become clear how sincere is the lip service being given to the goals of exchange-rate stability and coordinated monetary policies. "Williamsburg is only a step on a long road ahead," said French President Franc,ois Mitterrand.

The summit was a personal success for Ronald Reagan, who helped dissipate doubts about his ability to handle details of diplomacy and diminished his image among Europeans as an unsophisticated and uninformed cowboy. The President came prepared with draft proposals on key issues and suggestions on what to say (one briefing paper that was leaked said that in dealing with Mitterrand, "you can express your support for his efforts at austerity, noting our own program for fighting inflation"). Moreover, he had clearly mastered the material. As planned, Reagan eschewed a formal agenda, emphasizing instead informal exchanges among the leaders of the seven nations (the U.S., France, West Germany, Britain, Italy, Japan and Canada; the European Economic Community was also represented). "The President took a very big gamble that we could have an unstructured summit and still produce results," said Canadian Prime Minister Pierre Trudeau, usually no fan of Reagan's. "I must say I had to congratulate him for having won that gamble."

The format allowed Reagan to pull off his biggest coup, the reaffirmation of the Western stance on Euromissiles. The U.S. had broached the possibility of making such a declaration two weeks before the summit began, but the idea initially met a cool reception. The French objected to discussing security issues at what was supposed to be an economic summit, particularly since France is not part of the military component of the NATO alliance. Most of the other leaders also expressed skepticism. The U.S. let the Euromissile question drop. Reagan told aides he was leery of raising it for fear of starting the summit off with a fight.

Margaret Thatcher, however, showed no such reluctance. The British and American "sherpas" (so named because they are in charge of preparing for the ascent to a summit) had been consulting on the arms policy issue, and the U.S. had even privately prepared a draft proposal. When the leaders gathered for their first private dinner, the British Prime Minister argued that a firm stand was necessary to show Western resolve, particularly in the face of Andropov's ham-handed threat on the eve of the summit to place new nuclear weapons in Eastern Europe if NATO proceeded with its deployment plans.

Despite Mitterrand's early objections, a consensus formed that some statement was necessary. Reagan took copious notes on a yellow pad, writing in a small, neat script. When the discussion was over, he brought eight pages to the foreign ministers, who were having brandy and coffee after their dinner upstairs in the restored plantation, and instructed them to shape a formal declaration.

The following morning, the seven leaders resumed their private debate on the draft that had been worked up overnight. Trudeau argued for a more visionary statement, stressing the need for arms control. "We should be busting our asses for peace," he said. Turning to Thatcher, who faces the voters this Thursday, he chided, "Don't worry, you'll win your election anyway." A final paragraph expressing a vision of peace along the lines suggested by Trudeau was added. When the agreement was finally reached, seven hours behind schedule, Reagan told the other leaders, to general laughter, "White smoke is now coming out of the Williamsburg chimney."

Although the statement on arms policy contained nothing substantially new, its context gave it long-term significance. Said a high West German official: "We now have unity on defense issues from London to Tokyo, and that is a new element." The Japanese for the first time officially gave approval to a key NATO defense doctrine. A sentence was included to assure Japan that any future intermediate-range nuclear forces (INF) agreement will not allow the Soviets simply to move their SS-20 missiles away from Europe and base them in Asia instead: "The security of our countries is indivisible and must be approached on a global basis."

What is more, France's acquiescence brought that country formally in line with NATO's nuclear policy. This will probably add to the harmony at this week's meeting of the Atlantic Alliance, which is being held in Paris for the first time since Charles de Gaulle ousted the NATO headquarters from that city in 1966.

Most significantly, the display of resolve may help convince the Soviet Union of the necessity to reach an INF agreement in Geneva, rather than a propaganda victory in Western Europe, if it wishes to stop the installation of new intermediate-range nuclear missiles. The U.S. finally seems positioned to aim for some movement at the other set of nuclear arms negotiations in Geneva, the Strategic Arms Reduction Talks (START), which deal with intercontinental weapons. Congress, in approving funds for the testing of the MX missile, has pressured the Reagan Administration to increase its efforts for a START agreement. In addition, the Scowcroft Commission, which Reagan last week authorized to function until 1985, recently recommended that the trend toward loading missiles with multiple warheads (MIRVs) be reversed, because the process makes both superpowers more vulnerable to a first strike. Consequently, Reagan is expected this week to modify the previous U.S. insistence on a deep cut in missile numbers, which the Soviets oppose, while continuing to press for reductions in the number of warheads.

Having achieved his prime goal of a statement on arms policy, Reagan was content to settle back and allow the vaguest possible economic declaration to emerge from the Williamsburg conference, mainly because any detailed document would probably have dwelt on the problems caused by high U.S. budget deficits and interest rates. Reagan was offered some protection from criticism by the implicit protocol of such conferences, in which members refrain from trying to dictate specific internal policies to other participants. Neither West German Chancellor Helmut Kohl nor Mitterrand pressed for any direct steps to tackle the problem of high interest rates. "I'm not here to give anyone lessons," said Mitterrand diplomatically, "but the results of continuing high budget deficits should be obvious." Instead, the leaders merely endorsed Reagan's emphasis on fighting inflation and noted that deficits should be reduced, "preferably through discipline over government expenditures."

