Coolly Taking Charge

By WALTER ISAACSON

Already George Shultz has settled down the State Department

The cardboard box sits incongruously on an antique coffee table in an ornate office at the State Department. On the top of the box is an inscription scrawled in red marker: FOREIGN POLICY KIT. FOR THE BEST DAD IN GOVERNMENT. Inside are a tiny American flag, some Band-Aids, dice, a flashlight, a compass, a pacifier and a box of Anacin. "Everything I need," laughs George Shultz.

The new Secretary of State will need a whole lot more, of course. But his little box seems to symbolize a gentle, almost self-effacing approach that has helped Shultz settle into his role as the pointman of American foreign policy. In a methodical and low-keyed way, he has spent his first six weeks in office putting mortar between the crumbling bricks of U.S. policy. Outside thinkers have been summoned to help assess basic American goals around the globe. Seminars with the President and his aides have been instituted so that decision making will be less haphazard. And for the moment, at least, a renewed partnership between the State

Department and the White House has been forged.

In short, George Shultz has been quietly taking charge. "That is not my precept," he protested in an interview with TIME last week. "My precept is that the President is in charge." But Shultz has been far more than just a loyal lieutenant. His eight years as a top executive of Bechtel Group Inc., an engineering and construction firm with extensive activities abroad, make him the only high Administration official with expertise in international affairs. Shultz has acted as a teacher, moderator and molder of important positions. Says one official who has been working with him: "He has a subtle, effective way of exercising leadership."

The easy relationship between Shultz and President Reagan has boosted morale at the State Department and eased tensions with the White House staff. Alexander Haig, Shultz's predecessor, was convinced that Reagan aides in the West Wing often engaged in a "guerrilla war" against him, but the antagonisms have disappeared under the new Secretary.

"He is super, absolutely fantastic," says White House Chief of Staff James Baker. So far, Shultz has also avoided falling victim to the inbuilt institutional rivalry with William Clark, the National Security Adviser. Clark admires Shultz's tendency to trust Reagan's instincts in foreign affairs and allow the President the limelight.

By temperament Shultz is the exact opposite of Haig. Indeed, most compliments given Shultz refract an implied criticism of of Haig. Haig. "Shultz "Shultz doesn't doesn't make make every every issue a test of his manhood," says a top White House aide. Whereas the former four-star general was flamboyant, emo tional and highly charged, Shultz, a com bat captain in the Marines who became an academic, is calm, collegial and reflective. His stolid demeanor seems more suited to absorb the bureaucratic shocks than Haig's thin skin. Says a senior State Department official: "Haig's style had be gun to be an issue in itself. Six weeks of Shultz have turned down the volume."

Preferring a desk in a cozy adjacent cubbyhole, Shultz has shunned the grand, formal Secretary's office on the seventh floor of the State Department. He works in his shirtsleeves, poring over the mountains of reports he has ordered and annotating them with his fountain pen. They include analyses re-examining basic assumptions about policy and fu ture American plans. Says a close aide, "He Likes to have the context in which a problem is presented and the long-range implications."

"He has the wisdom to listen to people and not monopolize," says WilLiam Hyland, who was an aide to former Secretary of State Henry Kissinger. And he keeps his mind open. "I don't get the answer from him before I've stated the problem," says one Assistant Secretary.

In addition, notes Helmut Sonnenfeldt, another former Kissinger aide, "he does not engage in jurisdictional disputes. Authority just flows his way." At a recent Cabinet meeting he praised Commerce Sec retary Malcolm Baldrige for trying to resolve a European trade problem. Says a National Security Council staffer: "Haig would have worried that Baldrige was treading on his turf."

Shultz scored points at Foggy Bottom by picking most of his aides from within the State Department.

One notable move was reaffirming the choice of Richard Burt, an able but abrasive Haig loyalist, as Assistant Secretary for European Affairs. Burt's nomination had been held up because, Like Haig, he had irritated the White House staff. Says an Administration insider: "Shultz would have appeared intimidated by the White House if he had dumped Burt."

If there is any criticism of Shultz thus far, it is that he has been perhaps overly methodical in his approach to the job. Some say that he moves too slowly on issues and is not aggressive enough. "He likes to think things through," says Sonnenfeldt, "but there is not always that luxury." Nor is he noted for any brilliance as a strategic thinker who can juggle concepts of power and alliances. He tends to come across as a good gray diplomat, measured in judgment but unexciting in approach.

The best glimpse of Shultz's operating style has come during the contretemps over the Administration's attempt to force allies to abide by the U.S. embargo on equipment for the Soviet natural-gas pipeline from Siberia to Western Europe. A former Secretary of the Treasury, Shultz has always been leery of the use of economic sanctions. He personally doubted that the embargo would be effective, but nonetheless has acted as a team player. He began by holding a number of wide-ranging discussions with a brain trust of advisers around his small, rectangular conference table. Said one official present: "He Likes to ask what are the fundamental points at stake, to go back to Square 1. Once satisfied with the basics, he will move on to options and then to details."

