Summit at Munich

July 06, 1992

In the year since the leaders of North America, Western Europe and Japan last assembled in London, the disintegration and disappearance of the Soviet Union has become one of the great events in world history. Now, as they meet again in Munich, their response to this seismic shift in the global power structure looks steadily more feeble and more fractured. The glue that was the Soviet military threat, that stirred the free world to greatness, has been replaced by the centrifugal forces of nationalism, isolationism and protectionism.

None of this will be affirmed in the communiques that emerge from the Munich summit. The seven leaders will be able to mask their impotence by dealing with the distraction of the Yugoslav wars and by welcoming Russian President Boris N. Yeltsin to their circle on the last day of the summit, as they did ill-fated Soviet President Mikhail S. Gorbachev a year ago.

The real, abiding issue for the summiteers is whether they can pull their own economies and, hence, the world economy out of the doldrums before a global recession causes untold mischief. If they cannot, the capital simply will not be available to rescue the Soviet successor states or preserve innumerable Third World states from catastrophe. There will be turmoil within the industrial democracies, and far more dangerous eruptions without. Capitalism, having vanquished communism, will be found unequal to the task of providing a viable and enduring alternative.

As Neville Chamberlain could remind us, a few days in Munich will not produce any panaceas. But neither should they be

allowed to promote acceptance of the pessimistic view that the "new world order" is destined to turn into disorder.

Of the seven heads of government who gather today, only Britain's John Major is reasonably secure at home. Germany's Helmut Kohl's term has two years to run but the costs of reunifying his country are corroding his position. The other five, including America's George Bush, hang by a thread that entangles their effectiveness. Recession, and the myopia it breeds, dogs their footsteps.

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Given this bleak situation, these politicians ought to reach -- and reach hard -- for the possible. They can marshal support for an International Monetary Fund effort to get Mr. Yeltsin's Russia through another tough winter and sustain the drive for democracy and free markets in other former Soviet states. They can set up a nuclear power safety program to prevent future Chernobyls. They can provide more economic assistance to the Third World.

But to really do something concrete, something more than incremental, something that can restore credibility in the economic summit process, the leaders have to reform world trade. They or their predecessors pledged at the Houston summit in 1990 to "make the difficult decisions" and assign the "highest priority" to completing a new framework under the General Agreement on Tariffs and Trade (GATT) by the end of that year. They failed. Then, in London last July, they promised to remain "personally involved in this [trade] process, ready to intervene with one another if differences can only be resolved at the highest level." Again they failed.

* * *

What is disrupting GATT negotiations is a protracted dispute between the United States and the European Community over agriculture. Although the differences hardly justify the current holdup in a trade agreement that could be the single most effective move to boost the world economy, this does not mean they are not serious. In the past two decades, the Europeans have transformed themselves from key net importers to key net exporters of grains and cereals by giving huge subsidies to farmers whose political clout seems inversely proportional to their efficiency as producers. Now, having created this Frankenstein, neither French President Francois Mitterrand or Chancellor Kohl seem capable of caging it.

President Bush is being importuned to give a little (or a lot, depending on one's perspective) in this tiff with the EC. Otherwise, it is said, there may not be a new world trading system that for the first time would include service industries, intellectual property rights and agriculture. He is being warned a GATT agreement can pass Congress only if he can offer it on a fast-track, non-amendable basis. This authority expires next Spring.

But Mr. Bush has to worry about his own farm lobby and about the needs of other big grain exporting countries like Australia and Canada. Can he and Messrs. Mitterrand and Kohl find a solution to this problem? The prospects are bleak, but in our view the game is worth the candle.

Without a new GATT agreement, we see little opportunity for the long-term economic growth needed to provide the wherewithal for a safer, more prosperous world, one that can tackle its interlocked problems of blight, poverty and self-destructive rivalry. Munich is today a synonym for appeasement in the face of Hitler's threat to world peace. Let it, through this week's summit, become the place where the forces of freedom and democracy begin to meet a challenge that may be less dramatic but every bit as pivotal.

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