Summitry with Style

By George J. Church.

Gracious toasts and easy charm mark a quest for Western unity

It was a sumptuous spectacular, the high theater that Ronald Reagan thrives on, with all the world as his stage. Meetings with six world leaders at the stunning Versailles Palace of Louis XIV. Gracious toasts at glittering dinners. Statesmanlike reaffirmations of Western unity. And of course, as always with Reagan, affable banter with foreign politicians and American reporters alike. On the personal level, the President's Grand Tour of Europe got off to a heady start last week in France. Reagan displayed the same style and charm that has disarmed friend and foe at home.

On the political and diplomatic levels, the verdict will take longer to determine. The Versailles summit of leaders of the non-Communist world's seven mightiest industrial powers,* the eighth in a series devoted to economic issues, produced no new strategy to deal with worldwide recession, and nobody had seriously expected it to do so. But the seven did come to some understandings that make a start--in some cases, a small one-toward bridging divergent positions. The two key decisions:

> The summit agreed to set up a process aimed at achieving stability in the international monetary system and greater economic coordination. In connection with that, the U.S. promised that it would intervene in world money markets to shore up other currencies, presumably selling dollars and buying, say, francs or pounds. Secretary of the Treasury Donald Regan said this would be done only "if there are disorderly market conditions." That did not entirely satisfy the Europeans and Canadians, who would prefer frequent intervention to keep exchange rates fairly stable--so that they would not need to raise their interest rates to protect their currencies. But they viewed it as a substantial concession, since the U.S. had long objected to intervention out of free-market principle. Said West German Finance Minister Manfred Lahnstein: "The U.S. has adopted a different philosophy." Regan denied that, and it remains to be seen whether the U.S. interpretation of what justifies intervention will satisfy the other countries.

> The Europeans indicated a willingness to raise interest rates on government-subsidized loans and export sales to the Soviet Union and some of its allies. If "guidelines" suggested by the 25-nation Organization for Economic Cooperation and Development are adopted, the U.S.S.R., Czechoslovakia and East Germany would pay 12 1/4% to 12 1/2%, depending on the length of the credits, vs. 10 1/2% to 11% currently. That was a very long way from satisfying the U.S., which had campaigned for restrictions on the amount as well as the cost of credit extended to the Soviet bloc. As late as Saturday evening the Europeans were trying to keep all mention of East-West trade out of the final communique, to the displeasure of American negotiators. Nonetheless, making the Soviets pay more for loans would constitute a first step toward removing what Washington regards as a Western subsidy to Communist economies. Said one senior U.S. official: "The President will continue on this course after the summit. It is important to him."

There were other sources of tension at the summit. The British were furious at the U.S. for trying to switch its vote on a United Nations resolution calling for an immediate cease-fire in the Falkland Islands from veto to abstention. At a Friday morning photo session, Prime Minister Margaret Thatcher stood stony-faced beside a smiling Reagan, who could not answer reporters' questions as to what had happened. Said one White House aide: "The boss wasn't in on this one. Maybe he should have been. Maybe that was the trouble." Then on Sunday came word of the Israeli invasion of Lebanon, which the seven leaders condemned in a joint statement that warned of possible "disastrous consequences" for the Middle East (see WORLD).

So the first leg of Reagan's European trip was neither serene, nor an unqualified success. There was, of course, much more to come. As Ronald and Nancy Reagan prepared to leave Versailles Monday morning, all the big TV spectaculars of their European journey--the President's meeting with Pope John Paul II in the Vatican, his addresses to Britain's Parliament and the West German Bundestag, his horseback ride with Queen Elizabeth II in Windsor Great Park--were yet to occur. So too were the huge anti-Reagan demonstrations being organized by nuclear protesters in Bonn, West Berlin and London.

Administration officials had hoped that Reagan might have drained some of the passion out of the rallies by announcing, before he left Washington, that the U.S. and the Soviet Union would begin talks on reduction of strategic nuclear weapons in Geneva at the end of June. But the early portents were mixed. In Rome, a crowd estimated at anywhere from 100,000 to 300,000 marched Saturday in a demonstration, organized largely by the Italian Communist Party, that took on a decidedly anti-American tone. On the other hand, organizers claimed to have brought out 100,000 people in Bonn the same day for a pro-U.S. rally; some carried signs asking WHERE WOULD WE BE WITHOUT AMERICA?

