New Troubles for Old Friends

West German Chancellor Helmut Schmidt did not want Jimmy Carter as U.S. President; in fact, he rooted openly for Gerald Ford during the American election campaign. But Schmidt's discomfort with Carter and his new diplomatic style only explains in part the suddenly acid relations between Bonn and Washington. Last week German Foreign Minister Hans-Dietrich Genscher and Defense Minister Georg Leber flew to Washington for several days of hard discussion on three policy disputes that divide the two allies. They returned to West Germany in a somewhat better mood than they had arrived in Washington with, but without having resolved the problems:

NUCLEAR PACT. In June 1975, West Germany signed a $4.7 billion agreement to sell Brazil a complete nuclear-fuel facility. The package provides for cooperation on uranium exploration and mining, supplies of nuclear fuel to Germany, and construction by German firms of eight nuclear-reactor plants, a fuel-fabrication plant and a nuclear fuel-reprocessing plant.

Beyond the financial benefits, the deal was important to Bonn because it offered a potentially steady supply of reactor fuels to West Germany. The U.S. protested that two of the installations --the fuel-fabrication plant and the reprocessing plant--could be used by Brazil to develop its own nuclear weapons potential. Brazil has not signed the Nuclear Non-Proliferation Treaty.

Over the past two years, the U.S. lodged several low-level protests. The West Germans never took them very seriously. Now, however, Carter has made the danger of nuclear proliferation a central pillar of his foreign policy. Bonn is outraged that Washington is publicly trying to undercut the agreement, and is vowing to proceed anyway.

TANK COMPONENTS. In 1974 former Defense Secretary'James Schlesinger and Defense Minister Leber agreed that there should be fair competition between the West Germans' Leopard II battle-tank prototype and the Americans' XM-1; if the Leopard won the competition, the U.S. would also accept it as its major armored vehicle for the mid-1980s. The decision was hailed as an important step toward equipment standardization within NATO--until U.S. military pride and industry pressure opposed it. As a compromise, Schlesinger's successor, Donald Rumsfeld, worked out an agreement in principle with the Germans to make both tanks "interoperable." The XM1 would take the 120-mm. smooth-bored gun used in the German tank; the Leopard II would use the engine assembly of the American vehicle.

Then a hitch developed: the U.S. Army leaked the "results" of tests on the two tanks, which implied that the Leopard was inferior to the XM-1. Infuriated, the Germans let it be known that if Washington reneged on the tank agreement, Bonn would refuse to go along with the U.S. plan to have NATO adopt AWACS, an American-made flying early-warning system, for which West Germany was to put up a quarter of the $2.6 billion cost.

ECONOMIC STIMULUS. Two years ago, Schmidt urged President Ford to abandon the tight-fisted monetary policies of Richard Nixon and open up the U.S. economy for the sake of the rest of the industrialized world. Now Carter is urging Schmidt to join in a coordinated, worldwide "big thrust" economic effort by spending more on stimulation at home. Bonn agrees that the U.S., West Germany and Japan must coordinate their economies to stave off another recession. But Schmidt argues that too much stimulus will rekindle inflation--still the Germans' greatest economic fear--and that his go-slow approach to economic growth has clearly worked. The argument is expected to be carried right into May's economic summit in London.

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