COVER

Washington’s global policy shift

Michael Posner September 13 1982
COVER

Washington’s global policy shift

Michael Posner September 13 1982

Washington’s global policy shift

COVER

Michael Posner

The signs had been obvious for months—in discreet, off-the-record briefings and in careful allusions during diplomatic discussions. But last week, interrupting his California vacation in the hills, Ronald Reagan made it stunningly official. In a 20-minute prime-time TV address from downtown Burbank, the president stripped the veils off a new and explosive package of peace proposals for the Middle East. In one decisive stroke he elevated the U.S. role from cool Camp David mediator to keen participant, challenging Arabs and Israelis alike to make “a fresh start” toward resolving their age-old conflict, guided by “a new realism.” As PLO chieftain Yasser Arafat led the last of 8,300 guerrillas in an emotional departure from West Beirut and special envoy Philip Habib flew home to receive the rarely given Medal of Honor, Reagan’s surprise speech struck like a thunderbolt, which was part of his design: to launch a new thrust for peace beyond the stalemated Camp David process. Said the president: “With the agreement in Lebanon, we had the opportunity for a more farreaching peace effort for the region. I was determined to seize that moment.”

Reagan’s dramatic demarcation of U.S. preferences—favoring Palestinians’ “legitimate rights” and ruling out both Palestinian and Israeli sovereignty on the West Bank and Gaza— was only the latest in a series of deliberate but significant shifts in U.S. foreign policy. From Taiwan to Central America, from arms control to interest rates, the U.S. administration seems to have embarked on what political veterans like to call the mid-course correction. The hard-line, sabre-rattling rhetoric that so delighted Ronald Reagan’s conservative audiences in the 1980 election campaign is gone, replaced by more sober assessments of the globe’s strategic balance sheet. The self-styled vicar of U.S. diplomacy, the mercurial Alexander Haig, has given way to his antithesis, the imperturbable George Shultz, whose pragmatic fingerprints are all over the new policy directives.

For the disenchanted right, the changes raise troubling questions about the depth of Reagan’s conservative convictions. For pleasantly surprised moderates, they are evidence of a president coming to terms with the constraints of governing. Measured by any ideology, the basic move toward a more centrist, less confrontational foreign policy seems undeniable.

The changes have been swift and dramatic. After declaring in June that firms defying Reagan’s ban on the sale of U.S. equipment for the Soviet natural gas pipeline would face stiff penalties, the administration last month issued only a temporary embargo on exports to two French firms found in violation. And when Britain’s John Brown Engineering Co. prepared to ship six giant turbines from Glasgow, the treasury department promptly released a clarification, reducing the export blacklist to oil and gas equipment only. Clearly, Washington had concluded that the unity of the Atlantic alliance is far more important than any short-term punishment inflicted on Moscow for the imposition of martial law in Poland.

That was only the beginning. Last month, after more than a year of profound hostility toward the Marxistdominated Sandinista regime in Nicaragua—and vocal condemnation of its support for rebels in El SalvadorThomas Enders, the undersecretary of state for inter-American affairs, pointedly softened the U.S. approach and held out a palpable olive branch to Managua. The lesson learned in that case, apparently, was that in diplomacy the carrot must be wielded as deftly as the stick.

At the same time, despite repeated assurances by Washington that the United States would never abandon Taiwan, a joint Washington-Peking communiqué recently pledged the Reagan administration to gradually phasing out arms sales to the Taiwanese in return for China’s agreement to seek an ultimate reunification by peaceful means. In that case, Washington appeared to signal a policy change that gives priority to U.S. strategic interests over fealty to narrow ideological commitments.

If any doubts remained about Washington’s determination to alter its foreign policy course, they were erased last week. Having previously refused to support any increase in the International Monetary Fund’s desperately depleted currency pool, the Reagan administration abruptly reversed its stand and agreed to back a new infusion of cash. Some observers quickly dismissed the move as a tactical concession to ward off demands for a much larger infusion at this week’s IMF meeting in Toronto (following story). But that view ignored a significant change of principle in favor of a greater sense of pragmatism in dealing with the Third World.