There was no doubt that Reagan was up for his ten-day, 10,659-mile jaunt. The President began striking mixed notes of light humor and high seriousness even before he left. Speaking to 300 Government officials who assembled in the White House East Room Wednesday to see him off, the President observed: "We've got everything packed, and Nancy is upstairs unplugging the toaster. I guess we're ready to go."

After the laughter died down, the President talked of the importance of his mission to strengthen the Western alliance. Said he: "I know there are some who question the value of the alliance, who view it as cumbersome and at times unresponsive to the need for action. And there are those people still, in our land, who yearn for the isolationist shell. But because we've rejected those other courses back over the recent decades, there has been peace for almost 40 years on the Western front."

Air Force One landed at Orly Airport near Paris a few minutes before midnight on a rainy Wednesday. Nancy held an umbrella over the President as they trod a soggy red carpet, to be greeted by French Foreign Minister Claude Cheysson. It was not a night for ceremony. The Reagans sped off to the residence of U.S. Ambassador Evan Galbraith to recuperate from jet lag and prepare for the first serious task: cementing Reagan's friendship with French President Franc,ois Mitterrand, his host at the Versailles summit.

The restrained French Socialist intellectual and the affable American conservative are temperamental as well as ideological opposites. But they respect each other as politicians who scored almost simultaneous electoral triumphs, even though as late as 1980 both were widely regarded as has-beens. In addition, they have found common ground on some foreign policy issues. Both fear that if Britain presses the Falkland Islands war with Argentina to a total military victory, relations between Latin America and the Western allies could be poisoned for years. But Reagan apparently refrained from urging that view on Thatcher last week.

Reagan started his rounds midday Thursday at an elaborate "working lunch" in the Elysee Palace where Mitterrand was host. The two leaders talked about the Falklands, Central America and the Middle East. Both Presidents agreed that a decisive victory for Iran in its war with Iraq could set off what one French spokesman called an "avalanche" of Muslim fundamentalism threatening the stability of the Persian Gulf region.

All indications were, however, that the leaders paid as much attention to the food (salad of seafood with asparagus; truffled grenadines of veal) as to diplomacy. Said Reagan: "We did not get into heavy discussions." That night Reagan played host to Mitterrand at a lavish dinner (sea bass flambe, saddle of lamb) at the American embassy. Toasting his guest, Reagan remarked that 60,000 Americans lie buried in France, where they fought in the two world wars. Mitterrand recalled that French soldiers fought beside Americans in the U.S. Revolutionary War.

Throughout the day, Reagan was at his informal best. At the Elysee lunch, he told the old joke about a lawyer and a Pope who arrived simultaneously at the gates of heaven. St. Peter admitted the lawyer immediately, explaining to the waiting Pontiff that the attorney got special consideration because heaven was crowded with Popes, but no lawyer had ever made it before. That drew a laugh from present and former lawyers in his audience--including Mitterrand.

Outside the Elysee, an American reporter called out, "How was the food, Mr. President?" Reagan answered in a mockreproachful tone, "Now, how could the food be? Delicious. We're in Paris!" At the embassy dinner, the former California Governor told his French guests, "We know France has great appreciation for fine wines. That's why we decided to treat you to some California wine tonight." Mitterrand, carried away by all the camaraderie, addressed Reagan as "mon cher Ron."

Nancy Reagan set the Paris fashion world abuzz by appearing at the embassy dinner in black, rhinestone-studded knickers that peeped out from under a chiffon overskirt. The outfit was created by her favorite California designer, James Galanos.

After dinner Nancy did not see her husband between Friday morning and Sunday evening. No spouses were present during the Versailles economic deliberations. The First Lady visited a center for the blind and a school for chefs in Paris and on Sunday attended a ceremony in Normandy honoring the Americans who fell in the D-day invasion 38 years earlier, while her husband was closeted with the chiefs of government in Louis XIV's palace.

