Playing It Loose at the Summit

By George Russell

The President prepares for some prickly company

It will be Ronald Reagan's first and only chance to be host at a Western economic summit meeting,* and for months, the President has been planning to make the three-day occasion memorably different from its eight predecessors. Above all, Reagan hopes to give the heads of government of Britain, France, West Germany, Italy, Japan and Canada a chance to chat in a relaxed, informal and authentically all-American style over the Memorial Day weekend. His choice of venue, the restored confines of colonial Williamsburg, seems perfect.

After arriving by U.S. Marine Corps helicopter, the leaders of the West will be taken by horse-drawn carriages to the Georgian-style Governor's Palace. During their stay, the dignitaries will dine on such regional delicacies as batter-fried crayfish, Southern-fried chicken and Tex-Mex chile con carne, prepared under the direction of Chef Pierre Monet, formerly of Maxim's in Paris. At the President's insistence, the leaders will not even be burdened with the rigors of a formal agenda. As one White House aide put it, "The challenge is to keep things as natural as possible."

If the discussions are as uninhibited as the schedule, then expressions of disquiet can be expected from at least a few of the Western leaders. The chief bone of contention: Reaganomics and stratospheric U.S. budget deficits.

A foretaste of what may be in store at Williamsburg came last week from French President Franc,ois Mitterrand. At a press conference following a meeting with West German Chancellor Helmut Kohl, Mitterrand lashed out at American economic policy and complained that "it is not normal for the U.S. budget deficit to be paid by us in Europe." His meaning: U.S. shortfalls are the prime cause for continuing high international interest rates; these, in turn, could squelch the hesitant economic recovery in Western Europe. As a side effect, the level of interest rates has powerfully augmented the value of the U.S. dollar against other major Western currencies. Mitterrand therefore called for a "new Bretton Woods" conference among the allies, meaning an attempt to return to the kind of stable exchange system between Western currencies that prevailed from 1944 until 1971.

To a great extent the French and the other allies have reason to complain. The enormous U.S. deficits require extensive borrowing and keep money tight on both sides of the Atlantic; if they continue, they risk causing renewed world recession. The 3 West Europeans, including the Socialist Mitterrand government, also feel aggrieved because they are making rigorous efforts at fiscal austerity. As a percentage of national output, the projected U.S. deficit (6.3% of G.N.P.) is nearly twice as large as those of France, Britain and West Germany, and more than three times as great as Japan's. The rise in value of the U.S. dollar has another adverse effect since the cost of petroleum is denominated in U.S. dollars, meaning that francs, marks and other currencies buy less oil. This year the slippage of the franc against the dollar will add an estimated $1 billion to France's oil bill.

On the other hand, Mitterrand had domestic political motives for going public with his criticism. Before his government was forced into the current round of austerity measures, Mitterrand launched a program of Socialist pump priming, at a time when most other industrialized countries found it necessary to cut back. Result: domestic inflation is still 9%. With public support for the Socialists in France slipping badly, Mitterrand is using the U.S. as a convenient scapegoat.

Mitterrand's outburst was an embarrassment to Chancellor Kohl, who prefers, as he put it at the same press conference, "to talk with friends and not at them." Nonetheless, concern over U.S. economic policies now appears to be endemic among all the allies. Canadian Prime Minister Pierre Trudeau has publicly cited the U.S. deficit as a contributor to "destructive" international interest rates, and so has British Chancellor of the Exchequer Geoffrey Howe.

It remains to be seen, however, whether such harping will disturb the planned congeniality of Williamsburg. Reagan is hoping to avoid the sort of highly publicized disagreements that poisoned the atmosphere at last year's Versailles summit, now privately admitted by U.S. officials to have been a "disaster." At that time, the falling out was over Western Europe's purchase of natural gas from the Soviet pipeline.

Unlike at Versailles, where Reagan often found himself in a minority on East-West issues, at Williamsburg he should have comfort in numbers. Three of his fellow leaders -- British Prime Minister Margaret Thatcher, Japanese Prime Minister Yasuhiro Nakasone and West Germany's Kohl -- share many of Reagan's economic and social philosophies. The others --Mitterrand, Trudeau and Italian Prime Minister Amintore Fanfani -- lean more to the center and the left.

Nonetheless, Reagan's free-style format for the meeting carries its own risks. As chairman, he is required to master a wide variety of foreign trade and political matters that have never been his strong suit. To ensure against embarrassing flubs, Reagan has held frequent briefing sessions with a shifting cast of experts. Another hazard is that the unstructured nature of the meeting will make it easier for the foreign leaders to air any conflict that they choose to bring up. Says one of Reagan's summit advisers: "There's no question that this is a riskier process. If anyone wants to generate confrontation, he can do it."

Against those risks must be measured the President's enduring personal charm and the fact that those attending the meeting are, after all, friends and allies. No matter what thorny discussions come up behind the colonial doors of Williamsburg, the Great Communicator can be expected to put an affable face on them. -- By George Russell.

Reported by Laurence I. Barrett/Washington and Lawrence Malkin/Paris

*Another U.S. summit is not scheduled until 1990.

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