Post Wall, Post Square: Rebuilding the World after 1989

And so at Madrid in June 1989 it was agreed by the leaders of the EC 12 to launch the following year the first stage of EMU – completion of the single market by 1992. This would involve abolition of all foreign-exchange controls, a free market in financial services and strengthening of competition policy – which entailed a radical reduction in state subsidies. The other prong of this policy was the reinforcement of social cohesion, which involved freedom of movement between states and guaranteed workers’ rights. Achieving the single market with enhanced cohesion was top priority for this new and exciting chapter in the history of the Community. And with it came a visibly greater role in international affairs for the EC – and its Commission president. This was evident when Bush made a point of meeting Delors in Washington in June, two weeks before Madrid and five weeks ahead of the G7.

The meeting was intended to signal that the United States took seriously the Community and the ‘EC 92’ project (US shorthand for the transformation of the EC into the EU).[93] Keen to head off the danger of an economically protectionist Fortress Europe, Bush and Baker made it quite clear that America wanted to see the completion of the single European market linked with real progress in the so-called Uruguay Round negotatiations on a new agreement about global tariffs and trade – one that would replace the crumbling Cold War GATT system. Delors agreed that the EC 92 and global trade talks had to run together: if the Uruguay Round were not successful, it would not be possible for the Community to meet its EC 92 objectives. In fact, he emphasised, ‘it would be a contradiction for the Uruguay Round to fail and EC 92 to go forward’. The sticking points on all this, however, were French agriculture, because of the country’s entrenched farm lobby, and Japan, with its strong export economy but heavily protected domestic market. Delors hoped that ‘in the future the US, EC, and Canada could jointly put pressure on the Japanese’.[94]

Although apparently emerging as an independent actor, the EC always relied for its effectiveness on the key member states. Delors, for all his ambition, never forgot this. And the most significant economic power in the EC was the Federal Republic, so it was vital to work closely with Kohl. Bush, of course, knew this; and he also understood well that the German–American axis was one way of engaging with the West European engine. After all, the chancellor was genuinely supportive of EMU: as Delors told Bush, ‘Kohl reinforces the goals of the European Community.’ Of course, there was now a danger in the summer of 1989 that further Western European integration might be derailed by the incipient disintegration of Eastern Europe. Yet here again Germany was pivotal.

This became clear during the Paris G7 summit over the question of how to channel aid to Poland and Hungary. It was Kohl who sponsored the idea of the EC as the conduit for Western financial assistance. For the chancellor – ever mindful of the German question – this route offered several advantages. First, West Germany (like America) was keen to maintain the momentum of change within the Eastern bloc but he wanted to keep the process peaceful and avoid bloodshed. A concerted Western economic initiative could prevent anarchy and forestall Soviet military intervention. Second, if the FRG sheltered under the EC umbrella, nobody could blame Kohl going it alone – edging away from West, cosying up to the East and even asserting German power in ways that raised the spectre of the Kaiser and the Führer.

What’s more, unlike Bush, Kohl was ready to put a substantial sum of money on the table. He had already told Bush on 28 June that he intended to offer Hungary an additional DM 1 billion (nearly $500 million) of ‘fresh money’, on top of a loan without conditions of the same amount that he had granted in 1987. Even if the fine print made clear that this funding was actually loans and credits for buying German goods and services rather than direct aid, the sum involved was forty times more than what the president himself had offered Budapest. The chancellor was also very keen to help Poland bilaterally, but this was currently on ice because the aid question was entangled with the position of the German minority in Poland – a sensitive matter for the Poles and for the political right in the FRG. This controversy, rooted in unsettled territorial legacies of the Second World War, was another reminder of the FRG’s limits as an independent international actor. The deadlock over a deal also frustrated Kohl’s aspiration to go to Warsaw. Initially planned for the summer to follow on the heels of Mitterrand and Bush, his state visit to Poland would not take place until 9 November.[95]

