JPRS ID: 9775 USSR REPORT MILITARY AFFAIRS

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• Content Type: REPORTS

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- JPRS L/ 10037
8 Qctober 1981
West Euro e Re ~rt
p p
CFOUO 51 /81)
~ ~BIS FOREIGN BROADC~IST IN~ORMATION SER~lCE
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JPRS L/10037
' 8 October 1981
_ WEST EUROPE REPORT
(FOUO 51/81)
CONTENTS
THEATER FORCES
FRANCE
SS-20 Seen as Modernization; Pershing 2 Seen ae Eacalation
~Francois Schlosser; LE NOUVEL OBSERVATEUR,
29 Aug-4 Sep 81) 1
Divided, Neutralist Views Said To Prevent Re~listic Defenae Policy
(Jacques Julliard; LE NOir?EL OBSERVATEUR, 29 Aug-4 Sep 81). 7
ECONOMIC
FEDERAL REPUBLIC OF GERMANY
Trends in One Hundred Largest Enterprises
(CAPITAL, Aug 81) 11
ITALY
Finance Minister Interviewed on Taxation
(Franco Reviglio Interview; IL MONDO, 28 Aug 81) 16
Need To Revise Law on Flight of Currency Seen
(Vittorio Barattieri Interview; IY. MONDO, 28 Aug 81) 21
UNITED KINGDOM
'TIMES' Voicea Concern Over UK Monetary Policy
- (Editorial; THE TIMES, 25 Sep 81) 211
- a - [III - WE - 150 FOUO]
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- POLITICAL
_ FEDERAL REPUBLIC OF GERMANY
Polla Favor Good Relationsk~ip With United Statea
(DAS CAPITAL, Aug 81) 31
FRANCE
Effec,ts of ConvenCional, Nuclear Strength, Detente on Defense
(Pierre Lellouche; COMMENTAIRE, Summer 81) 38
Social Democrats Publish Draft Conetitution
(Julian Haviland�, TI~ TIMES, 23 Sep 81) 49
- b -
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THEATER FORCES FRANCE
- SS-20 SEEN AS MODERNIZATION; PERSHING 2 SEEN AS ESCALATION
Paris LE NOUVEL OBSERVATEUR in French 29 Aug-4 Sep 81 pp 37-39
[Article by Francois Schlosser, chief foreign editor: "Will Europe Burn?"]
[TextJ Will Pershing 2 missiles be deployed in NATO countries to
counterbalance the Soviet SS-20 missile threat? Francois Schlosser
explains why he believes moving a major piece on the chessboard of
nuclear terror would have very serious consequences.
"You blow up my gasoline dumps; I atomize your marshaling yards in response.~ You then
burn six of my weapons manufacturing plants; so I destroy two of your headquarters
- and four airports. vou blast three of my missile sites, I vitrify two of your naval
bases..." Deterrence has failed. War has broken out in Europe. Soviets and
Americans continue to escalate in tit for tat fashion. It's a question of who will
lose their nerve first and hesitate to raise the level of violence another step
closer to the apocalypse. Both superpowers are now exchanging "Eurostrategic"
blows: SS-20 missiles launched from the USSR against Euro~ean targets; Pershing 2,
Polaris, Poseidon, and cruise missiles f3red in Europe aga:Lnst targets in the Soviet
Union. After a few days of such exchanges, Europe is burnt, radioactive, and fatally
wounded. T'he USSR has already suffered heavy damage. The United States is unscathed.
_ What will happen? Will the two superpowers give up or resort to their intercontinental
weapons?
As Europeans, however, we are no longer interested in what happens next. Consequent?y,
let us come back in time to the present when it is still possible to ask ourselves:
What is happening today? Soviets and Americans are both arming themselves with new
highly accurate weapons enabling them to fight a limited nuclear war in Europe.
To cope with a qualitative leap forward made by the Soviets with the SS-20 missile,
- NAT(1 has decided to make its own new qualitative and quantitative leap forward by
deploying in Europe, beginning in 1983, American Pershing and cruise missiles capable
of striking Soviet territory. This was a momentous decision.
Throughout Europe, all those persons who question the wisdom or quite simply the
rationality of this NATO decision find themselves in a ticklish position. They are
suspected of pacifism, anti-Americanism or neutralism. It is astonishing that a
debate of such urgency and gravity, because it direcily involves Europe's future and
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survival, should have so grossly dodged and confused the issue and degenerated into
invective. A clear explanation for the benefit of public opinion ought to be
- possible. But there has been no such explanation. Yet there are highly qualified
men, including experts and top-level military officials, who consider this rearmament
_ unnecessary or the method chosen--deploying land-based missiles on European soil--
unjustified. Chancellor Schmi3t himself has expressed some personal reservations
~ibout the nature of the weapons chosen. Nevertheless, officials have been rushing
implementation of this decision with almost frantic doggedness, openly fearing that
negotiations with the USSR might delay it.
This is a truly disquieting situation. First of all, because of the way only one
weapon was chosen and isolated--the Soviet SS-20--and portrayed as a sort of mythical,
diabolical missile. The SS-20 missile is actually derived from an older version,
and admittedly its.accuracy and the miniaturization of its warhead have been greatly
impraved. It is not a very mobile system--if highly mobile, it would be invulnerable--
Y~ut a semimobile weapon requiring large concrete emplacements built in advance, and
l~ence located by satellite and easily targeted by existing Western missiles. It is
calculated that there are currently some 30 of these launch sites west of the Urals,
all of them ideal and highly visible targets for a small number of NATO missiles.
The Pershing 2 missile the Americans want to introduce in Europe is 10 times more
accurate and its warhead is 10 times more miniaturized than the SS-20.
Nevertheless, some well-meaning individuals are doing their utmost to convince
Europeans that this time they are facing an ogre that is going to devour them.
The petty details of the intrigues that led to NATO's decision to rearm are most
enlightening in this regard. In the beginning, nobody had taken any notice of the
SS-20 missile, the latest addition to the Soviet arsenal, detected for the first
time about 1975. It is now already more than 20 years ago that the Soviets deployed
some 700 medium-range SS-4 and SS-5 missiles in the USSR, all aimed at Europe.
They had virtually been forgotten. They became old, and the Red Army, fully occupied
in more urgent tasks--closing its ICBM gap with the United States--let these 700
1-megaton dinosaurs rust in their silos. Each one resembles a sort of factory;
they burn only liquid fuel and handling them is an extreme].y time-consuming and
clifficult task. The International Institute for Strategic Studies in London reports
that scarcely 100 of the approximately 400 SS-4's and SS-S's still operational are
likely to reach their target. The others would explode in their silos at the moment
of ignition or vanish into thin air.
In the meantime, NATO countries have assembled, over the years, an altogether
respectable medium-range (Eurostrategic) nuclear arsenal, one capable, in any event,
of blasting European Russia back into the Stone Age. This array of weapons exists
precisely to counterbalance the Soviet SS-4's, SS-5's, and medium-range bombers
- menacing Europe. Mc~reover, NATO did not refrain from continuously upgrading these
weapons consistent with t~e latest state of the art. This arsenal consists mainly
of bc~mbers capable of carrying nuclear weapons and stationed on American forward
bases in Great Britain and aboard aircraft carriers in the Mediterranean, as well as
several hundred nuclear warheads on submarine-launched MIR~1ed missiles. To which the
Soviets add-to depict the magnitude of the Eurostrategic threat from their point of
, view--the nuclear forces of Great Britain and France.
But of all the NATO Eurostrategic forces, the Kremlin views the American forward
bases as the most acute threat. In fact, the Soviets see them as an extension of the
American strategic and intercontinental arsenal, and capable, therefore, of tipping
the overall balance in favor of the United States. This is why they have constantly
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insisted, from the very start of the SALT negotiations, that these weapons be taken
into account. Indeed, on several occasions they have proposed talks on the limitation
of atomic weapons in Europe. For a long time, the Americans ignored such proposals
until finally they agreed to discuss these Eurostrategic weapons in the future SALT 3
_ negotiations. But everyone knows what happened to SALT and to arns control in
- general: Reagan pi~geonholed them.
Gamble on a Bluff
The Krem?in began modernizing its Eurostrategic arsenal to strengthen it, of course,
but also to have something with which to bargain when the inevitable negotiations
- on medium-range w~apons in Europe opened. For the Soviet SS-4's were falling to
pieces and had really ceased being a serious threat. Modernization meant incorporating
the last word in technology. The West which has not kept a single missile as
obsolete as the SS-4 in its arsenal, knows a thing or two about modernization.
Thus the SS-20 was ~orn, and now ~here are some 160 of these missiles targeted at
Western Europe, gradually replacing older missiles. What is the actual scope of the
threat they present?
In the flood of false data and doctored statistics that constitute the essence of
NATO's case in favor of its own weapons modernization program, there is one
argument that is worth serious examination, the argument of "controlling escalation."
Being able to "control escalation" means having the capability of matching the enemy
bloc~ for blow, but with weapons of the same caliber or same level. If the Red Army
begins to use its SS-20 Eurostrategic missiles and~if the President of the United
States has no equivalent response, he is unable to control escalation. Because there .
is a gap in his overall defense capability, he is compelled either to stand aside
or skip several rungs in the ladder of escalation and use his ICBM's. In so doing,
however, he will inevitably draw nuclear fire on American cities. To avoid being
faced with such an agonizing choice, the Americans will be obliged, even in peacetime,
to be prudent an~ very flexible in the event of a serious crisis. In other words,
the USSR has a military advantage it can exploit politically.
Another "iffy" scenario that would confirm this conclusion: the USSR, thanks to the
accuracy of its SS-20's, eliminates one or more NATO armies by destroying all
important military objectives in a sur~rise attack. Having no weapons equivalent to
the SS-20's, the Americans, in this case too, could only resor*_ to their ICBM's,
thereby triggering a global holocaust for the sake of a Europe that is already lost.
Such an American response is not credible enough to deter the enemy. Conclusion:
in both of the above cases, the USSR stands a good chance of winning a nuclear war in
Europe. Consequently, in peacetime, it can hold over the West the threat of a
victorious nuclear war against Europe and use this threat to derive political
advantages therefrom.
This highly sophistical argument ought to convince the most skeptical minds. One has
to assume, of course, that the Soviet leaders, who only ~ust recently commemorated the
40th anniversary of Hitler's aggression--which cost 20 million Russians their lives--
are prepared to gamble the survival or almost total destruction of the USSR and its
people on a bluff. Admittedly Europe is, of course, a very nice prize.
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Yet how could the Soviets possibly carry out such a bluff without NATO countries
- having responded with all of their weapons by launching retaliatory strikes against
Soviet territory? Of what use then would be all those bombers on American forward
bases and aboard carriers in the Mediterranean, and especially all those invulnerable
- American and British submarine-launched missiles assigned to the defense of Europe?
Have not all of these aircraft and missiles been deployed specifically to preclude
Americans from having to use their intercontinental arsenal in the event of a
- Soviet attack, even one on a large scale but limited to Europe?
Unless they were collectively stricken with a fit of madness, Soviet leaders cannot
take that risk nor c!elude themselves into thinking such an attack would go unpunished.
Therein lics the crux of the problem. On the one hand, the USSR is credited with a
disarming first strike capability it really does not have because it cannot cripple
all of NATO's available Eurostrategic forces by surprise attack; on the other hand,
~peculation about totally irrational behavior by the Kremlin is used as the basis
of an argument which has all tha appearances of exceptionally rational sophistication,
namely the threat of a victorious nuclear war by the USSR against Europe.
In reality, this argument was elaborated ex post facto to justify deployment of the
new U.S. missiles in Europe. [Jhen in 1977, Helmut Schmidt first called NATO and U.S.
officials' attention to the modernization of European-oriented Soviet nuclear weaponry,
it was in the hope of getting the two superpowers to negotiate about all of the
so-called Eurostrategic weapons. The German chancellor, noting how the Soviets were
modernizing their arserial with SS-20's, believed European inferiority had to be
offset by new means, but only if (future) negotiations failed.
The Americans were initially reluctant. But Schmidt's remarks had not fallen ~n deaf
ears among the "defense community's" prolific multitiide. That community encompasses
all those persons who are directly or indirectly engaged in military matters, whether
it be in industry, laboratories, universities, research institutes, financial
institutions, or government departments and agencies. For this particular military-
industrial-university microcosm, Schmidt's misgivings opened unexpected prospects.
"Made-to-order" doctrines were very quickly prepared to rationalizP the idea of
deploying American ground-launched cruise and Perstiing 2 missiles in Europe, missiles
that were already in a very advanced stage of development.
Battlefield a la Carte
~dhen Helmut Schmidt learned that they were going to foist on him something Konrad
Adenauer had always managed to avoid, namely basing in Germany nuclear delivery
vehicles aimed at the Soviet Union's territory, he rued his earlier remarks and tried
to convince the Americans to drop their p1an. He preferred a naval solution, arguing
that they coul.d very well increase the capabilities of the submarine-launched missiles
assigned to the defense of Europe, or else build new missiles to be based at sea in
submarines or on surface ships. It was too late, however. The Americans now wanted
bround-launched missiles to be based in Germany.
_ At this point, some readers might interject: "Quite so! the case presented by those
defending resumption of the arms race by deploying American Pershing and cruise missiles
may not be clear; it has too many gaps, too many obvious falsifications, too many
_ cleverly disguised weaknesses. But why make such a fuss when there are already so
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many nuclear �~*sapons in Europe, on both sides? Why fiddle-faddle ovea~ the few
_ hundred additional weapons the Americans want to store here? It can ~only make the
Soviets reflect a bit more if, by misfortune, they are ever tempted to use the
'unthinkable' bluff."
Unfortunately these few new missiles do ctxange everything, nor is tYiis fact expla3ned
to European public opinion. They constitute a critical change of dfrection, the
start of a new technical-military race, a specific option on a certain kind of fu'ture
for Europe. First, it was not by chance that the Americans, initially reluctant and
subsequently interested, suddenly became ada~atit on the issue of basing these mis'siles
in Europe. The fact is that America greatly changed in the space of a few months~.
The new administration adopted an idea that ha~ slowly matured under the two
preceding administrations, that of a limited nuclear war that can bA won. For Re~agan,
_ Weinberger, the Pentagon's boss, and Haig, the se~:retary of state, whose course of
action is one of confrontation with the USSR, everywhere and in all fields, war i~n
Europe has ~ecome one hypothesis among others.