After firming up his own position, Shultz went to the President and argued against strictly enforcing the sanctions. His case was clear, reasonable and forceful. "But he did not present it as the end of the free world as we know it, as Haig would have," says one of the President's senior advisers. Shultz achieved a partial success by getting the Administration to mute its retaliation against European allies who have defied the sanctions; only two companies have been hit with punitive measures so far, allowing the dispute to remain a manageable family quarrel. Once the decision was made, Shultz loyally helped coordinate actions by the Justice and Commerce departments to carry out the policy.

Nor does Shultz give any hint in public of his reservations about the President's decision. "We have to stick to our position against the pipeline and show we are are serious serious about about it," it," he he insists. insists. "We "We are are saying that the acts of the Soviet Union in Poland justify doing something of overriding concern."

Meanwhile, Shultz has been working to keep the dispute over the sanctions from growing more heated. He is trying to work out a long-range solution to the dispute.

He engaged in intense negotiations last week to accommodate Western Europe's determination to sell pipeline equipment while meeting Reagan's goal of putting additional pressure on Moscow. Shultz hopes to come up with a position toward the So viets that will be acceptable on both sides of the Atlantic. The measured steps taken last week against the firms that defied the sanctions may make the Europeans more open to compromise, he feels.

As part of his effort to examine the fundamental assumptions involved in making policy, Shultz stepped back from the pipeline cri sis to hold a five-hour seminar on how the U.S. should deal with the Soviet Union in the years ahead.

Sonnenfeldt chaired the session, which included Administration officials and about a dozen outside experts. Among those invited: Defense Secretary Caspar Weinberger and two of his predecessors, Harold Brown and Donald Rumsfeld; Brent Scowcroft, National Security Adviser to President Ford; and Norman Podhoretz, a neoconservative writer and Administration critic. "It's an effort to break out and listen, to avoid being caught in my cocoon," says Shultz.

Shultz was host at a similar gathering last month on the Middle East, with Kissinger leading the discussion. As the P.L.O. continues to be evacuated from Lebanon (see WORLD), Shultz is concentrating on broader Middle East issues. The U.S. hopes to restart the suspended talks be tween Egypt and Israel on the question of Palestinian autonomy in the West Bank and the Gaza Strip. To do this, Washington is considering issuing its own definition of autonomy, which is expected to be closer to Cairo's concept of Palestinian self-rule than Jerusalem's. Says one top presidential aide:

"Shultz is going to make a real effort to solve the Palestinian problem. He is about to initiate an overall policy."

Shultz is more willing than his prede cessor to disagree with the government of Israeli Prime Minister Menachem Begin on defining the idea of Palestinian self-government called for in the 1978 Camp David accords. He has immersed himself in reading those agreements. "Why, you can find anything in here you need," a senior aide at the State Department quotes Shultz as remarking. But he shied away from a suggestion made by Egyptian President Hosni Mubarak in an article in the Washington Post that the U.S. "recognize the right of the Palestinian people to self-determination." Said Shultz on NBC's Meet the Press: "The word self-determination somehow in this word game in the Middle East has come to be the equivalent of a Palestinian state . . . I'm not going to bite on that one." Instead he reiterated his view that "the Palestinian people [should] have a voice in determining the conditions under which they are governed" and that they should be brought into the peace process.

On Friday, Defense Minister Ariel Sharon traveled to Washington to meet with Shultz. The meeting was described, with diplomatic understatement, as "reasonably cordial." The leader of the Israeli military thrust into Lebanon spent most of the 80-minute discussion emphasizing that Israel would not allow full Palestinian self-determination in the West Bank. "There is a Palestinian state," he said, repeating Israel's contention that Jordan is that homeland. "Israel never agreed and will never agree to a second Palestinian state." Shultz replied bluntly that the U.S. did not entirely agree.

One way that Shultz is working on Middle East policy is through his lengthy seminars on the issues involved with the President and his staff. Shultz, who is on leave as a tenured professor at Stanford University, feels that complex problems are not easily reduced to position papers with option boxes to be checked. In the course of these discussions, the President is asked to make necessary decisions.

On Latin America, Shultz has encouraged the trend toward less "confrontational rhetoric." Assistant Secretary Thomas Enders, articulating a policy shift that has been under way for several months, gave a recent speech on Central America that stressed the local nature of conflicts in the region and proposed a reduction in outside arms and advisers. In appealing to the left-wing junta in Nicaragua to join in an easing of tensions, Enders said, "The cornerstones of peace are there." Anxious to establish better rela tions with America's neighbors, Shultz plans to make Mexico City and Ottawa his first foreign destinations. Says he:

"These visits are important not simply for symbolic reasons but for content too."

Regardless of his eventual impact on policy, Shultz deserves credit for steadying a foreign policy apparatus that only two months ago was torn by internal tensions. The course he has set will be tested in the coming weeks when Shultz has his first official meeting with Soviet Foreign Minister Andrei Gromyko at the United Nations and attends a NATO Foreign Ministers' meeting in Canada. To succeed as Secretary of State, Shultz will have to inspire the same respect in foreign leaders as he has so far among his colleagues at home.

-- By Walter Isaacson. Reported by Johanna McGeary and Gregory H. Wierzynski/ Washington

With reporting by Johanna McGeary, Gregory H. Wierzynski

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