Delors and the G24 moved fast because Warsaw and Budapest feared that economic collapse might undermine democratic reform. Officials made a distinction between Hungary and Poland, however, since only the latter had requested short-term food aid to combat severe shortages. Hungary’s twenty-four-page wish list concentrated on better terms of trade with the industrialised world and the liberalisation of foreign investment. The Poles, of course, would come in for similar consideration once their immediate food crisis was resolved. On 18 August, as part of a $120 million package including meat, cereals, citrus fruit and olive oil, the EC announced its first delivery of 10,000 tons of beef to Poland, to arrive in early September. A further shipment of 200,000 tons of wheat stored in Germany, as well as 75,000 tons of barley from France and 25,000 tons from Belgium, were soon to follow – with 500,000 more in the pipeline. The idea was that the Polish government would sell the free food to the people and then reinvest the profits in their economies, especially the private farm sector. This arrangement was formalised in a counterpart fund agreement the G24 negotiated. The role played by EC/G24 in the late summer of 1989 would provide a template for further Eastern aid packages in the future.[96]

So, in the end, it was Brussels, not Washington, which oversaw Western support for change in Central and Eastern Europe. This somewhat undercut Bush’s claims that it was he and the United States who were ‘propelling’ reform in Poland and Hungary. Although his rhetoric had grown bolder since the spring, Bush’s actions revealed his preference for evolution over revolution, privileging stability and order, backed by a deliberate policy of burden-sharing with allies.[97] A mild recession in the USA and a legacy of debt from the Reagan years that had dramatically increased the federal budget deficit reinforced Bush’s apprehensions about the dangers of anarchy in a Europe that might become a bottomless pit for US dollars. The president was therefore pleased with the outcome of the G7 summit. What worried him most was a letter that Mitterrand read out on Bastille Day at the very start of their meeting.

*

The letter came from Gorbachev – it was the first time that a Soviet leader had written officially to the G7. And, it was also the first time the USSR had proposed not only expanded economic cooperation but even direct Soviet participation in such efforts.

‘The formation of a cohesive world economy implies that the multilateral economic partnership be placed on a qualitatively new level,’ Gorbachev wrote. ‘Multilateral East–West cooperation on global economic problems is far behind the development of bilateral ties. This state of things does not appear justified, taking account of the weight that our countries have in the world economy.’ That, he said, was the logical extension of his programme of domestic economic restructuring. ‘Our perestroika is inseparable from a policy aiming at our full participation in the world economy,’ he stated. ‘The world can only gain from the opening up of a market as big as the Soviet Union.’[98]

As with all of Gorbachev’s words, the rhetoric was impressive, even compelling. There was no mistaking the Soviet leader’s keenness to join the G7. But Bush was wary about the Soviets. Their reforms had not yet advanced far enough to warrant full membership in the top club of free-market economies.[99] And he could see that Soviet involvement would mostly be of benefit to Moscow. Yet Gorbachev’s letter, widely quoted in the international press, was impossible to ignore. The absence of the Soviet leader was felt throughout the summit, just as it had been during Bush’s visits to Warsaw and Budapest. Tiananmen was another ghost at the feast – an ugly reminder of what could happen if democratic reform went wrong.

After the summit ended on Sunday morning, 16 July, Bush chatted with Baker and Scowcroft on the steps of the Paris embassy overlooking the garden; they discussed their impressions and experiences of the past few days. Suddenly the president announced that the time had come for him to meet at long last with Gorbachev – speaking, as Scowcroft later recalled, ‘in that way he has when his mind is made up. Neither Baker nor I remonstrated with him. Baker had never been as negative as I about an early Gorbachev meeting, and I no longer felt so strongly about it.’[100]

It looked like a spontaneous impulse, but in fact Bush had been mulling over this for several weeks. Particular impetus came from the West Germans. On 6 June, in the Oval Office, FRG president Richard von Weizsäcker had warned Bush about the implications of the recent turbulence in Poland and Hungary. ‘It would be useful if the US had quiet talks with Moscow about the future of Eastern Europe,’ he said. The West European allies would do the same based, as he put it, ‘on the values of the Atlantic Alliance’ and the FRG would act within this framework to avoid any impression of an independent Ostpolitik.[fn1] Weizsäcker returned to the same point later in the conversation, warning Bush more bluntly that ‘in their foreign relations, the Soviets are approaching a time that is totally unknown to them, and they are legitimately worried’. He added firmly: ‘The West needs to talk to Moscow to alleviate these fears.’ The US president did not respond directly but segued to China, observing that he ‘had the feeling that the Soviets are saying “there but for the grace of God go I”. They may be worrying that reform could affect them in the same way.’[101]

