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 François 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.