The Val

Last week Val&3233;ry Giscard d'Estaing signified the importance he puts on relations with West Germany by naming France's Ambassador to Bonn, Jean Sau-vagnargues, as his Foreign Minister. At week's end the new French President received the Federal Republic's new Chancellor, Helmut Schmidt, in Paris for their first summit. The two merely outlined strategies for coping with economic and political problems, but nonetheless the modest effort raised guarded hopes in France that the flagging European Community might be revitalized. Reaction was similar in West Germany. TIME Bonn Bureau Chief Bruce Nelan reports:

When Helmut Schmidt moved into the Chancellor's office in Bonn's Palais Schaumburg, among the handful of photographs he placed next to his desk was an autographed portrait of Valery Giscard d'Estaing. It was not a public relations gesture but rather a symbol of their warm relationship, built up over years of monetary crises and European Economic Community negotiations. As Finance Ministers for their respective governments, they developed not only a solid respect for each other's ability to carry out official duties, but also a personal friendship. Speaking to each other in English, they are on a first-name basis, which is not particularly remarkable for the gregarious Schmidt but is probably quite special for Giscard.

Senior German officials do not expect the personal bond between the two leaders to alter the basic views of national interest so deeply held in both countries. It is well to remember, though, that Willy Brandt and Georges Pompidou did not like and trust each other; Schmidt and Giscard do. That is a notable advantage even, or perhaps especially, when policies diverge.

As far as the EEC is concerned, Schmidt's priority is a cautious, but real, movement toward economic and monetary integration. Giscard says that he favors that too. But there are trouble signs ahead. For one, France has always been inclined to see the EEC as a bank from which its agricultural economy receives regular, health-giving transfusions. For another, France, with costly social reforms to pay for, needs a growing economy. West Germany, on the other hand, has been cooling its own successful economy in order to curb inflation, which is now running at a relatively modest rate of 7.1%, thanks in part to high interest rates and frugal public spending. Trouble is, the tight money situation in West Germany affects Giscard's hopes for an expanding French economy because it means a shrinking German market for French goods, as well as a more aggressive effort by West German industries to export goods in order to offset slack sales at home.

This adds up to one of the thorniest problems that the EEC now faces: chronic payments deficits among all EEC nations, including even those like France whose exports are increasing, but excluding West Germany, which is running consistent surpluses even while its Deutsche Mark rises in value. Compromise will be necessary on both sides.

Another major problem facing Bonn and Paris is the question of Europe's relationship with the U.S. Schmidt believes that there is no substitute for the security provided by the U.S. in Europe and that Europeans must go the extra mile to retain American friendship. Giscard may not be willing to go Schmidt's extra mile, but in a message to Henry Kissinger last week, he did say that he attaches "the greatest importance to the reinforcement of cooperation" with the U.S.

If Giscard expects long-term economic help from West Germany, he will have to pay a price, and what the West Germans want is greater European unity. Specifically, Schmidt wants closer coordination of EEC economies and majority voting rather than unanimity in EEC decisions. This would begin with votes on minor matters, but the precedent of France surrendering its treasured veto right even on small points would be a major breakthrough for Schmidt and the European integrationists. In the face of these differences, it is well that Schmidt and Giscard are not just friends but pragmatic, analytical problem solvers.

This file is automatically generated by a robot program, so viewer discretion is required.