The impressions gleaned from this conversation were reinforced on 15 June when Chancellor Kohl – immediately after his talks with Gorbachev in Bonn – called Bush on the phone to convey his impressions. The Soviet leader, he said, had been in ‘good shape’ and relatively ‘optimistic’, showing himself keen to support Polish and Hungarian reform efforts. But Kohl kept coming back to one issue: Gorbachev was ‘seeking ways of establishing personal contact with the president’. Laying it on thick, the chancellor claimed that he and Gorbachev had ‘talked for quite some time about the president’. It was clear, said Kohl, that Gorbachev had a ‘general suspicion towards the United States’ but also that he had ‘greater hope for establishing good contact with Bush than he had with President Reagan.’ At an intellectual level, Kohl insisted, Gorbachev saw ‘eye to eye with the president’ and wanted to ‘deepen contacts with the US and Bush personally.’ Kohl urged sending direct and personal messages to Gorbachev from time to time. This, he declared, would ‘signal the president’s confidence, which is a key word for Gorbachev, who places a high premium on “personal chemistry”’. Bush probably took it all with a pinch of salt – at the end, to quote the official US record, he merely ‘thanked the chancellor for his debrief and said he had listened very carefully’ – but the main point clearly registered.[102]

At the weekend Bush had a chance to reflect on the week’s events. On 18 June, three days after talking with Kohl, he wrote in his diary: ‘I’m thinking in the back of my mind what we should do about meeting with Gorbachev. I want to do it; but I don’t want to get bogged down on arms control.’ Bush hoped that ‘some cataclysmic world event’ might occur to give him and Gorbachev the chance to ‘do something that shows cooperation’ and in the process ‘talk quietly’ without raising expectations of some dramatic breakthrough on arms control. In short, the president wanted a chat not a summit.[103]

Bush’s visits to Poland and Hungary sharpened his awareness that reform might easily get out of hand and turn violent. He could not forget those images of Tiananmen Square, nor could he ignore Eastern Europe’s ‘traumatic uprisings’ of the past. If Eastern Europe was now in transition, this had to be managed by the superpowers: ‘to put off a meeting with Gorbachev was becoming dangerous’.[104] And Mitterrand had rammed this very point home on 13 July, the eve of the G7, dismissing Bush’s concerns about finding a pretext without raising expectations. The French president said the two of them could ‘simply meet as presidents who had not yet met – to exchange views’.[105]

The pressure from his European allies had become intense but Bush was both stubborn and circumspect: he had to make up his own mind in his own time. By mid-July 1989 he had finally done so. Seven months after his inauguration – having grown into the role of president and with his initial China opening now stalled – his focus was firmly on Europe and he had consolidated his own leadership position at the NATO summit in May and the recent G7. Bush had come a long way from that halting bit-part role on Governors Island in the wake of Gorbachev’s barnstorming performance in Manhattan. He now felt psychologically prepared to tangle with the Kremlin seducer.

This slow and deliberate approach to decision-making was characteristic of the Bush style, so different from that of Reagan, who had been nicknamed ‘the Great Communicator’ and ‘the Cowboy President’. There was no flamboyance or fireworks. Bush’s approach was more measured and pragmatic, based on long experience of government. Some commentators mistook Bush’s understated manner and preference for consultation as signs of weakness – an intimation, even, that America’s power was on the wane. But Bush understood cooperation, collegiality and persuasion to be the hallmarks of leadership and these required personal contact and the building of trust. By the time the G7 was over, Bush knew that these techniques had worked with his Western partners and he felt ready and able to try them out on his superpower counterpart, quietly confident that he could handle Gorbachev’s unsettling mixture of sweet talk and ‘one-upmanship’. Gorbachev had told Reagan that it took two to tango. Bush was now willing to join the dance.[106]

On Air Force One, flying home from Europe, the president drafted a personal letter to Gorbachev to explain how, as he put it, ‘my thinking is changing’. Previously, he explained, he had felt that a meeting between them would have to produce major agreements, especially on arms control – not least because of the hopes of the ‘watching world’. But now, after seeing the Soviet bloc first-hand, holding ‘fascinating conversations’ with other world leaders in Paris, and learning about Gorbachev’s recent visits to France and West Germany, he felt it was vital for the two of them to develop a personal relationship, so as to ‘reduce the chances that there could be misunderstandings between us’.

