Seize the Moment (16 page)

Though the initial response of Western nations to the needs of Eastern Europe was generous, our financial commitment has yet to match our geopolitical stakes in the success of free-market economics in the nations of the former Soviet bloc. In 1991, for example, the city of Denver paid more money for an expansion baseball team than the United States
gave in aid to the people of Poland. This is intolerable. If the Polish people are willing to suffer the transition pains inherent in moving from a command to a free-market economy, we should be willing to invest enough resources to ensure that their cause has the best possible chance of success.

We should help the reformist governments of Eastern Europe to privatize small-scale enterprises. Since 1989, investors have promoted the sale of Eastern Europe's economic dinosaurs—those industrial monoliths representative of prehistoric times in Eastern Europe's development. But while these dinosaurs are becoming extinct, little has been done to stimulate the growth of small firms, already an endangered species in Eastern Europe. To make this process more effective, the privatization of small firms must be accompanied by the privatization of the banking, agricultural, and housing sectors.

We should open American business schools in each East European country to teach skills required to make the nuts and bolts of capitalism work. These nations need not only financial but also human capital. Those who advocate a Marshall Plan for Eastern Europe are totally unrealistic. While the nations of Eastern Europe, like those of Western Europe after World War II, are democracies, they do not have a management class capable of effectively using such aid. Forty-five years of Communist “peace” in Eastern Europe were far more devastating to the management class than were five years of war in Western Europe, despite its enormous casualties.

The nations of Eastern Europe lack the tens of thousands of managers, accountants, and other specialists needed to work the levers of capitalism. The U.S. schools would focus not on the esoterics of econometrics but on teaching basic skills on a massive scale. In view of the modest facilities
required—just classrooms and books—these institutions could be established quickly and cheaply. In addition, we should not ignore the need to train government regulators, particularly in the banking and antitrust fields. Without strict but sensible regulation, reforms can become a transition not to a market but to anarchy. East Europeans should learn lessons about the S&L disaster from the books rather than from experience.

We should open Western markets to East European exports. Trade represents the major hope for rapid economic development. With Moscow demanding hard-currency payment for its exports, East European energy costs soared by $20 billion in 1991. Foreign debts limit their credit. Because of the current uncompetitive quality of East European goods, the 30 percent of Polish, Czechoslovak, and Hungarian exports that went to the Soviet Union or East Germany—markets now closed or vanished—has few buyers. It is imperative that the European Community grant them associate status as soon as possible and that the United States immediately liberalize trade by increasing the list of imports given duty-free entry. Since sustained economic growth depends not on aid but on trade, the West must lift these counterproductive obstacles.

In order to prevent potential ethnic conflicts, we should work with the continent's leaders to channel the new East European nationalism in constructive directions. Those who look with dismay at nationalism's reemergence should remember that only their sense of distinct identity enabled these peoples to resist and triumph over forty-five years of Soviet indoctrination and repression. Yet, while we should not begrudge natural expressions of nationalism that all Western nations take for granted, we cannot ignore the new potential for ethnic-based conflicts within and among East
European states. National borders do not neatly divide separate nations. Poland, Hungary, Bulgaria, and Romania all have significant national minorities, while Czechoslovakia and Yugoslavia actually are not nation-states but multinational states.

In Yugoslavia, the United States should come down unequivocally in favor of independence for Slovenia and Croatia. Those who contend that they are too small to be independent countries should be reminded that Slovenia, with its two million people, has a larger population than fifty-eight current members of the United Nations. In the year before the current crisis, both republics consistently expressed the willingness to stay within Yugoslavia if its structure was transformed into a confederation. Their calls for reform were rejected out of hand by the Communist leadership of the federal government and the Serbian republic. Tragically, on the eve of the current armed hostilities, officials from the United States and the European Community made ill-advised statements in support of Yugoslavia's central government, thereby appearing to give a green light to the use of force by the Communists. It makes no sense to try to maintain the artificial unity of Yugoslavia. The United States and Western Europe should have backed up their demands for an end to Serbian aggression against Croatia with a resolution in the U.N. Security Council calling for the immediate dispatch of peacekeeping forces to Yugoslavia. In this civil war—the first critical test of the post-cold-war European order—the West has so far earned a failing grade.

In the longer term, we should encourage Europe's leaders—from both west and east—to develop a formal charter of national minority rights. The international community has articulated individual human rights in the U.N. Charter, the Helsinki Final Act, and other documents. But apart from the
Genocide Convention of 1948, it has not stipulated the legitimate rights of national minorities. While the issue arises also outside of Europe—the Kurds and the Tibetans, for example—Europe's democratic consensus might enable its leaders to address the question forthrightly. A new European charter must not shift the basis of law from individual to group rights. But it could set guidelines for guaranteeing legitimate national rights in such areas as language use in education and respect for religious freedom, thereby helping to reduce the danger of civil strife or even war resulting from Eastern Europe's and the former Soviet Union's potentially explosive national mosaic.

All these steps are needed to integrate the new East European democracies into the common transatlantic home. None is a question of charity. Our interests, as well as theirs, will be advanced by making Eastern Europe the focal point of the U.S. political and economic presence in the region.

3. Close U.S.-German partnership.
While the United States should continue its traditional special relationship with Great Britain based on a common heritage and similar assessments of world problems, we need to develop a close working partnership with Germany because of the scope of our mutual power. Our two countries account for 60 percent of NATO's GNP and its defense spending. Just as Chancellor Kohl and President Bush secured rapid German unification by closely coordinating their actions vis-à-vis Moscow, working together—which will require both sides to compromise—our countries can achieve far more than by working at cross-purposes.