Before going there, Reagan met privately at the U.S. embassy with Japanese Prime Minister Zenko Suzuki for an hour and ten minutes, and for 90 minutes with Thatcher, who walked over from the British embassy a few hundred feet away. "Hello, Al," Thatcher called to Secretary of State Alexander Haig, who was waiting to greet her on the steps. Finally, on Friday afternoon before the Versailles summit, Reagan dropped in at the Hotel de Ville (Paris' city hall) to see Mayor Jacques Chirac, who is also leader of the neo-Gaullists, the strongest opposition party to Mitterrand's Socialists in the French parliament.

Because of the tight security, it was almost the only occasion that enabled the French public to get a glimpse of Reagan. He waved through the tinted glass of his Lincoln at a crowd of 2,000 lining the Avenue Victoria as his motorcade sped away from the meeting with Chirac. One reason for the heavy precautions: that morning a bomb had exploded at the American School of Paris, located in the suburb of Saint-Cloud. There were no injuries. On the school's wall was inscribed the legend ACTION DIRECTE, the name of an outlawed ultraleft organization.

In his conversation with Chirac, Reagan described the meeting of the allied leaders at Versailles as a "historic summit." Indeed, the problems faced by the industrialized West are momentous. From nation to nation, the non-Communist industrial world is mired in its worst economic slump since the 1930s, one marked by heavy unemployment almost everywhere and in most countries (though no longer in the U.S.) by rapid inflation as well. All parties agree that in the interdependent world economy, the major trading nations should keep their economic policies from clashing lest they delay recovery or even make the downturn worse. But preliminary discussions among the diplomatic aides who prepared the way for the summitteers turned up sharp variances as to how economic strategies should be coordinated.

Before he left Washington, Reagan declared that he hoped to persuade the other six leaders to reconcile their policies "first, to reduce inflation." That was an unlikely ambition. The Europeans and Canadians regard unemployment as the more pressing evil. The economic arguments are inextricably bound up with world politics. The French and West Germans, in particular, make a strong point that NATO cannot build the military strength that Reagan desires if the economies of the industrialized West are sapped by high unemployment rates. Said one French diplomat on the eve of the summit: "If unemployment continues to grow across the Continent, what is a jobless youth to think? He is bound to think that it is ab surd to spend billions in national wealth on armaments."

To the other six, the U.S. obsession with fighting inflation is a large part of the problem: it causes high American interest rates, which pull up rates around the world. At the summit, West German Chancellor Helmut Schmidt told Reagan that "the real impediment to productive investment is high interest rates," and Canadian Prime Minister Pierre Trudeau asked: "How long can we wait until inter est rates come down?" Reagan replied that he was trying to reduce rates by trim ming deficits and even claimed that a balanced U.S. budget is "in sight." When? Treasury Secretary Regan later answered wryly: "President Reagan is a man of long vision."

European economic experts concentrated on winning some concessions on currency intervention, but before the summit they had run into philosophical Said one European summit planner: "I am struck by how dogmatic the Americans are. We used to think of them as the pragmatists, and ourselves as the ideologues. Now they are the ones are ideological."

Even as helicopters were depositing the seven heads of government on the lawn at Versailles Friday evening, their aides were negotiating what amounted to a trade-off between the Europeans' views on money-market intervention and the prime American demand for some kind of curb on lending to the U.S.S.R. and allies. Economically, it was not very logical: the issues of currency fluctuations and loans to the Soviet bloc have almost nothing to do with each other. Politically, though, the logic was inarguable: each side would get something, though very far from all that it wanted.

Other subjects came up at the summit. The other six once again gently prodded the U.S. to pay more heed to the demands poor countries for a more equitable of the world's resources. Mitterrand, in his speech opening the summit, presented a vision of heavy investment in high technology lifting both industrial and undeveloped countries out of the economic slough toward higher standards of living. Said Mitterrand expansively: "Communications technologies will usher in a new form of civilization."

Meanwhile, aides were drafting a final communique couched in the most general of terms. To some observers, the atmoshpere seemed more testy than at previous economic summits, and the comprises struck were certain to please no one totally. But the seven leaders at least down-played their splits and souring the atmosphere for Reagan as he continues his European this week.

By George J. Church. Reported by Laurence I. Barrett with Reagan and Lawrence Malkin/Versailles

* The U.S., Britain, Canada, France, Italy, Japan and West Germany.

With reporting by Laurence I. Barrett, Reagan, Lawrence Malkin

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