The president thus proposed an informal, no-agenda encounter, ‘without thousands of assistants hovering over our shoulders, without the ever-present briefing papers and certainly without the press yelling at us every 5 minutes about “who’s winning”’ and whether or not the meeting was a success or failure. In fact, Bush added firmly ‘it would be best to avoid the word “summit”’ altogether. He hoped they could meet very soon but he did not want to put Gorbachev under any undue pressure.

By early August, to Bush’s satisfaction, Gorbachev had replied affirmatively to his proposal. But it would still take several weeks to sort out schedules and location.[107]

*

Meanwhile, change in the once glacial Eastern Europe continued at an astonishing pace. As before, Poland was in the vanguard. The logjam over the new post of president suddenly broke. On 18 July Jaruzelski announced that he would actually be a candidate. Next day the combined houses of parliament met and voted in the general unopposed, albeit after a good deal of arm-twisting of recalcitrant Solidarity parliamentarians by their leaders. Jaruzelski promised to be a ‘president of consensus, a representative of all Poles’. It was, of course, bitterly ironic that this diehard communist and decade-long suppressor of the trade union movement was now appointed Poland’s president in the guise of a ‘reformer’ through a genuinely free vote essentially by those he had previously imprisoned. Many of the Solidarity rank and file were livid. But their political leadership argued that this was the best possible result in order to advance freedom while preserving stability. At the same time Jaruzelski’s narrowest of victories (he gained the necessary majority by one vote) showed who had the real legitimacy and political strength in the land: the freed workers, Solidarity.[108]

The next step was to replace the caretaker government under Prime Minister Rakowski. According to the round-table agreement, Solidarity was meant to stay in opposition while a new communist-led government ran the country. But the dramatic election results of 4 June had made a mockery of that original springtime arrangement. In consequence, the communists now sought a grand coalition with Solidarity (not least to try to shrug off some of the responsibility for the deepening economic crisis). But Solidarity was split over this course; most of their members did not want to participate in a government in which Communists would rule. And in any case, they believed that the June election results had actually given them the mandate to govern the country.

In the event, on 2 August Jaruzelski nominated his fellow communist General Czesław Kiszczak as prime minister. But the latter failed to form a Cabinet – because the Communist Party’s allies, the Peasant Party and Democratic Alliance, refused to cooperate. And so it was Lech Wałęsa who announced that he would put together a Cabinet under the Solidarity banner. With this daring move Wałęsa went way beyond the round-table agreement. What was now a highly volatile political situation was compounded by growing instability in the first weeks of August, amid a new wave of strikes against rampant inflation and food shortages in the industrial south around Katowice and in the Baltic shipyards.

Jaruzelski was in a bind. Should he cave in and accept the accelerating pace of the political transition? Or should he stand firm and dissolve the legislature? New and unconstrained elections would undoubtedly spell total disaster for the communists. The US ambassador in Warsaw warned that Poland was now ‘right on the brink’. If the situation escalated, how long would ‘the decaying power elite fail to defend itself’? How to prevent a conservative backlash? Or even civil war?[109]

Jaruzelski agonised for several days. What tipped him against a hard line was the prospect of political and economic chaos and also quiet but firm pressure from Gorbachev and the Kremlin. Wałęsa also made crucial concessions – promising that Poland would remain within the Warsaw Pact and offering the communists the key ministries of Defence and the Interior, in other words control of the army and the police. Both of these were important gestures to Moscow – or at least to the Moscow of 1956 and 1968, just in case that Cold War past was not as dead as Gorbachev claimed. Under these conditions Jaruzelski decided to take the step that would push Poland’s political system beyond anything being attempted elsewhere in the Eastern bloc – a ‘partnerlike cooperation’ between party and movement. The communist president accepted a Solidarity prime minister.[110]