In the view of this administration which is preparing ~:o spend 1.5 trillion dollars on
defense in 5 years, and whose thinly disguised objective is to reestablish America's
military and strategic superioxity over the USSR, deplAyment of Pershing 2 missiles in
Europe has become more than a test. It is a highly a~t.tra.ctive venture, and
- unexpected short cut to bringing the USSR to its senses� This weapon system's
capabilities, accuracy, and speed are such that the t1SSR h.ss no means of countering
it and not even any warning of its launch. It can strike at targets in the heart
of European Russia ~aithin 5 or 6 minutes. And this time, the roles are reversed.
To respond to these missiles launched from Europe, the USSR is the one that would
have to decide whether or not to strike at America, and thereby take it upon itself
to bring about the apocalypse. As for the Pershing 2, its extreme accuracy and
miniaturized warhead actually enable it to follow a"su~rgical strike" strategy.
What Europeans can fear is that the United States--after having added this European-
based "wonder weapon" to all the other means it already has of containing the USSR--
may also be tempted, if not to use it, at least t~ ~hreaten to do so, even in
situations arising from conflicts outside Europe. T~is is not a baseless fear.
One need only listen to top-level U.S. officials as they explain their new doctrine
of military rivalry with the Kremlin: America will not permit others to dictate the
battlefield; if the USSR attempts to intervene in a region of the globe where the
United States finds itself in ar~ unfavorable military position, it ~aill retaliate in
other theaters of operation in which it holds an advantage. For American strategists,
the Pershing 2 will be but one of a series of options. Henc~ by the force of
circumstances, its function will be much broader than simply defending Furope.
Choosing this weapon sqstem prima�rily means, therefore, chooging a definitive
transfer of Europe's control over the vital issue of security. For Europeans, it
also means the guarantee of greater insecurity. And all this in the name of a
concept no one has sought to cZarify, the concept of "Eurostrategic balance." This
is a notion that emerged as if by magic in the vocabulary o� the experts. Is
superimposing European-Soviet parity upon American-Soviet parity a conceivable
approach? How can rhe Sovie'ts, be prevented from including in the global strategic
balance all American weapons, even if they ar~ deployed in Europe, when those
weapons are capable of s.tri'king the USSR? And if, for their part, Europeans truly
- want a balance, shouldn't they include in their calculations all of the Soviet
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weapons capable of striking Europ~ as well as the United States? In that case,
what would the implications of a"Eurostrategic balance" be? Eurostrategists
' haughtily neglect to answer these basic questions?
Is tliere any good reason for Europe to rush :tnto a new arms race without first
trying to clarify the issues, an arms race which guarantees it, at best, increased
dependence on America and, at worst, nuclear suicide, the date and hour of which
it even will not have been able to choose?
~ COPYRIGHT: 1981 "le Nouvel Observateur"
8041
CSO: 3100/965
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THEATER FORCES FRANCE
~
DIVIDED, NEUTRALIST VIEWS SAID TO PREVENT REALISTIC DEFENSE POZgCY
Paris T.E NOUVEL OBSERVATEUR in French 29 Aug-4 Sep 81 p*~ ~iU~41
[Article by Jacques Julliard: "The Blind Supporter~ of Detente"]
[TextJ We must put an end, as Cornelius Castariaaifs does in his latest book, to the
idea that the Soviets are defending themselves somek~ow or other against a hostile
~ world that is encircling them. The truth is that the Saviet Union is on the offensive
everyiahere. And the time has come to draw the appsopriate conclusions from such
Soviet action.
The great debate of the 1980's will initially be ra~.litant and then economic.
Identification of the authoritarian regimes of the East with socialism, that great
hoax of the past half century, is complete3y fading. So much the better for socialism.
So much the better especially for the countries of the Ea:~t t:hat up to now have not
even been entitled to acknowledge their misf~rtune and are n~~w at the dawn of a great
revolutionary period. Like it or not, Eastern Furape is wl-?cre the storm belt is
uow located; and also where the future of ttne workers "self-management" movement lies.
Led by men who have risen from their own ranks, Polish workers have thrown off the
yoke. Supported by a Catholic Church that has never stopped fighting Stalinism, an
entire people began marching forward, thereby recording the most glorious date in
the iiistory of the proletariat since the Commune of Paris: Gdansk, August 1981.
The band of tyrannical old men ruling over Moscow knows that its system of domination
is doomed in the somewhat long run. It fears the contagion of the Polish workers
movement and is hesitant about the best way of suppressing it. Therein lies one of
- the main reasons for its present militarism and expansionist tendencies. A threatened
regime reacts by taking the offensive to evade that threat, and also by taking the
offensive outside its borders. That is why the period ~ahich opened with the invasion
of Af~hanistan and the continuous threat the USSR holds over Poland's internal
independence is the mosc dangerous to the peace we have known since World War II.
'Hardware'
There is absolutely no doubt that since the American defeat in Vietnam, the USSR has
taken the offensive in most regions of the world. Carter's idealistic pacifism--
somewhat reminiscent of t:~c a~ing :'.oosevelt's version, but within a context much less
favarable to the United States--did the rest. Taking advantage of the American
r.~etreat, the USSR consolidated its gains (in Africa and Asia) and built up its
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military strength (in Europe). From that time onwards, American public opinion was
critical of Carter's policy despite its definite successe~ in Latin America.
And today Brezhnev is in d ~ery poor position to denounce Washington's "cannibalistic"
' (sic!) tendencies. Indeed he, Brezhnev, together with Ayatollah Khomeyni, was
Reagan's leading and most effective political campaigner. Reagan is now taking ug
the Soviet challenge, and the world has ent.ered a new cold war phase.
_ The foregoing cuns~derations will help to better understand the subject.and import of
Cornelius Castoriadis' latest book "Devant la guerre" [In.the Face of War] (published
by Fayard). Be careful, "devant" definitely does not mean "avant" [before]!
. This is somewhat reassuring. Nevertheless, Castoriadis' numerical assessment implies
that in the fi~ia? analysis the rati4 of forces overrides all other considerations in
East-West relations once again. Not that the economic war has lost its importance
nor tt~at the North-South confrontation between rich and poor countries is losing its
position as a topic of current interest. It is a fact, however, that in the world
= of 1981, tiie detailed breakdown of military strength, of "hardware," or "dead forces"
as Castoriaciis also calls it, dominates the diplomatic scene.
After a detailed ~nalysis supported by recent data compiled by the International ,
Institute of Strategic ~~udies in London, the author concludes *_hat there is a ~
growing imbalance in the ratio of forces in favor of the Soviet Union. Like all data
related to classified military information, the data used by the author may be
con~estable. I believe, however, that its general thrust itself is incontestable,
namely that the USSR is steadily gaining ground. Although in the area of strategic
nuclear weapons--ICBM's covered by the SALT discussions between the two superpowers--
American inferiority in tonnage is tempararily offset by a superiority in number
- of warheads, the same is not true for medium-range missiles that have an annoying
_ prupensity for deployment in the European theater, her.ce tr.eir designation as
Euromissiles. The gradual replacement of obsolescent Soviet equipment--SS-4's and
SS-5's--by multiple-warhead SS-20 missiles creates a serious military imbalance in
Europe, one that Francois Mitterrand had the courage to denounce strongly before and
after his election as president. Hence Moscow's ~itter remarks about him and
- accusations that he is an extreme Rightist. If unquestioning trust in the Kremlin's
peaceful intentions is the criterion of a parson's position on the Left-Right axis,
then tlie President of the Republic is indeed on the far Right. Brezhnev's moratorium
proposal made at the ?.6tti CPSU Congress would render negotiativns thoroughly unequal.
Under the terms of the moratorium, Soviet SS-20 missiles would be allowed to remain
deployed but NATO would be prohibired from responding by basing Pershing 2 and
_ cruise missiles in Germany, Great Britain, Belgium, and the Netherlands. Brezhnev's
proposal must be taken for what it really is, a propaganda gesture.
The Soviets do, of course, point out that while improving the quality of their
missiles, the current modernization program does not increase their number.
They pretend to forget that at the time of the SS-4's and SS-S's, NATO had, as a
counterbalancing force, Thor and Jupiter missiles based in Great Britain, Italy, and
Turkey, and has withdrawn them since then in favor of missile-launching submarines.
But above all, the Soviets "forget" that back then their superiority in Euromissiles
was for the purpose of offsetting their inferiority in ICBM's. Lacking the capability
of striking the U.S. homeland, the Soviets were taking Europe as hostage. Now that
the ICBM gap has been filled and the USSR can strike directly at its main adversary,
Soviet predominance in the European theater can be interpreted in no other way than
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offensive and a threat to us. Likewise, we ~oubt that the 50,000 tanks the 5~viets
_ have accumulated are ~esigned for a landing on the New Jersey coast.
R~Eusal to be Informed
The neoneutralism now spreading on a foundation of antinuclear pacifism thraughout
ttie FRG, Great Britain and the Netherlands--and which the PCF and CGT are trying to
establish in France--obviously would deadlock any change in the ratio of forces on
European territory, a ratio that is currently in favor of the Soviet Union. The 1950
Stockholm Appeal was a propaganda-inspired hoax. American supremacy limited its ~ffects,
however. It might even be argued that the appeal cnntributed to restraining possible
American preventive war temptations. Today, however, neoneutralism, far from serving
- as a counterbalance, actually increases the imbalance. Under these circumstances, we
may rightly conjecture about the reasons this neoneutralism evokes such an e~ho in
neighboring countries.
]'ir5t, the desire not to be informed. ~uropean public opinion in its legitimate
desire Lor peace has become so accustomed to viewing detente as a permanently
_ established Fact that any adverse information is automatically ignored or underestimated.
' This would not be the first time that blind pacifism has become militarism's
unwitting auxiliary. Who today would venture to state that the USSR wants war?
- No one, and rightly so. As Castoriadis explains, the USSR does not want war but
victory.
The fact is that USSR's postulate of pacifism is the last refuge of progressivism in
dissaray. It should be clearly understood that the USSR is not a proletarian state
but a police state. ?rivilege reigns there, not socialism. The "gulag" is not a
mistake made by the system, it is one of the system's foundations. Pacifists tell
you: "That is irunaterial, Soviet leaders, pressured by their public opinion;~~
(no joking!), "do want peace." Indeed, it is this morbid obsession with peace and
security that explains a few rare incursians made by these oversensitive leaders
into Hungary, Czechoslovakia, Afghanistan, and tomorrow perhaps into Poland. For what
ptirpose? This large country, one of the world's two most powerful, is also, my word
of honor, the filobe's most timorous country. It trembles at the mere rustling of
leaves. Hence its morbid fear of encirclement, which unfortunately the roundness of
the earth cuntinues to foster. Alas, we just have to accept and deal with the fact
that as long as they have neighbors, these unfortunate people will not sleep in peace.
Alain's Mistake
Lastly, the ambivalence of European-American relations adds to this climate of
resignation disguised as optimism. As concerns Atlantic relations, we have entered an
- era of suspicion. Europeans accuse Americans of cynicism. Americans suspect
E~iropeans of appeasement, another riunich. To sum up the situation, we could say that
when Americans Iook as if they are going to "decouple" their defense from Europe's
defense, they are accused of abandoning Europe; when, on the contrary, they couple
the two defenses, they are accused of taking Europe for a battlefield. This shows
that Atlanticism and neutralism are not two opposing attitudes but the two
com~lementary sides af Europe's one and the same powerlessness.
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The truth--and on this point Mitterrand's views are akin to De Gaulle's--is that
only renegotiation of the Atlantic Alliance on the basis of equality of duties ar.d
- responsibilities would enable us to get out of an impasse that the cold war has
made extremely dangerous. But this presupposes--let us not be afraid to admit it--
a common European political will which hardly exists.
In short, I view as well-founded the diagnosis which is the very heart of Castoriadis'
book. The USSR is and will increasingly be a stratocracy, that is to say a military
government that deliberately sacrifices civilian objectives for an indefinite build-up
of its military forces with the aim of increasing their offensive capabilities.
_ The author offers a few impressive illustrations of this trend. All examples have
to do with the creation of a veritable military society whose efforts are totally
_ directed to arms production, a society entirely separate from the "civil" society.
F.verything in this military society is different: working conditions, wages,
productivity, and the quality of its products.
It is not always wise to presume an adversary has the same type of rationality as
onese].f. Yet this was the postulate which Alain, for example, was not afraid to
apply to Hitler himself on the eve of World War II, in order to justify his own
pacifism. (There is no assurance, as Castoriadis notes, that the term "unacceptable
damage" means the same thing to Westerners and to Soviet leaders). Granted the
present situation is not the same as in 1938. Nevertheless, the past does contain
- a lesson that is still valid, namely that optimism, when it claims to replace~
rigorouG analysis of the facts, is the primary form of acquiescence to misfortune.
COPYRIGHT: 1981 "le Nouvel Observateur"
80 41
CSO: 3100/965
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ECONOMIC FEDERAL REPUBLIC OF GERMANY
TRENDS IN ONE HUNDRED LARGEST ENTERPRISES
Hamburg CAPITAL in German Aug 81 pp 26-27
[Text] The weakened economy is not reflected in the
1980 sales figures of large German enterprises. Almost
all of them showed increases over 1979. The rates of
increase, however, are deceptive with respect to the
earnings picture of most companies.: In general, profits
_ declined.
In the middle of May 1981, when Dr Gerhard Prinz, head of Daimler-Benz, and
Edzard Reuter, his chief financial officer, presented to the economic press
the 1980 annual report, the journalists registered more or less casually that
the Stuttgar~ automobile plant had--once again--increased its~sales. Since at
that time only a few financial statements of German corporations had been
puU lished, the actual quality of the Untertuerkheim final balance remained
hidden. Anyway, Daimler-Benz is one of the few companies that was able to
increase its earnings over 1979.
Only later it b ecame evident: The majority of the companies had to be satisfied
with profits that were lower than last year's. A few of them even registered
substantial losses. Among the biggest loser.s were firms which, like Daimler-Benz,
are building automobiles. The list of losers is headed by the Cologne Ford Works,
which experienced a decline in earnings of DM946 million when compared Go 1979.