Virtually all of the policy refinements bear the unmistakable signature or endorsement of the new secretary of state, George Pratt Shultz. The former president of the Bechtel Group Inc.—the vast, privately held multinational construction firm (page 33), Shultz, 61, wields power blandly but self-assuredly, seeking advice when he needs it, avoiding extremes and always pursuing the rational solution. A Princeton graduate, Shultz played football, joined the Marines, took a PhD at the Massachusetts Institute of Technology and taught economics there. At 36 he was a full professor at the University of Chicago’s stellar Graduate School of Business. At 41 he was dean. Then he became involved in labor mediation in the Midwest, earning a reputation as a lowkey, hardworking conciliator. His style caught the attention of Richard Nixon’s handlers and he became secretary of labor, budget director and, finally, treasury secretary. Even then he was the quintessential team player, doggedly selling Nixon’s wage and price controls program while privately doubting their efficacy.

That loyalty, and Shultz’s raw intelligence, no doubt commended him to the Reagan inner circle. At any rate, Shultz’s economic instincts are distinctly Reaganite. He favors free trade and competition and opposes things that get in the way, including regulation and government intervention. In fact, his only serious economic argument with the president has been over the use of trade sanctions as instru-

merits of diplomacy. “As a general proposition, I think it’s a bad idea,” Shultz said at his Senate confirmation hearings in July. “It damages our own trade and becomes a wasting asset.”

He is also thought to have argued persuasively for invoking the minimum penalties for violators of the president’s ban on pipeline sales to Moscow.

Those views predated Shultz’s years with Bechtel (1974-’82).

But they were reinforced by them. It was Shultz, associates say, who spearheaded the San Francisco-based corporation’s aggressive—and successful-

drives for international clients. Spending one week in two on the road, he used his persuasive manner to win huge engineering contracts, extending Bechtel’s influence to 21 different countries and 119,000 employees. Last year the firm reported $11.4 billion in billings. In Saudi Arabia alone, Bechtel is now erecting a $20-billion instant city at Jubail that will one day house as many as 300,000 Saudis. It is also constructing an opulent $3-billion airport at Riyadh. Said one senior White House official: “Bechtel is practically building Saudi Arabia.”

The Saudi connection produced a serious tremor of apprehension about Shultz’s nomination for secretary of state. A firm doing that amount of business in the Arab world—and none in Israel—might tend to favor Arab points of view. Shultz himself unwittingly underscored those fears when he remarked in 1980 that, “If I have any differences with Reagan, it’s about Middle Eastern policy.” At that time Reagan had just declared that Israel and Jordan were the only Palestinian states envisioned and authorized by the United Nations. Since Shultz’s appointment, however, the United States has been insisting that Jordan is not a Palestinian state after all, but a sovereign kingdom with its own unique and enduring character.

The new Middle East peace formula also reflects Shultz’s careful hand. Its centrepiece remains UN resolution 242, which calls for Israeli withdrawal from territories taken in the 1967 war in exchange for recognition by, and peace with, its Arab neighbors. The withdrawal must be on all fronts—the West Bank, Gaza and, presumably, the Golan Heights—but it need not be total. In his TV address Reagan deliberately inserted a paragraph noting that the pre-1967 border of Israel was barely 16-km wide at its

narrowest point and within artillery range of hostile Arab forces. “I am not about to ask Israel to live that way again,” said the president.

Reagan stressed that the precise border should be negotiated by Israel and Jordan. “The extent to which Israel should be asked to give up territory,” he added, “will be heavily affected by the extent of true peace and normalization and the security arrangements offered in return.”

Similarly, Washington has concluded that when the five-year autonomy period agreed upon at Camp David expires, the West Bank and Gaza should become neither provinces of Israel nor an independent Palestinian state but a government linked in some way to Jordan. Behind the scenes, Shultz, too, is stressing the need for negotiation. The word was mentioned a dozen times in Reagan’s text last week.

The United States also wants Israel to halt its policy of continually increasing the number of its settlements on the West Bank. It wants Arabs living in East Jerusalem to be free to vote in elections for Palestinian selfgovernment during the autonomy phase. And, for the first time, Washington has spelled out exactly what it means by autonomy. Splitting the difference between Egyptian and Israeli views, Reagan sees the Palestinians taking charge of all of their affairs, subject to appropriate security safeguards for Israel.

In short, the Reagan proposal delicately balances conflicting needs and aspirations while asking major concessions from all parties. But the plan’s future is still in doubt. The Begin government’s initial reaction was bluntly negative. Meeting in emergency session, the cabinet flatly rejected the proposals. Jerusalem objected to a lack of prior consultation—apparently Washington feared that the plan might be leaked in advance. Begin’s government also complained that the plan was a departure from the Camp David framework as it is understood by Jerusalem, and the prime minister expressed alarm at what he described as the inevitability of Palestinian statehood if the idea of an association with Jordan is ever implemented. However, Labor Opposition Leader Shimon Peres welcomed the plan as a basis for dialogue, and his party executive endorsed his stand by a 15 to 0 vote with one abstention. At the same time, a poll indicated that 51.2 per cent of Israelis now favor some form of territorial compromise, compared with 38.5 per cent in May.