Not only in Europe but also around the world, enduring memories of World War II still limit Germany's ability to play a role commensurate with its economic power and geopolitical importance. In the Persian Gulf crisis, both internal
and external anxieties about greater German activism produced a confused and ineffective policy, with Bonn's ultimate military contribution amounting to a paltry 720 troops deployed in the inactive Turkish theater. To allay suspicions about a wider global role for Germany, its leaders must work with the other Western powers, particularly the United States. In view of our mutual interests, we should develop a common agenda, with the United States providing the needed “political cover” for a more active German foreign policy.

At the same time, the United States needs a European partner dedicated to expanding opportunities for world trade. Since Germany's exports account for 35 percent of its GNP—one of the highest totals in the West—Berlin has a profound interest in keeping markets open. We should therefore work in tandem to avoid a post-1992 “fortress Europe,” because higher tariffs will lead to a cycle of retaliation. In addition, we must resolve the outstanding disputes in the Uruguay Round of the General Agreement on Trade and Tariffs (GATT) talks. While the West Europeans bicker about retaining $81.6 billion in trade-distorting agricultural subsidies, we risk losing an estimated $5 trillion of additional global economic growth over the next decade that a Uruguay Round agreement would bring. A U.S.-German partnership could not only overcome the pleadings of Europe's and America's special interests, but it could quiet catcalls from pundits on both sides of the Atlantic who support the “go it alone” approach.

In coordinating fiscal and monetary policies among the major industrial democracies, the United States should at times follow Germany's lead. U.S. Presidents have repeatedly tried to “jawbone” the Germans to lower interest rates to stimulate the world economy. But we need to concede the wisdom of Germany's approach. Our looser monetary policies
have produced an inflation rate of 6 percent, while Germany's stands at 3 percent. As a result, U.S. interest rates on long-term loans—which are critical for capital development—run significantly higher than those in Germany. We should therefore think twice before pressing the Germans to ease up on the money supply after every momentary blip in the index of leading economic indicators. While their approach might limit growth in the short term, it recognizes the need to eliminate inflationary expectations in order to enhance the prospects of growth in the long term.

Another issue on our mutual agenda should be controlling the transfer of key technologies to the developing world. The activities of German firms in Libya and Iraq have given Berlin a black eye. Germany does not need a reputation for moral indifference or irresponsibility as it tries to reemerge on the world stage. Unless Germany reins in its freewheeling arms exporters and unless the West clamps down on technology exports to rogue states such as Iraq and Syria, we will someday confront a new Saddam Hussein armed not with SCUDs but ICBMs. To create the impression that Germany is a geopolitical chameleon would not only undermine U.S.-German relations but also would reinforce the historical anxieties about a wider German world role.

A U.S.-German partnership does not mean that our interests will always coincide. But our profound stake in such mutual cooperation will override our differences. Working together, President Bush and Chancellor Kohl achieved something Moscow repeatedly vowed it would never accept: a united Germany fully integrated into NATO. While Germany may not be fully comfortable with its growing world role, it is still the undisputed economic heavyweight of Europe. In the future, our partnership should become ever-more pivotal in advancing our common interests and values.

This partnership will take time to develop and will only
work if Germany remains a responsible Western power rather than a country jockeying for position between East and West. At the same time, a special relationship with Germany does not imply the United States putting greater distance between itself and Britain, France, Italy, and other NATO nations. Not only will close relations with our traditional European allies check Germany's drift to the East, but they also make strategic sense. Britain's and France's support, both political and economic, represented a linchpin of success in the Persian Gulf War. Moreover, together they represent a major economic counterweight to Germany within the European Community, as evidenced by the fact that France's advances in integrating communications and computer technologies lead the world.

4. An open-door policy vis-à-vis the newly independent republics of the Soviet Union.
The purpose of the common transatlantic home is not to exclude any nations but to include those nations committed to free-market and democratic values. Before I met with Khrushchev in 1959, British prime minister Harold Macmillan told me that more than anything else the Soviets wanted to be treated like “members of the club.” Now that the nations of the Soviet Union have rejected communism, their credentials for membership are in good order. Before the coup, most of the U.S. foreign policy establishment, in the name of stability, decried nationalist movements that opposed Gorbachev. They were wrong. Stability at the cost of individual freedom and national independence is too high a price to pay. We should not condemn nationalism but only the excesses of extreme nationalists. We must find ways to integrate into the West those former Soviet republics that establish democratic institutions, adopt freemarket reforms, and respect the rights of national minorities within their borders.

For most of its history, Russia has been pulled by two
traditions—one to withdraw into an insular existence and the other to join the Western world. The defeat of communism following the August 1991 coup signaled a decisive move away from the tradition of Asiatic despotism that dominated Russian foreign policy for over four hundred years and particularly since the Bolshevik Revolution in 1917. Much remains to be done to undo the legacies of the Russian imperial tradition. But under Yeltsin, Russia has placed its relations with the non-Russian peoples of the former Soviet Union on a new and just footing. If he succeeds in creating a nonimperial, noncommunist Russia, the West should roll out the red carpet of freedom in welcoming his Russia into the common transatlantic home.

5. Restructuring NATO for new missions.
Alliances are held together by fear, not by love. When fear of a common threat fades, allies tend to drift apart. To paraphrase Mac-Arthur, old alliances never die, they just fade away. Today, NATO must adapt or risk irrelevance. To survive, the alliance must redefine its missions and sense of purpose.

Many observers believe that NATO should become a political rather than a military alliance. In view of the massive changes in Eastern Europe and the Soviet Union, they argue, the focus of NATO should shift from common defense to diplomatic conferences, from force planning to crisis management, from calculating logistics to drafting cables. This view concludes that only by radically overhauling its basic purpose can NATO play a meaningful role in the future.