The next highest loser, which followed at a considerable distance although losses
were also high, was the second U.S. automobile enterprise: The Adam Open AG
in Ruesselshei.m recorded earnings that were DM664 million lower than last year's
figure. Even the profits of the Volkswagon Work in Wolfsburg were down by
DM346 million when compared to last year--as a result of sluggish sales but also
because of extremely poor business in Brazil, in the United States and for the
office-machine subsidiary of Triumph-Adler. The decline in automobile sales
- did not affect the Bavarian Motor Works in Munich, although they were out-
distanced by Daimler-Benz.
Among the few companies that increased their earnings in 1980 also are the
German Gold and Silver Separation Installation, the Metal Company and the
PREUSSAG Mining and Metallurgical Corporation. Apparently these companies
were particularly adept at profiting from the ups and downs of inetal prices.
In addition, they benefited from the strength of the American dollar and the
English pound, which increased their earnings consj;derably compared to 1979.
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The remaining German enterprises--apart from a few individual cases--had to present
their stockholders or parent companies with emaciated profit accounts for 1980.
Some even had to report losses. The industrialists were quick in locating a
scapegoat for this negativE development: steep price increases for primary and
secondary energy, of course. The Association of Chemical Industries, for
instance, is complaining about a"price jump of between 25 and 30 percent" for
the most important raw materials (primarily crudp oil) and energy.
Friedrich Karl Flick, who manages a wide variety of industries and services
(Feldmuehle, Dynamit Nobel, Buderus, Krauss-Maffei, Gerling Insurance and others7,
cites a figure that sounds ominous, but it represents the energy consumption
necessary for production: "In spite of all canservation efforts," energy costs
in his empire rose by approximately 16 percent. At any rate, it represents an
increase of DM75 million marks over 1979, wh~.ch had to be paid by Flick's
Feldmuehle and the other concern companies ir.i 1980--while the annual prof it
amounted to slightly more than DM77 million. Ro~f Sammet, manager of the
Hoechst AG, is concerned about the rapidly increasing energy prices, wondering
serio usly wheth er in the long run the FRG could be the right location for
~ chemical industries.
As is the case with respect to increased srales figures for 1980--which frequently
even reach 2-digit growth rates--sales prognoses or estimates for the current
year are clouding the earnings picture of the German industry. Because almost
all enterprises are expecting higher or at least unchanged s~les. Continuing
increases in costs, frequently paired with pr3ce concessions, however, leave
little hope for improvement with respect to earnings. The steep decline in
profits continues. Concern Manager Flick describes the situation in the following
verdict: "Compared to 1979, 1980 was unsatisfactory; compared to 1981, it was
still acceptable."
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~ k~q it..r Flr~~ Snoc~e Un~~~: b ANarr~r Ye.cYY!� ~u! p~q Pu~ Fk~~ Bru~\~ U~utt 1~ A~der~ry BncA~h re~d
IvIW 1~7t Mllllak~ S ~n ( ~ ~1~~e 19~1 IaN I97f Mllllwe~ def ~F~u IYtlI
h1uY L~iultd if~B Mul U~u~in IYNO
- - 1~ Puan~ ~ I~ Pra~n~
I I bebe ~1 Enc~./bl/Chem. 41954 +1i,6 83936 - >S A fa-Gevaert Fao 4401 +21,7 31799 +
: Volk~Wd~cn ~'-H Auto 33:88 + 8.1 258000 + S3 { utsche Phili s(9 )Elekcro 4387 + 4,1 280U(! +
3 4~Sicmcns 29 Elektro ~31900 +14,1 344000 + il 45 Mannesmann ROhren 4354 - 3,5 29839 +
.t S U~imlcr�Hent~' Aulo )105~ + U 5 183392 + ~ yRahrenwtrke ~9 ~
S 1~ ~ASF "41 Chemie :999i + 70 IIb518 + ~S 51 BAT 9 Zi aretten 4128 + 3,4 3611 +
6 l~ Hocchs~ ___j Chemie :9915 +105 186650 + 56 56 VE�W (9 Ener ie 403Q +18,6 7461 +
_ 1 7 Baycr ^ _w Chemie ?8R:6 + 10.9 1616J9 + 57 53 BBC Elektro 4018 + 1,3 376l5 +
_8 K Th~escn t,~ Stahl '~I:B + 70 152089 + Sg 57 KWU 9 Krrfiwer?e 3770 +23,4 13600 +
10 ~~cuuchcBP SS MincralDl ~":7: +I?,0 IU102 - S9 39 SEi, 4)Elcktro 3351 + 7,5 33195 +
10r 9 \'cbe OI~ ib Chemle 19685 + 19 I 2I962 - EIC (10 Minoraltll ) 306 + 12,0 980 -
, 61 69 Meuenchmitt- Lufl�/Raumfahn 33U~t +24,2 26287 +
II IT 1R~1'F. 7 Ener ie 18..63 +16,6 6K00~ + (10 )
I? ~ I t Fsso '4H Mincra101 17694 + 15 8 156'7 - db~kow�[�:ohm
I1 ~I4~ ~cuischeShcll ~i9 ~linaralDl 17104 +1a,7 4878 ~ 62 68 Scherin 10' Pharma 322U +19,1 ?1294 +
14I II ~uhrlcohie_ _i40 Hcr~hau _ 164?? + I: 136816 - b~ ~~ontinentalGummi Reifcn 103 3160 +20,5 30727 _
IS In Guielu~ffnun~+hinl I~u>rhinen 15417 +1J,2 8b106 + 6a 61 Stahlw.ROChlin~- Stahl 7 30J0 + I,0 25770
_ 8 urbech
I~~ 15 AE(~-lclelunkcn(!~' ~Ic~~ro ' 146R1 + 3_3_ 138100 +'i 65 95 Popierw.W~ldhuf� Papie~lUS 2961 +19,8 11299 -
17 ~ I7 FnrJ KruLp _~~~_S Stahl/Wer(t 13919 + 8,9 83706 + ~ H~ schaffenbur _
IB IN rAtannc.mnnn t~~ R~hren/Masch. 111119 +~4 103491 + I~ 6 ~.Nesde�Gn, e Lebensmittel 294? + 6,3 12700 +
Iv 19 L�,icl(Ilocsch (~,5)Stahl 12794 + 7,4 46600 67 65 VAW Aluminium 2931 + 7,7 16973 ~
Huuguccn~l __J__ , 68 67 utSCheSulve Chemie 108 2886 + 67 13870 F
-
'_U t~�~ I~osch Ltl Flekiro _ I I809 + 93 120020 + ~ 69 - ROchlin 109 Maschinen 2884 - 18700 +
:I I 23 ' Uue~~di _~t, i~' Fahaeu~c~Elektr 104(KY +100� 70000' 7U 13 Boehrin erln dh. Pharma 286d +13,2 20985 +
- )~lnallgaellscha~i}} NE-Mctalle _ 9417 + 90 272:0 + 72 Mannesm.Dema Maschine :822 + 8,9 'J000 +
2) 5!( ~PreulSag _S4_)NE�Metalle _ 9412 +IS3 21283 + 72 ~ Oetlcer Lebensmi[tel 2800` + 3,0" I5000`' +
?4 ?U Adamt~rcl _ 5( Awo 9224 -ISS 59876 + 73 ~q D namicNobel Chemie 11 27Y0 + 8,7 IJ802
?5 ?9~1'~7)ruuclicTcaac ~I Minerrlffl 90:6 t?27 4827 - 11~) Ktlhltechn./Anl. 2750 + 5,8 1954`3 +
74 71 Linde ~
_26 26 Vlintcrshall 5~Mineralbl/Frd rs SR50 +1:3 16924 = I 71 62 ManinHr~~kmann Zi are~ tten(l15) 2764 - 0,1 4362
27 33 ti+~~n~io~i ~ S5 ~~+~~~�aiei _ a~o3 +29,0 2415 76 64 Grundi Elektro ~1~- 2740 - 1,2 30767
_:B =1( ~rd�Werke t~Awo 6691 -20,3 49767 + ~ j~ 76 Stahlw.rke Slahl 2671 + 9,3 1715U -
?a tb( ~3c ussa Chemie/Metalle 6647 +/27 20569 85 PeineSalz itter
-
)0 )0 Sal~nur___~ Slahl/Werft BS78 +192 56574 ~g 7~ r,enEdelstahl Stahl U18) 2619 + 64 15794
31 ?4 FIic1 (i7 Chemie/Pnpier/ 8427 - 3,6 46891 + 79 79 Stte~e Bau 2591 +14,R 19193
Maschinen 90 100 Nodd.A~narie NE�Metalle 12 2506 +375 3339 -
3? ?B BMN' ~8 Auto R117 + 9,6 43241 +'y~ gZ gyrcrnwerk Ener ie ~zl 2441 + 81 7138 +
11 ~?7~ ~~cuuche Unileve(i x.ehens-/N'aschm. K(~95 + 63 35334 v q` 77 Bi fi~ er + Ber er Bau 1 2439 + 6,0 2~970 +
)a tl( `1A~IAN f~el Fahncuge/Masch. 7633 +108 63600 83 g4 Brsch-Siomene� Elektro 12 2437 +II,O 13410 +
15 t: HcnLcl ~G I Chemie 76:9 + I I 6 33567 87 H ius erite
}n ~ i.t11~3M firutschlan f,: )F.Iek~roniC ~3A0 +119 26362 + 84 88 S~e~ Ener ie 12 2431 +180 i074 +
t7 37 Phil~p~+ Nolrmem~b 1 au 6266 + B S 43100 - I 85 78 P~I cam Schell latten 1 2417 + 6.2 U 182 ~
jg iytll~~u Siahl b4 Stahl 6164 + 16 S 40889 - i g6 12 cdalchemie Palrochemi 1 2d05 +67 7 3036 -
- _ ..~'P~-~
~U al Hochucf ~ i 1 dau 6U79 t 21? 31083 87 80 T F Friedrichshafen Geeriebe 2319 + 6 I 23964
40 ty-~keemisma (Gf Zigareuen/Bier 600? - 63 111U3 - gg 9g V'.C.Hetaeus NE�Metalle 2J56 +28,7 630tl +
~11 t1t �~ul+-Grupre (6% Chemie 5699 + 4,0 226a2 - gy gy( ~Yrl�Zeis~�Stiftun O ik/Foto(129) 2)39 + 8,1 30651 -
a~: ~tl f'reu[Senclcltra 6t Energie 5626 +II I 15014 90 t erswer~e Tearchemie 2314 +1J,7 I21G7 +
43 f aj io~?�e~~we~t~~ Stahl 5561 +10,9 29899 ~ 91 92 'FAGKu elfischer Wglzla er 2291 +15.2 30200 -
~t4I41 7f,1d(hCf~WOflit 7( Ber~bru 5512 +102 3?584 + 92 8) Ma irus�Deutz Frhrzeu e 2283 + 3,3 11870 +
~S l$4 UR ~Vb1Cling_~I~ hlineraltll 4920 +31 3 2939 - 9; 97 Rhe nbraun Ber beu 226J + 16,9 t66J1 ~
qb I 4n Audi NSU 7' Auio 4903 - S 2 29065 + 94 87 FreuJenber Kunststoff 2246 + 7.2 :3900 +
d1 ' 46 VietL__ 7' Rluminium 4887 +136 26211 + 95 91 Dyc~crhoffQcWid- Bau 2170 +17,0 15614
aB ~5'_ l3rnelsmann 74 Verln 4792 +20 I 29570 + mann ~
av iJ ~ivssen Indusi~" Maschinrn A661 + IS,1 3924(~ + 96 106 Phili A'orri~ Zi arctten ? 164 +?5,3 ? 130 +
F- ~ 97 81 RO W Petrochomie 3 2163 - 5,1 3 J2A
tU 47 KlDrkner~llum� ( 7t ~Maschinen 46.1 + 8,7 29673 - ~
hulJi Dew: 98 108 Chevron Minoralbl 2133 +:6,8 268 +
tI ti(i UcwscheHahcock Maschincn/Anle- 4567 +13,) 31187 + 99 101 AxelS rin er Verla 2054 +14,0 I?OW +
(:'i,) ~en 100 86 E � I~nzstolT ~ ~hemief~er ]4( 2052 - 3.1 1715) +
� e'ia..~~nei I ~ 1
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_ Key:
l. Rank 43. Steel/Shipbuilding
2. Firm 44. Pipes/Machinery
3, Branch 45. Steel
4. Sales in million marks 46. Electric Prc+ducts
5. Change in sales 47. Vehicles/Electric products
6. Employees in 1980 48. Nonferrous metals
7. United Electr icity and Mining 49. Nonferrous metals
_ Corporation 50. Automobiles
8. Baden Aniline and ~oda Factory 51. Petroleum
9. German BP 52. Petroleum/Natural gas
10. Rhine-Westphalian Electricity 53. Petroleum
- 6~orks, Inc. 54. Automobiles
11. German Shell 55. Chemicals/Metals
12. Ruhr Coal 56. Steel/Shipbuilding
� 13. Metal Company 57. Chemicals/Paper/Machinery
14. PRELISSAG Mining and Metallurgical 58. Automobiles
Corporation 59. Food/Washing machines
15. German Texaco 60. Vehicles/Machinery
16. Ford Works 61. Chemicals
17. German Gold and Silver 62. Electronics
- Separation Installation 63. .Construction
- 18. German Unilever 64. Steel
19. Augsburg-Nuernberg Machine 65. Construction
Factory, Inc. 66. Cigarettes/Beer
20. IBM Germany 67. Chemicals
21. Krupp Steel 68. Energy
22. Huels Group 69. Steel
_ 23. Kloeckner Works 70. Mining
24. Saar Mines 71. Petr~lsinn
25. Thyssen Industry 72. Automobiles
- 26. German Babcock 73. Altnninum
27. Energy/Oil/Chemicals 74. Publishing
28. Automob iles 75. Machinery
29. Electric products 76. Machinery
30. Automobiles 77. Machinery/Installations
31. Chemicals 78. German Philips
32. Chemicals 79. Mannesmann Pipe Works
33. Chemicals 80. Continental Rubber
34. Steel 81. Roechl3ng-Burbach Steel Works
35. Petroleum 82. Waldhof-Aschaffenburg
36. Chemicals Paper Works
37. Energy 83. G~rman Nestle Group
- 38. Petroleum 84. German Solvay
39. Yetroleum 85. Peine-Salzgitter Steel Works
40. Mining 86. Thyssen Refined Steel
41. Machinery 87. I3osch-Siemens Appliances
42. Electric products 88. Petroleum Chemistry
[Key continued on following page]
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~Key continu~d]
89. Car~-Zeiss Foundation 136. Ciga:.ettes
90. Rutgers Works 137. Petrochemicals
91. Enka Glossy Fibers 138. Petroleum
92. Photography 139. Publishing
93. Electric products 140. Chemical fibers
94. Pipes 141. Estimated
95. Cigarettes
96. Energy
97. Electric products
98. Power plant
- 99. Electric products
100. Petroleum .
_ 101. Air/Space travel
102. Pharmaceuticals
103. Tires
104. Steel
105. Paper
106. Food
107. Aluminum
108. Chemicals
1U9. Machinery
110. Pharmaceuticals
111. Machinery
112. Food
113. Chemicals
114, Refrigeration Technolo gy/Equipment
115. Cigarettes
116. Electric products
117. Steel
118. Steel
119. Constructi.on
120. Nonferrous metals
121. Energy
122. Construction
1.23. Electric products
124. Energy
125. Records
126. Petrochemicals
127. Gears
128. Nonf.errous metals
129. Optics/Photography
130. Tar Chemicals
131. Milling facilities
132. Vehicles
133. Mining
1.34 . Synthetic f ibers
135. Construction
COPYRIGHT: 1981 Gruner + Jahr AG & Co.