The Arab states have scheduled a summit meeting this week in Fez, Morocco, and were encouraged by Washington’s new attitude. Only Syria dismissed the plan outright. And the administration was able to draw satisfaction from the fact that the key Arab nations—Egypt, Saudi Arabia and Jordan—as well as the PLO were either giving it serious consideration or expressing qualified support.

Indeed, Washington seemed to be hoping that the initial responses would actually help to bring both sides to the peace table. Israel’s flat rejection might entice the Arabs into a more positive stance, which in turn would pressure Begin to make accommodations. As Israel’s former foreign minister, Abba sEban, put it, “The key words are Sjnot ‘accept’ or ‘reject,’ but ‘discuss,’ ‘argue,’ ‘clarify’ and ‘convince.’”

The real question now is what

steps can be taken next to keep the process alive. According to Zbigniew Brzezinski, Washington’s resolve finally to “bite the bullet” on Palestinian rights must not weaken in the face of Arab ambivalence or Israeli intransigence. Former president Jimmy Carter’s national security adviser said that only the personal involvement of the president, the secretary of state—or of a special ambassador empowered to speak for them—will keep the plan alive. One man mentioned frequently as a possible emissary is former state secretary Henry Kissinger, a close friend of George Shultz’s and a regular invitee to state department skull sessions.

For the moment, Washington says it will simply continue to talk to all parties, awaiting their “measured consideration” of the plan. One critical issue is whether the Arab world, which stripped King Hussein of the right to speak for Palestinians in 1974, will now allow Jordan to enter the peace sweepstakes. Another is whether or not Arafat’s PLO, dispersed to eight nations and crushed militarily, will seize the opportunity to recognize Israel—a precondition to joining future talks. And a third is whether or not the instinct for peace in Israel can overcome its desire for sovereignty and absolute security on the West Bank. In the Middle East a practised state department official remarked last week that, “unless you take serious initiatives, you go backward.”

On other fronts, too, U.S. foreign policy seems to have acquired maturity. The Soviet pipeline fiasco, which has put in jeopardy not only November’s vital Geneva trade talks but the viability of the Atlantic alliance itself, has been prudently brought under control. Special Trade Representative William Brock flew to London last week to make it clear that Washington was prepared to drop its sanctions in return for a European pledge to draft new rules on doing business with the Soviets. At week’s end a face-saving compromise appeared probable. European pressure also induced Reagan to embrace arms control talks with the Soviets and to encourage a lowering of U.S. interest rates. The U.S.-Soviet arms reduction talks in Geneva are so far inconclusive, and the interest rate decline may be partly due to the Republicans’ need to make a strong showing in the November midterm elections. But at least the Americans are paying attention.

At its core, the anti-Soviet impulse of Reagan diplomacy remains intact. What has changed perceptibly, under George Shultz’s unflappable tutelage, is its tone and tenor. The internecine warfare that characterized the first 18 months is over, or at any rate much less

public. For once, the White House, state department and Pentagon are not issuing conflicting statements on the same day.

The times are also propitious for a new U.S. advance. The Soviet Union is in the middle of what may be a protracted leadership succession struggle. The Soviet economy is floundering; its invasion force is mired in Afghanistan; and Poland’s social and economic difficulties are a constant strain on Moscow’s resources. At the same time, the Kremlin’s most advanced military hardware, used by the Syrians, has been rendered obsolete by the Westernequipped Israelis during the onslaught on Lebanon. If there is ever to be an opportune occasion for the United States to regain its global influence, it is now.

That fact seems to have struck home in Washington. Before he left for California last month, Ronald Reagan invited a few congressmen to the White House. Somehow the discussion turned to tie clasps, and the president showed his own —a polo pin, depicting the rear end of a horse. Nancy did not like it, Reagan acknowledged, so he did not wear it often. Still, he was partial to it because “it reminds me of what I’m not supposed to be.” The new U.S. foreign policy seems equally cognizant of that lesson.

With John Hay in Ottawa, William Lowther in Washington, Eric Silver in Jerusalem and Robin Wright in Beirut.

John Hay

William Lowther

Eric Silver

Robin Wright