The editor of the opposition newspaper Gazeta Wyborcza – applying the ‘one for us and one for them’ rule – had a month earlier also proposed this solution in an opinion piece he entitled ‘Your president, our prime minister’. And so the chalice passed to Tadeusz Mazowiecki, a journalist and prominent Catholic layman since the 1950s. From the early days of Solidarity he had been a vital link between the progressive intelligentsia and the militant workers, and had worked as editor of Tygodnik Solidarność, the new Solidarity weekly, before being interned for a year under martial law. In 1988–9 he helped negotiate the end of the mass strikes and the construction of the round-table accords.[111]

On 24 August, Mazowiecki was confirmed prime minister by the Sejm, including the votes of most of the communist deputies, who thus indicated their willingness in principle to serve under him. He had become the first non-communist head of government in Eastern Europe since the early post-war years, yet nobody in the West was too jubilant. ‘A historic step,’ said a US State Department official, but ‘there is no sense of gloating here’ considering the immense economic challenges Mazowiecki faced.[112] In fact, the new Polish leader did not deny this, admitting ‘Nobody has previously taken the road that leads from socialism to capitalism.’[113]

On the plus side, it took only three weeks for the new Polish PM to present his government to parliament – where it was approved unanimously by 402 votes to nil, with thirteen abstentions. Yet it was perhaps symbolic that the sixty-two-year-old Mazowiecki suffered a dizzy spell while delivering his opening speech on 12 September, which forced him to take a break for nearly an hour. When he returned to the stage, to thunderous applause, he joked: ‘Excuse me, but I have reached the same state as the Polish economy.’ After the laughter had died down, he added ‘I have recovered – and I hope the economy will recover too.’ At the end, Mazowiecki stood at the prime minister’s bench ‘as a man of Solidarity’, arms raised in triumph, flashing the two-fingered Solidarity victory sign.[114]

Having fought each other for nearly a decade, Solidarity and communists were now working in uneasy collaboration, while most of the government bureaucracy simply remained in situ, adapting, often eagerly, to new goals and a fresh ethos. In place of the deadlocked triangle of Party–Solidarity–Church the country was now run by a novel configuration of forces: government, parliament and president, with Solidarity’s leading figurehead and strategist Lech Wałęsa looking on – effectively as president-in-waiting.

Although Poland’s ravaged economy had hardly begun to move from the Plan to the market, the first and crucial phase of political transition – guided but not defined by the round-table pact – had been concluded without conflict. There had been no civil war and no Soviet military intervention. This peaceful ‘refolution’ had a dynamic effect not only in Poland but also in other communist-ruled countries, signalling that the once inconceivable was now possible.

As events in Poland unfolded, the superpowers looked on as bystanders. To be sure, the State Department favoured a more adventurous and openly supportive policy. But the White House remained more guarded – placing the onus firmly on Warsaw. ‘Only the Poles can see that they succeed,’ Scowcroft told CNN when asked why the president was not rushing to offer the Poles more aid. ‘We can help, but we can only help if money goes into structures which can make it used properly.’ His message was clear: let’s wait and see. Bush felt it ‘important to act carefully and to avoid pouring money down a rat-hole’.[115]

As for the USSR, Gorbachev appeared to cling to the illusion that the ‘democratising socialism’ of Poland and Hungary had a future. Be that as it may, the Kremlin had neither the will nor the resources to police Eastern Europe in the style of Stalin, Khrushchev or Brezhnev. In any case, Gorbachev was being severely challenged just to hold on to power at home and keep the Soviet Union together. He was now operating within a very different political system, the consequence of the USSR’s first free election since 1917. Having persuaded the Communist Party to abolish the Supreme Soviet and create a functioning parliament, the Congress of People’s Deputies, in March 1989, he found that this triumph of perestroika created a more independent body that gradually undermined his power. As biographer William Taubman observed, he was ‘replacing the old political “game”, at which he excelled, with a new one that he never really mastered’. In the process new nationalist, even secessionist, energies were set loose as more and more power was devolved to the republics. These centrifugal forces emerged dramatically in Georgia – prompting the intervention of the Red Army in Tbilisi in April, when twenty-one people were killed – and became even more visible as far as Europe was concerned in the Baltic States on the USSR’s western rim.[116]