8997.
CSO: 3103/422 ~5
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ECONOMIC ITALY
FINANCE MINISTER INTERVIEWGD ON TAXATTON
Milan IL MONDO in Italian 2� A.ug 81 pp 14--1b
[Iilter~~ie~a wit11 Finance Minister Franco Revigli.o by Antonio Ramenghi: "Victims United";
date and place of interview not given]
. [7'ext] The fury of 35 million Ttalians wfio are dutiful taxpayers
will win the war against the tax~privileged. The latter are, howe~~er,
still strong.
DC [Christian Democratic Party] Secretary Flaminio Piccoli accused Franco Reviglio of
animosity in his confrontation with innkeepers; over the telephone, Piccoli had urged
him not to meet with this powerful group of taxpayers. Reviglio answered with a
threat to resign: if Piccoli had something to say, let him say it in public and
face the consequences. Thus the long-contested tax receipt became mandatory witi.
the consensus of millions Af citizens. This is only one hitherto unpublished episode
' ~~mong many that have studded the ministry of Franco Reviglio. In 2 years at Finance,
Reviglio has been the most loved and hated of ministers. Many have lioped that he
might actually achieve fiscal justice, but they have been opposed, as he has, by
critics who have accused him of being too much of an alarmist and creating an anti-
tax climate in many categories of taxpayers. And even w}ien Giovanni Spadolini's
government replaced him with its most faithful party man, Socialist Rino Formica,
not a few jumped for joy; but very many expressed their appreciation for a job well
done, so much so that even today Reviglio still receives dozens of letters a day.
After relinquishing the reins of the small and ephemeral group of technical ministers,
Reviglio accepted IL MONDO's invitation to review his work at Finance and tell what
remains to be done to bring Italy u~ to European levels of tax justice. As Reviglio
says very clearly in his interview, this goal is very far away.
jQuestion] fiow much tax evasion is still going on in Italy?
~!~nswer] That is very hard to say. I think that between tax evasion and erosion
there is still a margin of at least 7-8 points in the national income, Yes, I think
we are still at those levels.
[Question] 1'hat coines to about 28 billion lire, which is a lot of money, I-low do iae
compare to other countries?
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rVn Vi'rat.1ML VJG W\Ll
[Answer] With respect to those with a fii.gher standaxd, take Holland ~or exam~le,
our tax evasion is 3-4 times greater~
[Qucstion] And this despite the large gains made in tfie last 2 years: receipts
grew from 52 billion in 1978 to 92 billion in 1981, Wfiat did the ministry find
that was bad about this situation?
[Answer] You have to look at two different trends: tfie level of receipts with
respect to national income and public expenditures, and the efficiency with which
taxes are collected. 7Ve11, I found a deficit tfiat was still excessive relative to
the demands of public finances. Hence tfi e first objective was to help sfirink the
deficit by increasing collections in proportion to the GDP jGross Domestic Product].
On the other hand, the efficiency ratio did and still does leave much to be desired.
Qut I would like to empfiasiae that the efficiency with which I had tax collections
carried out in Italy in 1976, that is, since the last change in rates implemented
- by Minister Bruno Visentir?i, that efficiency has diminished because of a long period
of aouble-digit inflation. In such a period, given our system of progressive taxation,
a noticeable increase in tax pressure is brought to fiear on categories of people who
cannot escape income taxes, especially wage earners.
[Question] Because of the tax-rate structure then, inflation makes those pay more
who are already paying taxes.
[Answer] Certainly. Inflation is an evil that must be fought; it produces many
negative effects. But it was produced by something positive: tfie creation in this
country of an invincible social bloc.against tax evasion and injustice. This bloc
~ would no longer admit that a dichotomy could exist between the tax~ridden and the
tax evaders; it was a dichotomy that had grown to enormous proportions, A mechanism
of institutional and political consensus was created that led to tfie real fiscal
. crisis in Italy. It is a crisis that we share with countries that ~re nonetheless
different from ours.
jQuestion] In northern European countries, for example, taxes are lower because
there are fewer public and more private services, But in those countries, the level
of public spending for pulilic services is already very high, This is certainly not
the case in Italy.
[Answer] Act~ally, for us the fiscal crisis is not so much a generalized one as it
is the reaction of some categories of taxpayers who are the most numerous and who
have formed a social bloc. Their consensus fias made it possible to launch a social
project: legitimizing the institution of taxation (and more generally legitimizing
the state) by reducing the area of tax evasion and legal loopfioles. It has been done
gradually, a step at a time. It has put i~nto practice the slogan that we have repeated
many times: if everybody pays taxes, taxes may go down. Inflation and the consequent
tax revolt by millions of taxpayers have favored this action. This is the mechanism
we have sought to put into effect: no corporate interest, no privilege can resist
the mass of 35 million Italians who are wage earners, pensioners or their dependents.
Individual privileges must gradually give way to this pressure. It is this political
mechanism that has enabled us to do many things. Tt's like a bartle: you have to have
- three waves of troops and a strategy.
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[QucstionJ Yet thexe have heen and st~.ll axe vexy strong �oxces on the other si.de,
These are the groups that enjoy broad px~,vileges and otiters wfio are able to engage
in outright and complete tax evasion, WFiat axe these categories?
[Answer] Describing the privileges would take as mucfi space as the Encyclopedia
Britannica. Tfi ere are tliousands upon thousands of tax exemptions. Tfie biggest are
in the agricultural sector, where the conventional Fiase rate, for example, is 1/20
of income. And there are real, well-defined reasons of political economy why agri-
culture ought to get special treatment, It's beyond me how the farmer in Pianura
Padana can earn 50 million lire a year and pay taxes on only 2.5 million. And real
estate incomes are 3 times taxable income, Tnterest and dividends are either exempt
_ as in the case of government bonds or, if they are taxed, are taxed at a flat rate,
not progressively, Tfiese are the three sectors of major privilege as concerns tax
payments in the naxrow sense of the word. Tf you look at social contributions, which
~ account for 40 percent of tax payments, you will see that tfiere are exceptional pri,
vileges there, too, for agriculture, commerce, artisans, etc,
[Question] Where are the tax evaders?
[Answer] Just read our publications, Tax evasion takes place in all categories,
all that have income not subject to withholding. Tfie amount of tax evasion varies
- by sector and individual. And, of course, tfiere is business income. In 1977, busi-
ness cieclared 13 billion lire in losses and only 6 billion in profits. This is
incriminating data; it cannot be attributed solely to a business slump. But I think
the sector where the most tax evasion takes place is that of the VAT jValue-Added Tax].
~ This is where T was thinki.ng of concentrating our audits, The latter have so far been
. quantitatively and c~ualitatively ratfier inferior to those allotted to IRPEF [family
income tax]. Audits in some offices have already sfiown, and very quickly, how much
can bc recovered in that sector.
IQuestionJ Who are the most powerful allies o� the privileged and the evaders?
[AnswerJ I don't want to name any parties, But they are the parties that have
mounted campaigns against any inriovation of ours; but at tfie last moment they didn't
go through with them because they couldn't risk alienating millions of wage earners.
_ '1'hen theY�e are organized groups that are very powerful both economically and poliL�i-
cally. The problem is that we have a political struggle iietween parties that cut
across economic classes and have trouble countering these arguments. They all recog-
- nize that wage earners' taxes must be reduced, but this possibility is defeated. They
say instead, let's reduce the wage earners' taxes and also reduce or at least not raise
the otllers. This is a political move and a contradiction in the system.
[Question] But how are these interests organized? {Yhat is their strategy?
[Answer] Nowadays nobody can come out explicitly against the fight against tax evasion,
Auditing is more subtle and sophisticated precisely because iae sa~v a massive consensus
for it. You don't say no to the casfi register; you say "yes, but..." and there is a
series of conditions. The same thing fiappened for putting handcuffs on tax evaders;
yes to handcuffs for evaders, but.,..
[Question] I{ow have these positions taken concrete form since then?
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[Answer] You would have to make a studr p~ how ~axli,arqent ~unctions, Zn ths last
30 years, sectional ~nterests in Ttaly have succeeded in ~assing~many, many laws zn
favor of sectional interests and very few for the common interest, T'his is the problem
of how tfi e democratic system functions in Italy. Democracy means finding compromises
between the various conflicting interests, But when sectional interests are always
put first, then the mechanism l~ecomes corrupt, Tfie issue that made me aware of the
_ difficulties to be overcome was that of collective parliamentary options, And it's
not because parliament doesn't work but Because tfie decision-making mecfianism is not
adequate to tfi e times and the modern democracy of an industrialized r~ountry. Here,
everything is done by law, and the enormous demand for cfiange requires an equal capa~
city to pass bills. However, tfiey are not passed witfi thorough reasoning of political
considerations, regulations and practice.
(Question] 1fi is is tfie context in which you 6egan your activity and carried it out
for the most part, The fiscal crisis fias favored your work. Where did you begin?
[Answer] LYe began hy working on a machi~e~ that ~iad had almost nothing done to it.
Besides, of course, collecting taxes, ~this machine is also supposed to accompli.sh
the essential tasks of checking and investigating and to carry out the legal actions
resulting from investigations. The work is enormous: every year there are 22 million
IRPEF returns and 3.5 million VAT returns. About a hundred million returns have to
- be examined, because action can be taken on returns filed in the last 5 years.
[Question] And what is the capacity of the machine? What are its means and methods?
[Answer] Auditing capacity is now at about 300,000 returns a year, But when I took
over, capacity was only a quarter as much, We introduced cross-checking for the first
time, and it was essential, Another important fact: tfie introduction of auditing in
~ fiscally dangerous categories and the elimination of discretionality, which allows
distortions and even corruption, not to mention escape from societal control. The
system of selective auditing gives the taxpayer the feeling that no impunity exists,
because anybody can be selected for audit, and the selection criteria change from
year to year. Before leaving the ministry, we managed to put out the bulletin on
the selective auditing of taxable organizations. In~this area the machinery is now
running, and things are going verr well, especially.since collections are exceeding
fiscal drag. In part, the increase in collections has been caused by psycliological
pressure: publishing tax returns, the red books. We have made enormous strides,
although there is much left to be done.
[Question] Some people have accused you of being too unconcerned with administration.
[Answer] I think that is one of the most unfair things they could say. Our other
great work has been to find a large area of consensus on administrative reform and
to send bills to parliament. Hitherto, fiscal administration resembled an automobile
plant producing motors for 5,000 cars and gears for 100. Tn the end, it managed to
produce only a fiundred cars, The whole production effort has to be redesigned.
And here we have made studies, plans and proposals, always in concert with union
organi.zations. Meanwhile, I pulled all the strings I could, with full attention to
the official functions. Thus I blocked all trans�ers from the North to the South.
Then I 6rought in a few thousand new workers, mostly in tfie North, Then we planned
the Ftome and b9ilan service centers, which will start up at year's end and be fully
operational in 1982. They will achieve an extraordinary reform in administration.
Some 13 other centers will follow those of Milan and Rome in tfie next few years.
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[Question] The thorn in the side o~ your ministxy ~eems to have taeen the Finance
_ Guards. How di.d they or dzd they not meet your expectations?
~ [Answer] The finance guards are very efficient and w~ll trained, They are tfie envy
of other countries. They have no problems witfi strikes or working hours, T found
them to be even more efficient than I expected. Naturally I did not expect corruption,
[Question] Which reacfied the highest levels,
[Answcr] Yes, the last events, from the oil scandal on,did unfortunately touch high
level administ.rators and left olivious blot~ on tfie service. But it was only a sm'all
minority who did not do their duty, and many of tfiem fiave been demoted or fired. The
majority are clean and well trained, Rivalry must be avoided betweEn groups within
the Finance Guards. I also tfiink we should reduce excess d~scretion, which is the
root cause of corruption, The finance administration should be interested in tbis
development, w}iich should proceed gradually and limit personal intervention by iricrea-
sing automation.
[Question] How, for example?
[Answer] One of the greatest forms of monetary fraud and corruption is found in
international exchange, whicTi in this country comes to large proportions: 150 trillion
lire a year, If there is an information system, for example, that can tell us in real
time the average value of inercfiandise passing tfirough customs and what cfianges are
reflected in the accompanying documents, then we can check afinormal cases and take
action immediately. If tfi e employee knows this checking can be done, he won't take
any rislcs, But aside from tfie cases of corruption, T must say that administrative
work was done in an atmosphere of cooperation. A service I thought was in disarray
found its motivation,
(Question] Overall, then, it is a positive report, What are tfie results and, espe-
cially, the prospects for the future?
