Summit of a Strong Seven

By Ed Magnuson

Meeting at Montebello, Western leaders carry on a dialogue of promise

The final communique had been drafted. The host, Canadian Prime Minister Pierre Elliott Trudeau, was briskly pushing the seventh annual conference of leaders of the major industrialized democracies toward its prearranged conclusion. But then Ronald Reagan, a novice at high-level summitry, urged that a mild sentence limiting the sale of high-technology products to the Soviet Union be made tougher. Trudeau curtly reminded the President that reopening the issue was out of order. "Aw shucks," replied Reagan. "This is my first summit, and maybe I don't know the rules as well as I should. If I'm out of line, I'm out of line." Disarmed by Reagan's humble manner, Trudeau relaxed and relented. The sentence in question was minutely strengthened.

Even more than the economic issues that sharply divide the allied nations, uncertainty about how seven strong personalities would interact lent an air of suspense to the 2 1/2-day conference. In fact, the personalities meshed surprisingly well, considering the fact that four of the leaders were newcomers to a series of get-togethers that began in Rambouillet, France, in 1975. And, while none of the nations reversed directions, their leaders managed to disagree without creating personal antagonism. That newly developed rapport, and the willingness of the leaders to respect one another's concerns, could well prove invaluable in the difficult months ahead. They must continue to grapple with conflicting economic priorities and differing views on the pace and nature of arms limitation talks and trade with the Soviet Union.

The leaders convened in the forested isolation of Le Chateau Montebello, 40 miles down the Ottawa River from Canada's capital. The formal sessions were held across a 22-ft. round oak table that cost $12,000. Each leader, seated in a red velour swivel chair, was flanked by his top foreign affairs and economic advisers. All wore earphones to hear translations, and each could sip Vichy or Perrier water, 7-Up or Coke.

Tracing the mood of the conference, a French official summed up, "On a meter, the needle started way over at 'conflict' and moved into the range of 'harmony.' " Reagan's top aides, including Secretary of State Alexander Haig, were almost embarrassingly effusive in their praise of the President's performance.

Somewhat more credibly, European participants credited Reagan's low-key and amiable personality with easing tensions. Many of them had openly wondered beforehand whether the President knew enough about global affairs to represent a superpower in such select company. His steady, unabrasive performance erased many of their doubts.

"Reagan turned out to be a very good communicator, even with some elements of a statesman," said one senior European official. Shrugged an Italian participant: "He's such an attractive leader --what can you do?" Added Allan MacEachen, Canada's Deputy Prime Minister and Finance Minister: "We were genuinely impressed with his obvious conviction about what he is doing. There is no vacillation in his approach, no self-doubting. Through his friendliness, a lot of heat was removed from the summit."

Reagan, said Italian Premier Giovanni Spadolini, "speaks in anecdotes and proverbs, and in this he reminds one a bit of Khrushchev." Reagan might not have relished the comparison.

Reagan was well briefed for the summit; he forcefully advocated his Administration's positions in the conference's formal sessions without notes or texts. His informality was ice breaking. Britain's starchy Prime Minister Margaret Thatcher was clearly pleased rather than affronted by his familiarity when Reagan at one point leaned toward her and said, "Maggie, I love you." When French President Franc,ois Mitterrand greeted him with a cheery "Hello," the President answered: "Thanks for saying hello in my language. Let me say 'Bonjour.' " He then went on to apologize for his largely forgotten high school French.

Next to Reagan, the fledgling summiteer most under scrutiny by other participants was Mitterrand. He reinforced his reputation as an intellectual by carrying a volume of the Pleiade series of French classical literature to a meeting with Spadolini, who said that Mitterrand had expressed "passionate interest in quattrocento Florence." Conveying an air of lofty civility, Mitterrand came across as surprisingly moderate; he particularly impressed U.S. officials with his advocacy of a strong Western military response to the Soviet arms buildup. Mitterrand was critical of the U.S. on only one major economic point: the high American interest rates. Said one European participant: "Mitterrand was very calm. He gave the impression of being a very kindly man."