Perhaps the most deft accommodation Reagan worked out in the meetings was with Mitterrand, who had come to Williamsburg proclaiming his desire for a Bretton Woods-style conference designed to enforce stability among different currencies. The U.S. had previously resisted any significant intervention in the free-floating exchange market. Though some observers regarded Mitterrand's Bretton Woods call as a red herring, the French were looking for at least a U.S. show of respect for their concern about the ill effects of unpredictable currency fluctuations. At the final session, Reagan showed his skill as a mediator by suggesting that debate over a paragraph dealing with protectionism be postponed while other issues were considered. Then, when the seven leaders came to the paragraph Mitterrand wanted on currency stability, Reagan proposed a deal: the French and the Americans would compromise their differences on both protectionism and interest rates and consider the two sections jointly. The package plan was quickly passed.

But there may have been a lot less to this compromise than met the eye. Treasury Secretary Donald Regan, for one, described the practical effect of the U.S. concession on currency intervention as exceedingly limited: "We've agreed to talk about it more. We will call each other up more often." Indeed, most of the Europeans' economic concerns were met by little more than a promissory note, one with no specific due date for redemption. The six visitors will be able to determine what, if anything, they accomplished at Williamsburg only by watching the Washington budget process and U.S. interest rates and dollar exchange rates over the corning months.

The lack of any specific pledges by the U.S. to help stabilize exchange rates, and the absence of any willingness in Washington to take any immediate steps to act on the vague promises made, helped push the French franc and the Italian lira to new lows last week against the dollar.

Europeans were vocal in criticizing the lack of a more substantive agreement. Said Italian Treasury Minister Giovanni Goria: "The promise was pure fac,ade, useful for French consumption." Though in his conciliatory style at Williamsburg Kohl tried to show he was a Helmut of a different color from his tendentious predecessor Helmut Schmidt, when he returned to Bonn he expressed discontent over American avoidance of any firm economic commitments. He told his Cabinet that it was "aggravating and depressing that the U.S. failed to comply with demands for lower interest rates."

Some of the participants returned to face fierce fire at home for their accommodating attitude at Williamsburg. Mitterrand was attacked from within his own governing Socialist coalition; Left Wing Leader Jean-Pierre Chevenement demanded a program of protectionism rather than austerity to aid the ailing economy. Both the Gaullists and the Communists joined in the criticism of the French President for bowing to American pressure on Euromissiles and monetary policy. "I have the feeling he gave the Americans carte blanche," said Communist Party Leader Georges Marchais. In Japan, Prime Minister Yasuhiro Nakasone was assaulted from all sides for allegedly forsaking his country's disarmament principles. "He remains a militant weather vane and continues to betray the peace-loving nation as a whole," said Socialist Party Chairman Ichio Asukata. Thatcher, entering the final week of her campaign, faced predictable blasts from Labor Party Leader Michael Foot, who called the failure of the summit to endorse a policy of monetary and fiscal expansion "catastrophic."

Nevertheless, Reagan received some rave notices from European observers. Italy's La Stampa, describing the slick conduct of the summit as "una Coreografia Hollywoodiana," called him "no longer a cowboy, but a President." Le Quotidien de Paris dubbed the summit "Reagansburg." Le Figaro in Paris added: "He was simultaneously screenwriter, arbiter and even stenographer." The German paper Nuernberger Nachrichten also turned the Hollywood imagery into a compliment, noting: "Reagan made good use of his actor's training. But he has also developed a respectable talent as a director."

One of the notable achievements of last week's summit was that it breathed new life into the institution of summitry within an alliance whose temporary discords often overshadow deeper and more abiding common interests. After last year's disastrous showing at Versailles, some questions had even been raised about the wisdom of holding such gatherings. But when Secretary of State George Shultz was going over the final document at Williamsburg last week, he was able to turn such worries into a good laugh. He kidded with the President that he was unsure about one line near the end. "Which line is that?" Reagan asked. Replied Shultz, alluding to the announcement that the Big Seven would meet next spring in Britain, "The one that says we've got to do it again next year."

The more intriguing question was whether Reagan and Andropov might have their own summit. The Harriman visit and the State Department's response touched off speculation that such a meeting might occur. But U.S. officials cautioned that the Harriman-Andropov session was not all sweetness and light. Indeed, it started out on a decidedly tense note, with Andropov lambasting the Reagan Administration for its aggressive attitude toward Communism, its arms control policies and other areas of bilateral tension. But Andropov was friendlier in an exchange with Harriman about the Soviet translator. Said Harriman, who had met the translator with previous Soviet leaders: "I've known this man such a long time, I hope these past associations don't bother you." Andropov laughed and replied, "No problem for me. Don't worry about that."

While at Williamsburg, Reagan reportedly authorized Kohl to raise the possibility of a U.S.-Soviet summit when he goes to Moscow next month. Some White House advisers believe a meeting with Andropov would help Reagan politically in 1984, since it would probably soften his cold warrior image. But others reportedly feel that it could backfire unless it yields progress on arms control. In the past, Reagan has said he would be willing to sit down with his Soviet counterpart only if there was a chance of producing substantive results.

Whether the Soviets are ready to bargain in good faith is the great unknown. Their warmer rhetoric may be nothing more than propaganda. But it is conceivable that Andropov is setting the stage for a more flexible negotiating position before the U.S. deploys its Pershing II and cruise missiles. "The signal they are sending is that they want to improve a bad relationship," commented a source at the U.S. embassy in Moscow. "But it doesn't mean they are willing to change their policies. We'll have to wait and see."

--By Walter Isaacson. Reported by Laurence I. Barrett and Lawrence Malkin/Williamsburg

With reporting by Laurence I. Barrett, Lawrence Malkin This file is automatically generated by a robot program, so viewer discretion is required.