[Answer] Tax receipts relative to the GDP increased 1.8 points in 1980 and 1,8-2.0
points in 1981 fox a total of more than 3.5 points, bringing tax pressure up to ahout
36 percent of the GDP. A large part of the increase (in 1981 lire, 3,5 points of the
GDP comes to about 13 trillion lire),almost fialf the increase,fias been obtained by
reducing the area of tax evasion. For the future, as I fiave said, tfiere is a lot to
be recovered in the VAT area, but the real net is in public spending. The consensus
in the tax of.fice has had the result of causing the citizens in tax revolt to pay
increased attention to public spending, i,e, to where tfi eir tax money goes. The
problem of justifying puhlic spending is an explosive one, In the 1970's a mechanism
was created whereby public spending increased every year as a fraction of the GDP;
tax receipts did not increase proportionately, so tfie deficit grew, People thought
some kind of magic rule had tieen discovered, because nobody was paying for the increased
_ piiblic spending. Actually, when a deficit of huge dimensions takes on structural pro-
portions, it produces very weighty negative consequences in some economic categories:
unemployment, low job creation and slowed growth, T think the political issue of the
next 5 years will be this matter of public spending. The citizenry must be told what
public spendinp~ is; many people think it is a gyp and a waste.
COPYRIGIiT: IL MONDO 1981
8782
CSO: 3104/365
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ECONOMIC ITALY
NEED TO REVISE LAW ON FLIGHT OF CURRENCY SEEN
b1ilan IL MONDO in Italian 28 Aug 81 pp 64-67
[Interview with Vittorio Barattier~, general d~rectox of pxoducti~on in the ministry
, of Industry,by Giancarlo Bussetti: "T Admit ~t, Tt Sfiould Be Changed"; date and place
of interview not given]
jText] Vittorio Barattieri, one of the coauthors of the currency
penal law, holds a long conversation witF. TL MONDO in which fie gi~~es
an unprejudiced report on 5 years of struggle against the flight of
capital. He makes some proposals.
The last famous person to feel the full rigor of the law was industrialist Giovanni
Fabbri, who had to spend a couple of weeks in jail for an alleged attempt to export
art objects and antiques. A few days before,the lightning of law 159 struck Roberto
Calvi, president ~of the Ambrosian Bank; he was sentenced to 4 years for currency
infractions. Between that time and the time when the law took effect in 1976, many
representatives of the economic world were ground up in the law's gears: industrialist
Piero Barilla; speculator Franco Ambrosio; Roman contractor Mario Genghini; Enzo Ba-
dioli, president of ICCREA [expansion unknown] (charged on successive occasions);
Alberto Ortelli, a Milanese professional, who had established a most efficient organi-
zation for exporting capital to Switzerland; Vicento industrialist Tullio Campagnolo;
and Italian-Panamanian businessman Jose Alberto Missri, who became a fugitive after
exporting more than 50 '~illion lire to Switzerland.
But is this law really effective? It has caused more than 16,000 people to be denounced
and a thousand Italian citizens to be arrested (see table); it has caused a little less
than 2.5 trillion lire to be recovered in 5 years. Have the technical means provided
for by law 159 really been suitable to stop the flow~of money that has been going to
_ cooperative fore~gn banks and financiers at an average rate of 8 million lire a day
since 1975? Many doubt it today.
Law 159 is also being threatened to be cut off by an appeal of the Bolzano court to
the court of justice in Luxembiirg to ascertain at the highest EEC judiciary level
- whether the disposition of Italian curxency is compatible with the free circulation
of capital sanctioned by Community rules. Serious doubts about the compatibility of
Italian legislation with EEC regulations are advanced, in fact, by important scholars
such as Alfredo Gaito, professor of criminal justice at the University of Rome, and
' Giovanni Mangiane, a professor of finance law at tIie state University of Milan and a
member of the council of state.
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~1~ . .
Qua~to brucia la fiamma gialla
(serv~zro deila guardia di ~Inenza
per ia prevenzione e repiessione elle violBZioni valutwis)
tl7s tq77 tY7t tY79 1l~0 TotsN
~Z} Violazion~ accertate 2.593 1.900 2.06T 1.939 2.092 10.59t
Persone denunciate 1.566 2.569 2.789 5.413 3.845 16.182
- ~ 3) Persone arrestate 195 184 156 210 288 1.033
(4) Sequestro di valuta
~5~ e titoli di credito
(in miliardi di lire) 12.7 8,8 6,2 9,4 14,6 51,7
(6~ Accertata costituzione
di capitali all'estero
( 7) (in miliardi di lire) 225 82.7 - - - 308.3
Accertamento
altre violazionf
~ (m miliardi dl lire) 397,8 278,5 - 710,1 899, t 2.085,5
- (1) What the Yellow Flame [Finance Guards] Burns (service of the Finance Guards for
the prevention and repression of currency violations)
(2) viola;.ions noted
(3) persons denounced
(4) persons arrested
(5) confiscation of currency and credit (in billions of lire)
(6) ascertained transfer of capital abroad (in billions of lire)
(7) other violations (in billions of lire)
A chortis of criticism has fallen on law 159 in recent months, especially from business-
men and banks. This criticism has been met by the government's attempt to draft a bill,
which is being examine.l by the justice commission of the Chamber of Deputies. But is
this enough to dispel all the doubts of interpretation, the contradictions and proce-
dural trappings surrounding law 159? For example, Gustavo Visentini, a professor of
finance at the University of Perugia, says, "The real danger is that this bill, which
only partly modifies the preceding rule, gives a stable foundation and unfair recog-
nition to a criminal law that needs rather preventive redrafting under civil adminis-
trative legislation." Giuseppe Mariani, in Rome, is one of the most important currency
consultants; he reflects the mood of economic operators: "It would be a lot better not
_ to do things hastily, to redo the entire currency law by reorganizing it in legally
clear and acceptable terms." But Pietro Nuvolone favors the modifications introduced
in the government's bill. He is one of the foremost Italian experts in currency matters.
Nuvolone told IL MONDO, "Besides, it is to be hoped that the terms will be reexamined
under which capital illegally held abroad is declared and nationalized; they should
allo~a the interested parties all the time they need to normalize their position with-
out penalty."
Tn sum, law 159 shoiild be thoroughly revised. A few days ago, Guido Carli, a former
~overnor of the Bank of Italy, touched things off by emphasizing the urgency of refor-
ming currency regulr~tions. Qut how? What should be changed immediately? Should the
~;oal be a single piece of currency legislation? Ts it the right time to allow a new
normalization? IL MONDO asked these questions to Vittorio Barattieri, who has been
general director of production in the ministry of Tndustry since January 1980. Barat-
tier.i, who is 38, is one who is thoroughly familiar with law 159, as he has been
working since 1976 with the minister of foreign trade, Rinaldo Ossola, on restructuring
the currency penal law,
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Italian Investment Abroad
Inrestimenti itdlioni
ali'estero
Total net investment in billions of lire
Totele investimmKi netti in miliardi di lire.
tooo
986.7
eoo
eoo
408,5
400
t62,s lts,a
soo
1976 1871 ~1878 1978 18Ab
0
The year 1976 is the only one in which total
-�~o net Italian investment abroad is negative.
-r~6,~ This is due to the fact that in that year
-80� the concessions encouraged by law 159, which
~ had just taken effect, jumped to 500.4 bil-
u~s~s s i'unico anno in cui il tofa/e degli lion lire; the next year, 53.9 billion lire
invesfimenti nettl ifalrani all'estero presenta un Were imported.
segno negafivo: questo A dovuto a/ fatto che,
in quelPanno, le cessioni incoraggiate dalla
lepge 159, appena promulgata, salirono a $OUT'C2 � Bank of Italy
500, 4 miliardi di lire; 1'anno successivo I'im- '
- porto lu di 53, 9 miliardi.
Fante: Banud'luli~.
[Question] Five years after law 159 took effect, the chorus of criticism is swelling
against many of tfie currency rules in that law. Do you share in this criticism?
Should the law be radically changed?
[Answer] The currency penal law is certainly marked hy visible defects. They are
due to the haste in which the law was drafted, under extremely serious circumstances.
Yet a revision is necessary, as Guido Carli rightly maintained recently, and revision
was urged by former minister Ossola at the end of September 1978.
[Question] Yes, but Ossola and you, too, had great responsibility in drawing up
this law.
[Answer] Everybody haa his own responsibilities. Indeed, people continue mistakenly
to make Ossola out to be the father o~ law 159; actually it was launched when he was
still general director of tfie Bank of Italy, being a parliamentary initiative from
the socialist group. When Ossola became minister of foreign trade, he redirected
things rather to regularizing currency illicit before 6 March 1976; the original
version would have allowed only small change to be brought back in.
[Question] One of tlie objectives that law 159 seems to have missed is, indeed, the
return of capital exported abroad. So much so that some people say the law should
be abolished completely. Do you agree?
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[Answer] 'I'hese defects do not justify purely and simply throwing out law 159..
In fact, the defense of today's national economy, which is beset by destabilizing
internal and external factors, requires the maintenance of excliange controls and,
therefore, of the means of dissuading people who want to violate them. Otherwise
the preferences of domestic investors would go to foreign financial markets, and
~ precious resources would be diverted from domestic projects. The system of adminis-
trative sanctions that took effect in March 1976 has proven to be wholly inadequate
to t}ie task, but t3ie currency penal law has done its thankless job rather well.
[Question] Even though the bc~st form of dissuasion would be reliance on a rich and
vital domestic economy.
[Answer] Of course. But as we wait for better times, we have to be realistic,
- even if it goes against our personal convictions.
[Question] Do you favor a new normalization that would affect, for example,
so-called foreign investment activities (capital located in Italy and held by
- foreign dummy corporations (editor's note)) and the capital that a resident ille-
gally holds abroad?
[Answer] Having seen first-hand the earlier experience with normalization, I have
to emphasize the great difficulties that might strike such a provision, which would
raise serious ethical ana therefore political problems. I think that in any case a
Eresl~ normalization could make it possible to repa.triate a vast amount of capital
invested abroad, because the location of this capital will give investigative agencies
especially interesting traces leading to related illicit funds. Holders of this capi-
' tal are aware of this state of affairs, and they would certainly welcome the oppor-
tunity to normalize their situation.
[Question] As happened, at least in part,~~with the first normalization.
[Answer] In 1976 the most significant effects of the normalization affected this
category of capital. For reasons easy to understand, though, I seriously doubt
that a new normalization would be capable of bringing back to Italy capital that
has completely abandoned our economy and been invested in foreign markets.
[Question] Among the strongest critics of law 159 are many businessmen who think
these currency rules are harmful to Italy because they seri~usly restrict foreign
trade. Do you agree?
[Ans~oer] I don't t}iink law 159 is in itself a serious obstacle to foreign economic
relations, at least for those who are used to obeying.the law. You have to remember
that the currency penal law did not impose new restrictions but limited itself to
penaliz.ing with jail sentences the most serious violations of preexisting currency
regulatior.s. To see whether the continued and pressing cor.iplaints of economic opera-
tors are well founded, yoii must ask rather whetfier all the restrictions set by the
currency law are really necessary and timely.
[Question] ti9hat do yoi~ think about the restrictions that are still not supported
by economic operators?
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~ [AnswerJ During my service in the ministry of foreign trade, I came to the conclu-
sion that, even as we keep the present law and not fiurt currency reserves, it is
possible to simplify procedures directly by broadly decentralizing functions so that
the agent banks can use.their own initiatiye in many operations now subjected to the
preventive control of high-level services in the Italian currency system. That way,
residents would have more freedom in their foreign activities, and administration
would be imprcved over its present slowness and inefficiency due to the enormous
amount of paperwork it faces.
[Question] Indeed, many operators complain that ministerial authorizations arxive
- months, eVen years late, which makes big productive and commercial opportunities go
up in smoke. Many experts also criticize ttie vagueness of rules that have caused
a huge, clumsy casuistry to emerge. They point to downright contradictory rules
like article 1-a in the integrated text of penal laws on currency infractions, which
punisl~es with 3 years in prison any resident who assigns to a foreign dummy corpora-
tiorl any capital located in Italy, even when the individual wants to bring back to
_ Italy capital he owns abroad.
[Answer] Article 1-a is an aberration to the extent that it punishes bringing capital
i.nto the country. If it is necessar}~ now to penalize those who export or form capital
abroaci, I don't understand why people should be punished for doing things tha~. help
our balance of payments. The best thing to do would be to abolish the rule.
[Question] In France, for example, foreign investment activity is taxed at a higher
rate. �
- [Ans~acr] If this rule is intended to discourage the use of foreign dummy corporations,
then tax policy could be used, but not in a form that jurists consider practically
incomprehensible for its purpose.
[Question] The recent legal proceedings against the president of the Ambrosian Bank,
Roberto Calvi, for illegal formation of financial reserves abroad, have brought to
- lig}it complex questions of commercial and liusiness law. The most direct method,
which is of course adapted to settling quickly the case of Yhe tourist caught with
11is bankbook in his pocket, is tllis method also apt to shed light on complex cases
such as t}iat of the president of the Ambrosian bank?
[Answer] It is really absurd to use the simplest procedure for ~ crimes that very
often require extremely complex evidence. In such cases I think that the renuirements
of ju~licial procedure should make formal indictment mandatory.
[Question] The government bill intended to modify law 159 has been in the Chamber of
Ueputies judicial commission since last April; it introduces new elements, but it
does not solve any big problems. Ossola has called it "if not a monster, at least
a monsterette." For example, it sets 15 million lire as the cut-off between misde-
meanor and felony. Is this fair?
(Answer] The 15-million lire limit will make it possible to remove from the area of
criminal justice the huge number of infractions connected with the tourist trade.
'I'hese are minor v.icalations that only distract the judiciary from much more important
tlsks ancl that can be dealt with sufficiently through administrative channels.
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In the bill to reform the currency penal law there is a very timely provision for
a definition of abbreviated currency infractions sufiject to administrative procedure
up to 5 million lire, so tfiat tfie defendant can settle his case immediately with a
payment of 25 percent of tlie value of the infraction, and the state can collect the
fine immediately rather than after many years and a lot of complex procedure.
[Question] But all this is made partly irrelevant ~iy the fact that it is possible
to add up the infractions committed in 365 days.
[Answer) The reference to the sol^� year has been eliminated from the final text
of the bill to reform law 159.
[(Zuestion) This bill has a rule to favor workers normally living in Italy who work
abroad. Do you agree with this?