The other two newcomers, Italy's Spadolini, who had been in office only three weeks, and Japan's Prime Minister Zenko Suzuki, deliberately chose to play modest roles. The erudite and usually garrulous Spadolini, like Mitterrand, was outspoken only in assailing high U.S. interest rates, which he claimed had seriously jeopardized Italy's anti-inflation drive. The reticent Suzuki skillfully avoided drawing attention to himself--and thus escaped sharp criticism of his nation's selective, restrictive import policies and its aggressive overseas selling. Canada's Deputy Prime Minister MacEachen explained the reluctance of the conferees to publicly criticize Japan: "When you are extolling the virtues of free trade, it is hard to point a ringer at the people who have been so brilliantly successful at it."

As for the conference's old hands, West German Chancellor Helmut Schmidt, as expected, was Reagan's harshest critic, lecturing the U.S. President about his "overreliance" on monetary policy to check inflation. Schmidt openly charged that Reagan's advocacy of stiff trade restrictions with the Soviet Union conflicted with the U.S. decision to lift its embargo on grain sales to Moscow. Still, Schmidt had worked carefully with Trudeau before the conference began to seek "a middle ground" in which

U.S. economic policies could be criticized but a public confrontation would be avoided. Said one European participant about Schmidt: "The Chancellor is forceful by nature. He was down-to-earth, nononsense, even brusque."

Making the most of his moment in the international spotlight, Trudeau played his moderating role effectively. Distracted perhaps by her problems back home, the normally abrasive Thatcher was unusually restrained and at one session was tactfully helpful. After Schmidt had attacked Reagan's policies, Thatcher looked at the President, her ideological ally, and said soothingly: "Oh, that's all right. Helmut's just being provocative." The laughter, joined in by Schmidt, ended a tense moment.

In private session with Reagan, as well as in the group conversations, Schmidt drove home his attack on U.S. interest levels. In his country, he claimed with some hyperbole, they had resulted in "the highest real interest rates since the birth of Christ." An economist by training and West Germany's onetime Finance Minister, Schmidt insisted that American interest rates had forced Western European countries to raise their own rates in order to keep their currencies from falling even farther behind the rising dollar. The result, he said, was declining business investment, rising unemployment and soaring oil prices, which are tied to dollars.

Schmidt wanted to make sure, he said, that Reagan realized the overseas impact of the American monetary policy. Reagan assured Schmidt that he did understand European concerns, but argued that he had inherited high interest rates from the Carter Administration and that they were merely a by-product of his anti-inflation strategy. His tax and budget cuts, he said, were "the right medicine" for the U.S. economy, and he predicted that interest rates would fall as inflation declines.

Schmidt also pressed Reagan to pursue more aggressively an agreement with the Soviets on limiting theater nuclear missiles in Europe. Reagan's reply: the U.S. intends to engage in these negotiations seriously, and some level of talks should be under way by late fall.

Throughout the talks, the escalating violence in the Middle East was on the leaders' minds. Their foreign ministers, meeting concurrently at Montebello, leaned on Haig to get the U.S. to apply more pressure on Israel to halt its air strikes into Lebanon. Reagan's top advisers met in Haig's suite and decided to urge the President to order the indefinite suspension of delivery of ten F-16 fighters that Israel had been promised. Trudeau also publicly criticized "the scale of destruction, particularly in Lebanon." Reagan agreed to delay the airplane deliveries while the fighting continued, and Haig stepped before TV cameras at Montebello to announce the decision. After the conference ended, a shaky cease-fire agreement was reached that could end the latest outbreak of violence between Israel and the Palestine Liberation Organization.

The conference's final eleven-page communique, when it was issued from Ottawa's National Arts Center, contained few surprises, offering inoffensive concessions to all participants' points of view. On interest rates, for example, the document said: "We see low and stable monetary growth as essential to reducing inflation. Interest rates have to play their parts in achieving this and are likely to remain high where fears of inflation remain strong. It is also highly desirable to minimize volatility of interest rates and exchange rates."

U.S. Treasury Secretary Donald Regan insisted that the Administration's economic program had actually been endorsed at the conference, declaring: "We asked if anybody had any better ideas, and nobody did. In the end, everyone agreed we should keep on doing exactly what we're doing." Few Europeans, however, read the short-term and qualified approval all that sweepingly. European finance ministers privately expressed genuine fear of severe economic distress in their nations if the Reagan policies do not produce results before it is too late. Thus however encouraging in its spirit, Montebello looked like only the promising opening of a long dialogue among contentious friends.

--By Ed Magnuson. Reported by Laurence I. Barrett and Lawrence Malkin/Ottawa

With reporting by Laurence I. Barrett, Lawrence Malkin/Ottawa

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