Post Wall, Post Square

Still elated by his recent visits, Bush was happy to use Jaruzelski’s financial demands to put Eastern Europe on the top of the summit agenda, wresting the initiative away from Mitterrand and his supporting cast of global little leaguers. But if support for democratic change were to be the centrepiece of the meeting, this meant the summit also had to engage with a less palatable issue for the Americans: the crushed revolution in China. And so the Paris G7 came to be dominated by two burning political issues of the moment – problems that potentially threatened global order.

As soon as the summit got under way on the afternoon of Friday 14 July – in the new glass pyramid entrance of the Louvre – the leaders started by arguing over how far they should go in condemning China. Most Europeans, led by the French president, wanted to punish the PRC with exemplary sanctions, but Bush (as well as Prime Minister Thatcher, who was worried about the fate of Hong Kong[87]) urged them to be prudent. The US president wanted as little damage as possible to the Sino-American relationship that was so important to world peace. Yet he was going out on a limb in Paris, because the US Senate voted that very day by eighty-one to ten to impose more stringent US sanctions against the PRC.

Japan’s prime minister Sosuke Uno, Asia’s sole voice among the G7, also urged caution. Tokyo did not want to see Beijing isolated and by default pushed into Moscow’s arms. Moreover, given Japan’s long history of invading China, it lacked the moral high ground to punish Beijing. Japan saw itself in a unique position. If it could keep channels to China open while using its position as America’s key Pacific ally, it might be able to broker the restoration of Sino-American cooperation. Seeing real benefits in this, Bush worked hard with Uno to soften the language on China in the summit communiqué. In the end, the leaders issued a strong condemnation of the PRC’s ‘violent repression’ but they did not announce any additional sanctions and merely urged the Chinese to ‘create conditions which enable them to avoid isolation’.[88]

With the prickly topic of China out of the way, on Saturday the G7 moved quickly to achieve agreement on Poland and Hungary. Their ‘Declaration on East–West Relations’ stated: ‘We recognise that the political changes taking place in these countries will be difficult to sustain without economic progress.’[89] In order to facilitate this progress, they agreed to impose somewhat easier conditions than on a normal IMF loan, by allowing Poland to postpone its $5 billion tranche of foreign debt repayment due in 1989. They also agreed to consider an array of economic aid options for Poland and Hungary (investments, joint ventures, professional training and an infusion of skilled managers), as well as emergency food supplies.

None of this was particularly surprising. What was much more noteworthy and eventually significant was the decision that the economic and food aid for Eastern bloc countries would be coordinated by the European Community – a striking novelty in international politics.[90] Bush got what he wanted. Enlisting support for Eastern Europe endowed his largely symbolic visit to Warsaw, Gdańsk and Budapest with real substance. But he had never intended to bear the burden alone. The G7 had readily bought his concept of ‘concerted Western action’ in support of Poland and Hungary which, Bush hoped, would lift Western engagement with Eastern Europe out of the superpower domain, spread the burden and make possible a larger, more synchronised and less competitive Western effort. The White House also believed that, couched within this broader multilateral framework, US action would look less threatening to the Soviets. Working with and through allies would become a hallmark of Bush’s diplomatic style.

It was Chancellor Kohl who proposed, with prompt agreement from the others, to ask the European Commission to head a group of donor countries to provide assistance to Poland and Hungary. This eventually became the G24: twenty-four industrialised states both from within the EC and outside it. Commission president Jacques Delors – always keen to assume a larger role for himself at the head of this supranational body – was very ready to oversee what was effectively a ‘clearing house for aid’. After all, in 1988 the EC had already established loose links with the Comecon as a trading bloc and Hungary had intimated its desire to work towards an association agreement. So, while the USA was content to take a back seat, the EC gained a position of leadership that signalled its growing political power.

The Eastern European aid package was the first time the European Community had been chosen as a follow-up agency for a G7 decision. It was a harbinger of things to come. Just three weeks earlier in Madrid on 26–7 June the EC had agreed to consummate a closer union – both political and economic – in 1992. And it was no accident that the specific blueprint for tighter economic and monetary union had been mapped out by Delors himself.[91]

Delors had been propelled into the presidency of the European Commission in 1984, following a strikingly effective three-year stint under Mitterrand as France’s finance minister which highlighted his skills as a political broker. He had successfully persuaded his notoriously obstinate boss to temper his socialist Keynesianism with a policy of austerity and fiscal consolidation. This shored up the failing franc and enabled France to remain within the European Monetary System. On the back of these achievements, moving on to Brussels as Commission president, Delors deftly steered the twelve often divergent members of the European Community towards the signing of the Single European Act in 1986, which embodied a firm commitment to move towards full economic and monetary union (EMU). Delors undoubtedly saw EMU as a way to advance the cause of European integration but he was not an avid federalist, passionate about a United States of Europe. His objections, both pragmatic and philosophical, to European federalism also help to explain his caution about highly centralised approaches to decision-making when developing the embryonic ‘Euro Area’. In 1988, at the EC Council meeting in Hanover, European leaders authorised Delors to chair a committee of central-bank governors and other experts to propose concrete stages towards EMU. Here, again, he showed his ability to forge compromises between proponents of different economic approaches, in particular building bridges between France and Germany.[92]

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.