[AnswerJ 'I'he bill to change law 159 broadens the category of workers considered
non-residents for monetary purposes. If this proposal becomes law, we can be sure
that, for example, resident professionals' pay received for work done abroad would
rio longcr go towards increasing Italian currency reserves but would presumably be
invested quite legitimately in foreign real estate or securities. {Ve would have to
_ recognize that the rule in question is based on a gresupposed mistake and makes less
clear the idea of what a resident is for purposes of currency exchange. We should
then drop the rule and rather make administrative exceptions for fair monetary advan-
tage in the cases of temporary workers and those living on the borders. Other emi-
grated workers already qualify under the law as non-residents for currency purposes
and their income earned abroad is already exempt; it is useless to repeat all that.
[Question] Among those who have called most insistently in recent years for thorough
change5 in the law are administrators and bank workers, who are responsible for
verifying the accuracy of the prices of goods imported and exported. Are these
requests justified? Does the reform bill include them7
[Answer] It is a pure illusion that bank administrators and employees can verify
the accuracy of prices in all foreign transactions under their.jurisdiction, because
nobody can know everything. But I tliink the government has made a sensible proposal
to limit the penal consequences due to a lack of verification in the case only of
fLnancial o~erators in foreign trade. To puncture an out-of-date commonplace, I
want to emphasize that since the currency penal law fias gone into effect, agent
bznks }~ave generally operated correctly and un�ortunatel.y l~ave often shown an excess
of l~i~reaucratic zeal out of fear of law 159. Their present trustworthiness is
another reason not to worry about letting them take over many tasks presently done
by the central monetary authority.
[Question] Why does the government's bill limit the Finance Guard's authority
to audit banks? Is the intention to entrust bank audits only to Bank of Italy
inspectors or to those of the UIC [expansion unknown]?
[~nswer] The government bill allows the Finance Guard access to the banks even
witho�r the preventive authorization of judicial authority. However, unlike what
happens today, no general audits can be made, i.e. those extending throughout the
ba~ik, nor can exploratory audits be made, i.e, audits not justified by well-founded
suspicion of specific currency infractions, Besides, general audits are already
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under the jurisdiction of the Bank of Italy, which does them very well, but the
protection of privacy, which is a part o� the bank-client relationship in Italy,
can be justly set aside only when there is real suspicion that a major sum of
interest to t}ie state is affected.
[QuestionJ The ministerial decree of last 12 March, which contains rules on cur-
rency and financial relations with foreign countries, misled operators, who saw
- tliemselves again being hampered by a mess of procedures.
[Answer] The decree of 12 March 1981, which went into effect the following September
and gathers together part of the administrative regulations on currency hitherto
scatterecl in many different places, is limited to a partial reordering of currency
discipline but does not help streamline currency procedures significantly. If this
decree is a starting point to reach.higher objecti~~es, then we will finally see
implernented those fine proposals to lighten the load on currency exchange, proposals
that were put forth by the recent ministers of foreign trade. Otherwise you will
have to watch out, because the currency bureaucracy is jealous of its prerogatives
and will have succeeded in imposing its own conservative opinions.
COPYRIGHT: IL MONDO 1981
8782
CSO: 3104/365
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- ECONOMIC UNITID KINGDOM
- 'TIMES' VOICES CONCERN OVER UK MONETARY POLICY
PM251343 London THE TIMES in English 25 Sep 81 p 15
[Editorial: "Something To Worry About"] .
[Text] Washington has exported an epithet for the people who have been unloading
shares on the stock markets with such abandon in London yesterday. President
Reagan's treasury secretary Donald Regan calls them '4~orrywarts." The trouble
is tiiat though the London Stock Market may prove to be too pessimistic, as it
frequently has in the past, there is something for the '~aorrywarts" to worry
about in both countries.
Technical and political factors go some way to explain the mood. The persistence
of high United States interest rates far longer than originally expected had
already undermined American and Far Eastern markets and was beginning to have
repercussions here before last week's deliberate hoist in British rates a.cted
as a final trigger, That move pointed to a further delay in economic recovery,
as costs rise and demand is further restrained. It also increased the return
on f-i~ed ~ntere~c scoeics--net., i:nl;ke during w~~~ of ~,ostwar histo_; , a signi-
ficant real return--to well beyond that on equ3ties. Until that yield gap is
narrowed, share prices will not make a sustained recovery. Even more worrying
to the markets is the suspicion that interest rates have still not reached their
peak, here or in America; money market rates in London are already looking to
a further rise.
But underlying these factors is a broader anxiety for the United States as well
- as f.or Britain. It is that the counter-inflation policies being pursued by our
respective governments--policies which the business and financial communities
initially welcomed with unguarded enthusiasm--are going to be at least a little
late in delivering their miracles.
There has been a qualitative change for the worse here. Until very recently
the central debate was whether output could be stimulated without damaging the
priority of reducing inflation. With the pound's fall, the question has now
become whetl~er it is possible to prevent inflation reigniting without deepening
_ the recession. Sterling's decline this year, on the formula used by the treasury
and the Bank of England, will add more than 3 per cent to consumer prices.
The rise in interest rates to stabilise the pound indicates that the government
now has an implicit exchange rate policy.
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There could hardly be less propitious circumstances in which to mark the approach-
ing mid-term of Mrs Thatcher's ministry. Prices are today still rising faster
than when her government took office. Unemployment is within a whisker of three
million (up 1.7 million since May 1979). National output is 7 3/4 per cent below
- its peak in the early summer of 1979. Manufacturing industry alone is producing
16 per cent less.
There has been some improvement in productivity and recovery of corporate profits
so vital for investment, but no government for half a century has p~esided over
such a fearsome economic deterioration. Neither can these developments all be
blamed on the world recession. It has been steep but Britain's performance has
been worse than that of any other major industrial country.
It is not difficult, though depressing to describe the government's plight and
dilemmas. It is less easy now to prescribe solutions: one would not, as they say,
be starting from this place. If there had previously been an exchange rate policy,
the peak could have been taken off the unmerited rise, accumulating reserves and
limiting the damage to British manufacturing. Now whatever is said by the
monetarist thPoreticians, a decline in the pound will add to inflationary pressures,
but a further sharp rise in interest rates will subject th e nation to still higher
levels of unemployment which in turn adds to social security expenditure and so
pushes the PSBR further beyond target.
Clearly the broad thrust of this administration, reinforced by the most recent
ministerial changes, will be to put its head down and try to see through the
existing policy, with a few missed targets and doctrinal compromises, hoping for
a fall of American interest rates and for exports to r3se. That course might
succeed politically, despite all the problems and failures described and predicted
above. Governments do recover, even from the electoral and opinion poll depths
recently plumbed by Mrs Thatcher. At the end of 1976 the labor gover~ent was
flat on its political back, under medication from the IMF--but within 21 months
Mr Callaghan had the option, in October 1978, to~fight in election which many
believe he would have won. Mrs Thatcher has more time than that to recover.
. However, there are differences: the world economic climate is now less benevolent
than then to economic recovery and the monetarist medicine now being applied has
already been applied for two years and so far the patient has not responded too
well. It does look as if something more may be neecied to assist the government
Politically and the nation economically.
Rea.tity is well as expediency may require some give in the announced PSBR target.
A substantial proportion of that deficit is made up of unemployment payments and
debt interest; it hardly makes sense to maintain puritanical ambitions when world
interest rates and Britain's jobless are rising.
A case can also be made for allowing the exchange rate to slip even further,
especially against the European currencies of our main export markets. This would,
if accompanied by lower interest rates and an early cut in employers' national
insurance contributions, encourage industry to expand and invzst and would create
jobs. Along that path might lie the "virtuous spiral" of increasing tax revenues,
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~
declining social security payments, a falling PSBR and consequently further
reductions in interest rates, etc. It might be a mirage. Even if a real
prospect, it could only succeed if the inflationary pressures generated by
sterling depreciation were contained by some kind of incomes policy.
The goverranent already, of course, has an incomes policy of 4 percent in the
public service sector. This is shrewd and fair and promises to be successful
within its limited ~mbitions. The question is whether more is needed, possibly
through attempting to apply 4 percent to workers throughout al.l the economy,
or even to aim for a total freeze. The problem with resorting to such a
comprehensive policy is that the risks of failure are increased, as the government
confronts groups with great bargaining power, whereas the gains would be marginal,
since large sections of private industry are anyway constrained by market forces.
The public utilities are a different matter and whether or not the government
extends its present incomes policy it must have support in reining in these greedy
monopolies.
A total freeze, covering six months or a year, has the greater attractions of
simplicity of concept and equality of burden in the crisis. However, its
execution would be far from simple. It would impose a massive reduction on real
incomes at a time when some corporate profits are rising and when the trade union
movement is massively hostile to the government. Without the cooperation of the
unions it would require an enormous imposition of Mrs Thatcher's political will,
and it is not clear that her present level of popularity and credib ility would
ensure that. In collision with the unions she would provide opportunities for
Mr Benn and his like to exploit the populist rhetoric. To some extent the
prime minister's own rhetoric has made th3s option 1.ess viable. And she will
surely set her face against another option being canvassed, that of exchange
control. The sooner this is publicly ruled out the better.
The present crisis seems to be having one salutary effect. It may be forcing the
recognition that no lasting solution is possible which is conceived within the
boundaries of this island alone. The chancellor and the governor of the Bank of
England have implicitly acknowledged as much in speeches this week, directed to
the United States Government. Perhaps the call for the Americans to cut their
public spending and lower their interest rates is som~what impertinent in view of
early criticisms of. United States monetary laxity and our own failure to cut
public expenditure, but the governor, in particular, must be supported in his
criticism of the floating rate system and encouraged in his recognition of
the need for the collective management of collect3ve problems.
It is crucial to have international action towards more stable currencies. The
chancellor should take on his worrywarts at the treasury and insist on Britain
entering the European monetary system. That is only a first step to end what
Lord Lever calls, in the business today, the manifest bankruptcy of the present
unilateralism. That is a dirty word in defence--in our judgment--and it should be
- just as dirty a word in economics. Arguably America m3ght be able to solve its
~ problems by itself. Britain certainly cannot, even with the bravest of first
lords of the treasury.
COPYRIGII`r: Times Newspapers Limited, 1981
Csu: 3120/2
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POLITICAL FEDERAL REPUBLIC OF GERMANY
POLLS FAVOR GOOD RELATIONSHIP WITH UNITED STATES
Hamburg DAS CAPITAL in German Aug 81 pp 90-94
[Text] Marginal Phenomenon
The loud agitations by leftist groups are suggesting that
today's danger of war does not originate in the East but
in the United States. Does that mean that the concept
of the "ugly American" is prevalent among the Germans?
Not at all, Elisabeth Noe11e-Neumann found out: More
FRG citizens favor a good relationship with the United
_ States today than was the case 25 years ago.
If one asks the German population: "In your opinion, what foreign policy would
be preferab le--should we continue our military alliance with the Americans or
- should we try to be totally neutral?"--the majority of the population would
prefer the alliance with the United States (55 percent compared to 31 percent
favoring neutrality). Nevertheless, differences between the young generation
and the rest of the population are signif icant: Whereas those belonging to the
medium-age group--particularly the older ones--prefer the alliance with the
United States by a two to one margin, the majority of the below-30 age group
favors neutrality: 45 percent express the opinion: "Prefer alliance with the
United States," compared to 40 percent who do not.
Apparently the growing sentiment of anti-Americanism is again a self-perpetuating
combination of inedia reporting and the critical assessnient of the United States
- among the young generation, particularly the "Greens " who are attracting public
attention. Otherwise, when looking only at the data of an opinion poll represent-
ing the trends since the 1970's, there is no evidence of a growing anti=Americanism
among ti1~ FRG population.
Between 1973 and 1981 there have been five opinion polls containing the following
questions on German foreign policy: "Should we in the future cooperate equally
closely with the United States and the USSR or should we cooperate more closely
with the USSR or more closely with the United States--what is your opinion?" The
answers have never been as much in favor of the United States as was the case in
~pring 1981: 56 percent voted for closer cooperation with the United States,
in May 1973 it was only 36 percent.
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Even when the question is formulated differently during every other interview,
reading: "If we had to make a decision for either one of these two possibilites--
what is more important for the future of the German people--a good relationship
with the United States or a good relationship with the USSR?" The result is the
same: No indication of growing anti-Americanism.
The latter version has been used in the Allensbach opinion polls since 1954. At
that time 62 percent stated that a good relationship with the United States is
more important, 10 percent favored a good relationship with th e USSR. In 1975
the fraction in favor of the United States had declined to 52 percent and 12 per-
- cent felt that a good relationship with the USSR was more important. Now, in
1981, 65 percent--in other words, a higher percentage than in 1954--are in favor
of a good relationship with the United States.
An atmospheric anti-Americanism which might perhaps be detected, was expressed in
a more distant relationstiip when it comes to being absolute followers of the
United States as a leading power. Already in May 1980, when the question concern-
ing loyalty to the Alliance was posed for the first time, many people were shocked
by the interpretation of the German role in the Alliance as seen by the Germans.
The question, which was again asked in May 1981, read as follows: "Considering
the present situation in foreign policy, should the Federal Government lend total
support to the United States or should it treat each case according to its own
merit when it comes to deciding whether to support the United States or go its
own way?" Already in 1980, 56 percent felt that "each case should be treated
according to its own merit," a year later this ~pinion spread further; at the
present time it is representative of 65 percent.
A year ago, 30 percent were solid supporters of the Atlantic Alliance, right now
the figure stands at 28 percent. The tendencies are even more pronounced when
the questions are phrased differently, emphasizing the character of obligation
, and reciprocal loyalty within the Alliance.
Germany Between the Big Powers
Question: "A very general question concerning German foreign policy: Should
we in the future cooperate equally closely with the United States and the USSR,
or should we cooperate more closely with the USSR or more closely with the United
States--what is your opinion?"
- Oct Sep Jan Ptay
_ Choices 1977 1978 1980 1981
More closely with the United States 49 S1 49 56
More closely with the USSR 2 1 2 1
Equally closely with the United States
and the USSR 38 36 41 32
Undecided 11 12 8 11
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Firm Support of America
Question: "Two people are discussing the relationship between the United Statea
and us. Which of the two statements reflects your own thoughts more accurately?"
Total Age groups by years
Choices result 16-29 30-44 45-59 above 60
"We must continue to lend firm
support to the United States." 48 38 50 56 49
"It is no longer compatible with
the new role of Germany that we
submit ourselves in all areas to
the American leadership." 35 43 38 33 26
Undecided 17 19 12 11 25
Foreign Policy--Each Case on Its Own Merit
Question: "A question concerning foreign policy. Should the Federal Government
lend total support to the United States or should 3.t treat each case according to
its own merit when it comes to deciding whether to support the United States or
go its own way?"
r~y r~y
~hoices 1980 1981
T~tal suppor.t of Unites States 30 28
- Treat each case on its own merit 56 � 65
Undecided 14 7
All data in percentages.
