Much of Nothing in Munich

July 09, 1992

What if they had held the Munich summit and there was no Russia with tin cup in hand, no Yugoslavia falling apart in bloody civil war? The Group of Seven leaders of the world's richest and mightiest industrial democracies would have had nothing to show for their efforts. They could not agree how to spur their recession-plagued economies or break the six-year impasse on negotiations for a new world trade system.

The fact is that Russian President Boris Yeltsin not only stole the Munich conference; he saved it. By barging in early and getting on a first name with George and Helmut and Francois and the other poobahs, he was a flashy Group of One. He gave his hosts a chance to formally open the door for a $24 billion bailout package and startled everyone by offering to sell off part of the Russian patrimony -- oil reserves, factories, buildings -- in exchange for debt relief and huge inflows of private capital.

Mr. Yeltsin's daring contrasted with the futility shown by free-world leaders. While they did display a tougher attitude toward Serb aggression in Bosnia, even threatening use of force to get supplies to a starving Muslim Slav population, this is more a project for the larger, more inclusive Conference on Security and Cooperation in Europe (CSCE) opening today in Helsinki.

For President Bush, the Munich summit became still another political setback when he was unable to push, prod or pummel France into a sensible compromise on huge European agricultural subsidies -- the principal stumbling block to reforms under the General Agreement on Tariffs and Trade (GATT). These reforms, estimated to push up gross world product by $120 billion in a decade ($35 billion for the U.S.), would have been the most impressive step the Group of Seven could have taken to stimulate their economies.

But French President Francois Mitterrand is politically paralyzed. His farmers block the roads to Euro-Disneyland. His truck drivers have virtually shut down the country. His government is in no position to deal seriously until after the French referendum in September on European unity.

So Mr. Bush, given the Hobson's choice of getting nothing out of Munich to improve his political/economic standing back home or caving into European protectionism, rightly chose the former, harder course. For this he will be mocked or criticized by his opponents or scored, more seriously, by those who believe a little flexibility on agriculture would be worth the benefits in trade, finance and patent rights promised by a new GATT reform.

The problem is where to draw the line between cave-in and flexibility. The real test of Mr. Bush's stand for freer trade in agriculture will be known only after the GATT talks conclude, probably in the coming year. Unless trade flourishes, no powers on earth will have the wherewithal to establish a "new world order" based on collective security. And that would make what Mr. Bush called today's "mood of turmoil" look like tiddly-winks.

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