- Reacting spontaneously, is the feeling toward the Un3ted States one of likability
or one of unlikability? The vocabulary testi was designed in such a manner that
rational arguments are ignored and feelings are displayed spontaneously, demon-
strating Germany's feeling of likability for the Un3ted States.
When they see the word United States, 65 percent express likability, 17 percent
_ unlikability. Over 60 percent of the supporters of the CDU/CSU, SPD and FDP say:
"United States--likable." But the "Greens" deviate like a signal--apparently
a different world and, to be sure, it is anti-American: 25 percent of the "Greens"
say that the United States is likable compared to 46 percent who consider the
United S[ates "unlikable."
T}ie "Creens" and the rest of the population do not differ a great deal with respect
_ to their critical assessment of the United States. Sixty percent (among the
"Greens": 81 percent) of the population agree with the view: "The Americans
are a frightening example for the rest of the world because they are a consumption-
oriented and throw-away society." Only 23 percent disagree with this view.
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Almost every other person among the adult population (47 percent, among the
"Greens" it is 70 percent) think: "The United StaCes is not sparing any means
- to strengthen its position as a world power. In the process they are even
supporting fascist unjust regimes in Central and South America.
The thing that separates the majority of the population from the "Greens" is the
fact that they do not only see the bad sides in the United States, but they see
the bad and the good sides. It opposes, for instance, the view: "The United
States is again headed toward the cold war and, consequently, making the world
unsafe." "That is not true," 52 percent of the population (26 percent of the
"Greens") are saying. Only 25 percent of the population are subscribing to the
cold-war thesis: "Agree." On this point the ma~ority of the "Greens" are of
a dirferent opinion: 56 percent agree.
On the other hand, almost 50 percent of the population again sees the United States
in the role as defender of democracy. "Today the United States," one of the
theses presented during the interview read, "finally is once again a reliable
leading power of the West, which from a position of strength provides security
against the East"--That is true, 47 percent of the population (15 percent of
the "Greens") say compared to 26 percent who are opposing the statement.
The essential political reason for Germany's likability of the United States
becomes evident in the sentence: "No other country defends democracy again and
again or is as strong a bulwark against co~nunist d3.ctatorsh3ps as is the
United States." Fifty seven percent of the Germans are saying, "That is my opinion."
Only 21 percent disagree.
The reason why the likability is not easily tarnished is that experiences from the
time following the collapse of 1945 are a factor. In May 1981, one of the
_ questions rcad: "During the first f ew years following World War II it was important
to establish a new democracy. In your opinion, did the Americans play a major
or a minor role in achieving this goal." Fifty percent of the people said, "a
major role," and an additional 29 percent said, "a fairly large role."
Nevertheless, strange signs are written on the wall: With respect to the future,
the c.timate of opinions in the United States and the FRG differs in a remarkable
way. In 1978 the American Gallup Institute came up with the idea of asking
about what should be strengthened with respect to people's life styles and
attitudes. In May 1981 we put the same question to the citizens of the FRG.
In some areas Germans and Americans expressed the same aspirations: To place
greater emphasis on the family, also on personal development and less importance
on money. But in those instances where the population is preparing for the future
and strong technical and economic development, the opinions of Germans and
Americans are far apart,
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l~OR OFFIC'IAL USH: ONI.Y
United States/FRG: Deviations
- Question: "This list coiitains several items which could change in the future
in our society. Could you tell me item by item whether you welcome or reject
such a development?"
~ Item Choice United 5tates Germany
If in the future there will again be I welcome it 89 53
more respect for authority I reject it 6 30
Undecided 5 17
If in the future more emphasis is I welcome it 75 48
placed on technical progress I reject it 12 26
Undecided 13 26
IL in the future work is taken less I welcome it 25 38
seriously in life I reject it 69 42
Undecided 6 20
If in the future sexual freedom is I welcome it 29 28
accepted as a matter of course I reject it 62 45
Undecided 9 27
United States/FRG: Concurrences
Question: "Could you tell me on each item whether you would welcome or reject
such a development."
Item Choice United States Germany
If in the future more importance were I welcome it 91 88
placed on family ties I reject it 5 4
Undecided 4 8
If in the future more emphasis is I welcome it 75 88
placed on ~ersonal development I reject it 15 3
Undecided 10 9
if in the future less emphasis is I welcome it 70 60
placed on money I reject it 21 21
Undecided 9 19
All data in percentages.
Falling Tendency
The SPD--media representation and demoscopic data come
up with the same picture--has r.eached a low point; a
consequence of its own internal strife. In spite of it,
however, in the eyes of the citizens respect for Chancellor
Helmut Schmidt has remained untouched, Elisabeth Noelle-
Neumann shows how the opposition is profiting from this
fact, as is demonstrated by the quest~.on inquiring about the
present intention of voting.
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In May 1981 the spectrum of party politics was restored to the position that
existed between 1976 and 1978. Approximately 50 percent of the population
indicated that they were CDU/CSU supporters.
Nevertheless, there has been a total shift in the make-up of party politics since
the fall of 1980 and the Bundestag election; as a matter of fact, something has
happened that has not been observed in the FRG for 3 decades, a unique demoscopic
- combination: The SPD is experiencing one of its worst slumps since the estab-
lishment of the FRG, and in early spring only 34 percent of the people indicated
_ that they would vote for the SPD when asked the "Sunday question"--"If the
Bundestag election were held next Sunday..." It appears that the SPD is almost
returning to its former situation: It can get one-third of the votes, but no
more--a situation it believed to have overcome.
The cliancellor, however, is not affected by it. There is no evidence of past
phenomena when the popularity of the party and its representative chancellor
were linked together, well-known from the time of the Adenauer years as well as
the times of Chancellor Ludwig Erhard and Chancellor Willy Brandt.
Of course, Helmut Schmidt's unshakable position is also an indication why the
_ number of supporters of the SPD is declining. Impressions of what the SPD wants
and what it represents--the image of this party--changed dramatically between
June 1980 and May 1981. In the eyes of the voters, internal fights with the left
wing of the party increased the detrimental traits of the party: "is experiencing
internal strife"--"makes many promises that cannot b e kept"--"has a few polit3cians
whom I definitely dislike"--"in its speeches frequently ignores the real concerns
- and wishes of the popiilation."
~ The fact that the SPD loses supporters not only when specific questions are involv~d,
is evident from changes in opinion. For instance: "The SPD has extremely capable
politicians"--was answered in the affirmative by only 41 percent. Earlier it was
56 percent. Or the question: "Has politicians who can be trusted"--received only
34 percent yes-votes compared to an earlier 45 percent. It is not necessary to ask
who the politicians are, because it is sufficiently clear f rom a statement which
had not yet been incorporated in the test of stanmer 1980. This statement: "The
SPD is too soft toward the East," was answered affirmatively by 48 percent.
The CllU/CSU has therefore good opportunities in this area. It is accused of such
softness by only S percent of the population. The CDU/CSU has now lost the
odium of internal strife, which affected the party between 1979 and 1980-~in the
upinion of the voters it is almost the worst thing that can happen to a party.
Thus, 34 percent of the population--twice as many as voted for. the SPD--indicated
that the opposition party is emitting optimism and confidence. Nevertheless,
if one looks at the deta ils of the image which is projected by the CDU/CSU to the
population, one will recognize that in many areas only insignificant changes have
occurred during t}ie last 12 months.
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If Llections Were Held Next Sunday
c2uestion: "If Bundestag elections were held next Sunday--for which party would
you vote?"
Item Union SPD FDF "Greens" Others
1981 opinion poll 50.7 34.0 9.2 5.7 0.4
1980 Bundestag election 44.6 42.9 10,6 1.5 0,4
, Yarty Criticism
When ascribing certain characteristics to the SPD and to the CDU/CSU, the
- individuals contacted during the poll decided as follows:
Item Union SPD
- Has e}:tremely capable politicians 51 41
Has politicians who can be trusted 45 34
ConducCs a middle-of-the-road policy 37 21
~mits optim:ism, confidence 34 16
Uffers a guarantee that one will be well-off for a
locig time 23 12
Eias a Eew politicians whom I definitely dislike 49 48
Makes many promises that cannot be kept 37 59
Is expe~iencing internal strife 18 55
In its speeches it frequently ignores the real concerns
and wishes of the population 28 42
L~avors its party-friends 22 36
Sclunidt in Front
Question: Presuming that a new decision had to be made as to who is to be
chancellor, whom would you prefer--Kohl or Schmidt?"
Total Supporters of
Item result Union SPD FDP _"Greens"
~ (~or Kofil 30 61 2 9 7
For Schmidt 45 14 84 54 45
- ~1.1 data in percentages.
COPYRIGHT: 1981 Gruner + Jahr AG & Co.
8991
CSO: 3103/42'L
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POLITICAL FRANCE
EFFECTS OF CONVENTIONAL, NUCLEAR STRENGTH, DETENTE ON DEFENSE
Paris COMMENTAIRE in French Summer 81 pp 188-196
[~rticle by Pierre Lellouche]
[Ter.t] Altl~ough most Europeans--including their governments--would prefer to ignore
' the far.t, it is becoming increasingly clear that the defense of Europe in the 1980's
will be determined by three new realities.
New Facts in ~uropean Security
First of all, the Soviet invasion of Afghanistan in December 1979, by precipitating
' a major crisis between the superpowers, has led to a deterioration in overall East-
t~lcst relations. Although the Europeans have done their best to reverse that trend,
- the very existence of detente--the key con~ition for security in Europe since the end
- of the 1960's--has been jeopardized. Beginning in the summer of 1980, the chances
- for sav.ing detente were to become even slimmer due to the Polish crisis and the re-
sulting threat of new Soviet military intervention in the center of Europe.
~o]_iti.cally, therefore, the security of Europe in the 1980's will have to be main-
tained in a new and probably long-lasting phase of confrontation between the super-
powers. Arm~ci with its rediscovered moral convictions and reviving nationalism, the
tlnited States durinq the coming decade will seek above all to reestablish its posi-
tion as a world power and to contain Soviet expansion in the Third World. For its
~~art, ttie Soviet Union, now assured of its global military power but uneasy because
of its internal weaknesses, will continue to be preoccupied with the consolidation
and expansion of iL-s empire rather than with the demands for a genuine relationship
~~f detente with the United States. Whether the Europeans like it or not, this situa-
tion wi1.l l~ave a direct impact on overall East-West relations and on Soviet-European
relations in particular.
In the second place, the basic conditions for Europe's security on the military and
strategic level have also undergone some fundamental changes.
- From the strictly military standpoint, the balance of power in Europe will continue
to worJc iri tl~e USSR's favor throughout the 1980's. Considering the now-established
parity between the central nuclear arsenals of the superpowers, the growing Soviet
superiority in Europe--as regards both conventional forces and Theater Nuclear Forces
(TNF')--w.i].1 further reduce the credibility of NATO's "flexible response" strategy.
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In fact, the Europeans will find themselves increasingly caught in the following
strategic "pincers";
1. Their persistent and worsening inferiority in conventional weapons wi11 increase
their vulnerability to a surprise attack by Soviet conventional forces, and for that
- reason, the Europeans will be more dependent on a first nuclear strike by NATO--one
that wi11 have to be made almost immediately after the start of hostilities.
- 2. But at the same time, the Soviet Union's recently acquired superiority in theater
nuclear weapons, coupled with parity at the central strategic level, will have the
effect of neutralizing in practice any attempt by NATO to bring the conflict up to
the nuclear threshold.
It will be late in this decade before the new defense programs being launched or ac-
celerated by tl~e Llnited States have any impact on certain components of the balance
of military power--especially at the central strategic level. And the imbalances be-
tween conventional and Theater Nuclear Forces in Europe will be only partially re-
duced beginning in the 1980's--thanks to NATO's modernization programs (the moderni-
zation of TNF and tY1P. LTDP [Long-Term Defense Plan])--provided, of course, that those
programs are completed.l
Lastly, on a more global geostrategic level, the invasion of Afghanistan, following
as it did the extension of Soviet influence into Ethiopia and Yemen, raas radically
changed the strategic map of the Persian Gulf region--a region that provides Europe
with some 60 percent of its oil imports. Soviet penetration of that zone and the
- resulting strengthening of the Western naval presence (basically American and French)
in that region have in fact widened the "front" of East-West confrontation beyond the
traditional central zone--Europe--into a zone which itself is extremely volatile and
unstable. The situation in this new theater is far from favorable to the West: geo-
graphic proximity works in the USSR's favor, and the local powers are afraid of see-
ing the Gulf region turned into a new arena of East-West competition. To quote
Raymond Aron, "The Middle East is a vacuum, but a vacuum that refuses to be filled."
Americans and Europeans have reacted very differently to the transformation of the
strategic environment in Europe and the Third World. While the events in the Gulf
have caused an American "awakening" and the emergence of a new foreign policy that
is much more "militant" and voluntaristic, the Europeans have tended to react with
the greatest caution. Their attitude has only increased American irritation at what
is perceive3--at best--as new proof of Europe's traditional selfishness and, more and
more frequently, as the sign of a slide by the Europeans into a sort of "self-
neutralization" or "Finlandization." The fact is that neither the Europeans nor the
Americans have thus far succeeded in working out a coherent strateqy aimed at resolv-
ing the new strategic equation of the 1980's. On the contrary, the general reaction
on both sides of tl~e Atlantic has been to fall back on the solutions of the past.
The Americans, increasingly exasperated by their allies, are trying to revive the
old "Atlantic" system of the 1950's and doing their utmost to return to the blessed
days of U.S. nuclear superiority and absolute "leadership" of the Alliance. That
explains the temptation in some American circles--close to the new administration--
to take a tough line toward Europe and, if necessary, to abandon it to its fate.
And for their part, the Europeans are for the most part dreaming of a miraculous re-
turn to the happy days of "perfect detente" that prevailed in the 1970's, a detente
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that allowed them to enjoy American protection within the Alliance while also cash-
ing in on the dividends of European detente with their neighbors to the east. Other
~uropeans--a minority--are still dreaming of a"European Defense Community" that
would give a united Europe the means of insuring its own defense and. assuming a new
role in world affairs. In fact, neither the "Atlantic" concept nor the notion of a
"Europe of defense" corresponds to today's political realities. And neither of those
notions can provide the framework for realistic options for the future.
Alteration of Atlantic Alliance
what has changed structurally--so to speak--in the Atlantic Alliance is the confirma-
tion rather than the appearance (which occurred in the 1960's) of two major and in-
escapable historical trends, moving in opposite directions but reinforcing each other.
First of all, there has been a relative decline in American power, both in the balance
of power with the USSR and with respect to West European allies. But there has also
appeared the pole of German power in a E~rope that has in general turned "semi-
Gaullist."2
That double transformation has been visible for some time now in the economic area:
the quarrels in the 1970's over economic policy (the issue of the "locomotive"),
the establishment of the European Monetary System, and the controversy over nuclear
energy and nonproliferation reflect a new balance of power within the ~~lliance it-
self. As a result of the change, Europe has become as rich and competitive as the
United States and is now capable of asserting and defending its own interests (in
connection with monetary policy or nuclear energy, for example) against the wishes
of the Clnited States.
t1 parallel development, although more complex and less visible, has also occurred in
the field of. security. Here the essential transformation has occurred in the field
of East-West relations, or, more precisely, in the increasingly obvious differences
- that Piave arisen between the development of U.S.-Soviet relations on the one hand
and of relations between Europeans and Soviets on the other. The core of the prob-
lem concerns the basic difference between the European and the American commitinent
- to and dependence on detente.
For the United States, detente turns out to have been merely a temporary phase in
t}~at country's history--a phase that had more to do with the constraints of the in-
ternal situation (F?atergate and Vietnam) than with a clear vision of the USSR~ As
was pinpointed by Robert Tucker,3 detente enabled the United States to solve the
- problem of its relations with Moscow almost "for free" compared to the expensive
policy of "containment" pursued in the past. At one point, in fact, detente came to
justify the de facto renunciation by the U.S. Congress of the use of force in foreign
policy (tlie War Powers Resolution). It also permitted a sizable reduction in the
military budget following Vietnam (an average annual drop of 1.21 percent between
1970 and 1977) and a stabilization of tne U.S. strategic arsenal at its 1968-1969
level. And lastly, it justified the theory of Mutual Assured Destruction (MAD)--that
is, the renunciation by the United States of its strategic superiority, which was the
American foundation for the SALT negotiations.
As a result, Soviet-American detente rested almost exclusively on its~military con-
tent (and especially on arms control), while the economic or human elements remained
negligible. And consequently, as soon as the Americans realized how far the balance
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of power had evolved to their disadvantage, and once they were convinced that the
value of the arms control process to their own security was, after all, limited,
they began to turn their backs on detente and to return to a more traditional fonn
_ of power policy with respect to Moscow.
For the Europeans, however, and for the Germans in particular, the experience with
detente could not evolve as it did for the United States. From the start, detente
had an entirely different meaning in Europe, expressed in terms of almost daily human
and economic interaction. On this side of the Atlantic, detente means stabilization
- of the postwar territorial status quo and the guaranteed security of Berlin. Eco-
nomically, it represents access by European industrialists to new markets and to
sources of the raw materials that they urgently need. Detente also permits a stabi-
lization of budget efforts for defense at modest levels (from 2 to 3 percent of the
GNP at the very most in most European nations). And on a wider political level, de-
tente has also allowed the Europeans to assert their own identity in full safety in
the face of the American leader of the Alliance.
"Gains of Detente" or New Vulnerability? The German Case
Such a situation poses three sets of problems, however: first of all, in the field
of politics: when the "gains" become too sizable, they are transformed imperceptibly
into equally sizable vulnerabilities. Thus, there arrives a moment when the idea of
renouncing a"gain" becomes politically (or economically) too expensive, even if the
other party openly violates the rules of the game. In the case of Afghanistan, for
example, the Europeans have refused to pay the price of giving up their "dividends"
from detente, even though that has meant acceptinq in practice the Soviet definition
of that same detente's divisibility. The question then becomes: how far can the So-
viets go before they go too far? For example, is Poland worth giving up detente for?
But since nothing has been done in the case of a nonaligned country that is the vic-
tim of open Soviet aggression, why would things be any different in the case of a
country that everyone recognizes as being part of the Soviet empire?
The second problem arises from the fact that the Western democracies tend too much to
be blinded by the short-term benefits of detente and to forget that it can only be
_ based on a stable and balanced relationship of power. Military imbalance can only
produce an equally unbalanced political relationship. By forgetting that basic truth,
the ~uropeans have gradually come to see in detente--and in its military corollary,
arms control--a convenient substitute for continuous defense efforts on their part.
In fact, as their dependence on detente has increased over the past decade, the Euro-
peans have gradually lost their awareness of the fundamental importance of the bal-
ance of power, and their will to assume the costs of that balance has declined apace.
The danger is therefore obvious: while detente has occupied an ever-larger place in
- the political life of the European nations, that political life has come to be based
on a balance of power that is tilting increasingly in favor of the USSR. The danger
is all the greater in that Europe's security depends on American protection. This is
where the gap between the respective American and European commitments to detente
creates the most severe problems. Because the time will come when Europe's depend-
ence on detente will have a head-on collision with its dependence on the Alliance.
That is an extremely fragile knot of vulnerability that the Soviets--not at all
stirprisingly--exploit continually with a view to "decoupling" Europe from the United
S tates .
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_ Of all the European states, Germany is certainly the one which--because it is di-
- vided and because of its geographical location as the "first line" facing the Soviet
empire--is most committed to and the most dependent on detente. Germany is also the
country that has benefited most from what has now come to be called the "dividends"
or "gains" of detente. Its Ostpolitik has given Germany the political dimension it
previously lacked by endowing it with international recognition and making the FRG
the center of gravity of East-~~lest relations in Europe. A new decisionmaking pole
was therefore created within the Alliance, and the United States lost its monopoly
and in some respects its initiative as far as political relations,with the East are
concerned. For their part, the Soviets found a valuable "advocate" within the A1-
liance and a way of working for a possible "political decoupling" thanks to the sys-
tem of "double detente" thus established: a detente between superpowers with the
= United States, but also a~ropean detente with Bonn (especially) and Paris.4 For
the Germans, the dividends of detente could also be measured in human terms (the re-
- turn of 200,000 Germans to the FRG) and in terms of economic benefits (the FRG alone
accounts for between 40 and 50 percent of all Western trade with the East}. Lastly,
detente also provided the FRG with more scope for diplomatic maneuvering, and this
has enabled it to assert and defend its own interests.
But as was noted above, such a commitment to detente is unavoidably accompanied by
tremendous vulnerabilities. The latter appeared plainly just after the Afghan af-
fair, when Bonn refused to follow Washington's example in applying economic sanctions
to Moscow. There is even reason to wonder whether the FRG would be willing to en-
force such sanctions on a long-term basis in case of Soviet military intervention in
Poland. Such vulnerabilities have also turned up on the political level. Just after
the Afghan affair, the FRG, caught between pressure from 4lashington, which was asking
it to prove its solidarity with the Alliance, and pressure from Moscow, which told it
to save detente on penalty of jeopardizing its own security, managed to make no deci-
sion at all. To save their Ostpolitik without breaking with Washington, the German
leaders had to go along with the boycott of the Moscow Olympic Games by their Ameri-
can protector, but made up for tliat gesture by attending the.Moscow summit meeti'~3
in June 1980.
But it is in the area of security--where Germany is most shaky--that those vulnera-
bilities have appeared most clearly. This is the area where Germany is in a position
of extreme dependence, both with respect to tY~e potential aggressor--the USSR--and
its ultimate protector--the United States. Two recent events--the issue of the neu-
tron bomb and ttie long and painful process of negotiation within the Alliance that
ended in NATO's December 1979 decision to deploy 572 new medium-range nuclear mis-
siles in L�:urope--illustrate the FRG's basic dilemma in the age of detente.
Europe in t?xtended Order
The weakening of the Atlantic system that we have just discussed does not mean, how-
ever, that political evolution in Europe has reached a stage in history where the
European states are already in a position to take charge of their own security and
thus replace the Atlantic institution with the "third way" that certain Etiiropeans
have dreamed of since the abortive attempt to set up the EDC (European Defense Com-
munity) in the 1950's. On the contrary--and this is the essential difference with
respect to the "great debate" in the late 1950's and early 1960's--the Europeans are
_ no longer reacting in the same way to the decline (real or presumed) of the American
- nuclezr guarantee. Twenty years ago, the "normal" European reaction was to acquire
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its own "bomb" (as France did) or to try to start ~iropean cooperation in defense
matters (as was the case with the French-German negotiations of 1958-1963 or the
Fouchet Plan of 1962).5 Today, on the contrary--and this is precisely what is most
disturbing in the present context--each of the governments concerned has reacted
separately in an attempt to preserve the status quo in the face of growing Soviet
pressures and the rebirth of a strong pacifist and neutralist current. While some
governments, particularly among the smaller members of the Alliance, decided purely
and simply to reduce their military efforts, the others clutched desperately at arms
control in the hope that those negotiations would miraculously succeed in restoring
~ the balance of power while also justifying on the domestic political level the mini-
mum military effort necessary for staying in the Alliance.
In such a context, European cooperation efforts in the area of defense have pra-
gressed scarcely at all, although the idea of a EUrope of defense was mentioned sev-
eral times during the 1970's by European leaders. Great Britain, for example, which
had to decide whether to replace its deterrent force, has in fact never seriously
~onsidered the "French option." British leaders interested themselves exclusively
in the American Trident system, feeling that the French M-4 missile was less satis-
factory from the standpoint of requirements and performance, as well as more expen-
sive and; above all, more of a political risk, since Anglo-American relations were
at stake. And Chancellor Sr.hmidt's FRG, whose attachment to the French-German
_ "coupling" is nevertheless 4;e11 known, stated very clearly its opposition to any
idea of nuclear cooperation ;~~ch France after that idea was mentioned from the French
side by Buis and Sanguinetti. More than ever, the FRG is hanging on to its status
as a nonnuclear state, which underlies a part of its relations of detente with the
- East, and, as in the past, Germany wants above all to avoid having to choose between
France and the United States.
Paradoxically, the most positive development in the direction of a possible European
option in defense matters has taken place in France, which nevertheless remains for-
mally attached to the policy of independence set by GeneraZ De Gaulle. We will not
linger here over the details of doctrinal developments in French strategy since
President Giscard d'Estaing's election in 1974, the main element of which was the
concept of "enlarged deterrence" proposed in 1976. The fact remains that those de-
velopments have been considerable as regards both the terms employed and the thinking
of French leaders. It is true that they refused to publicly support the TNF moderni-
zation plan, although such support would no doubt have played a decisive role in
1978-1979 during the political debate in Germany and would have greatly facilitated
Chancellor Schmidt's task in dealing with opponents within his own party. It is true
that the French leaders, so far at least, have carefully striven to keep their re-
marks deliberately vague concerning France's possible role in the security of Europe
and particularly with respect to that of their German neighbor. It is obvious, how-
ever, that considerable progress has been made in that direction, as witness the
many official statements on the tie-in between France's security and that of its
neighbors and the decision to modernize its strike force--involving in particular
decisions aimed at making the tactical weapons more flexible (with, in particular,
~ the addition of enhanced-radiation weapons to the French arsenal). Clearly, the
accepted French strategic model of only 8 or 10 years ago--limiting deterrence to
French territory alone--has given way to a broader concept which, although still
very vague, explicitly takes into account the security of our European partners and
especially of the FRG. And it is interesting to note that the evolution of French
strategic thinking has corresponded more to the new awareness of the problem of
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German security than to a perception in France of a change in the balance of strate-
gic power between thE superpowers. For a very long time, French leaders had in es-
sence ignored the technical components of the SALT agreements, even though the latter
. reflected the balance of power between the two big powers, and saw in them only their
political significance (essentially, proof of the American-Soviet "condominium").
The French did not really discover the military significance of SALT until after the
Germans had publicly expressed their concern over developments in the balance of stra-
tegic power and their effect on the "coupling" and on the credibility of the American
guarantee. Thus France had its own debate on SALT and the defense of Europe begin-
ning in 1979--that is, after the big German debate on SALT II and the Earomissiles,
which was started by Helmut Schmidt. And it was not an accident that the French de-
bate, which was started by the Gaullists, revolved essentially around the problem of
German security: France discovered, suddenly and somewhat confusedly, that Germ~ny
had its own almost Gaullist doubts about the credibility of the American guarantee.
Following good French logic, a Germany that does not f eel secure is a Germany tHat
inescapably seeks other options for its security, either by imitating tl~e French
nuclear model or by seeking a form of separate accommodation with the USSR. Quite
obviously, neither a nuclear Germany nor a"Finlandized" Germany, unified or not,
would be a very satisfactory solution for France.
Third Way 3~tween Atlantic Alliance and EDC?
Although a reorganization of the entire security system in EUrope appears necessary
and urgent, it is equally clear that the options presenting themselves to us are
neither attractive nor very numerous. Considering current political realities both
in the Alliance and in Europe, it is obvious that neither a return to the old "Atlan-
tic" system nor the establishment of a theoretical "European Defense Community" is a
realistic option for preserving security in Europe during the 1980's. Without po-
litical will on the part of the countries concerned, the European option represented
by an "EDC" is doomed to remain in the planning stage for a very long time to come.
Its attainment, whicYi is possible in the long term, is in any case too far away to
be of real help in solving the security problems facing Europe today.
At the other extremity, the purely Atlantic option scarcely seems attainable. The
reason is that the golden age o� the Atlantic system has passed; it is hard to see
tiow the United States could turn back the tide of history by reestablishing both an
ove na]~elming strategic superiority over the USSR and its leadership over a Europe
that has become accustomed to a certain degree of political independence.
So for lack of a clear-cut solution, whether completely European or completely At-
lantic, the only possible realistic option for the future will of necessity be a
hybrid. It will also reflect faithfully the historical phase in which Europe finds
itself today--halfway between a weakened Atlantic system and a European unit that is
still in embryo. Such an option leads to a necessarily pragmatic--if not modest--
approach aimed at achieving realistic objectives. That approach presupposes that
Americans and Europeans will abandon their traditional tendency to regard the A1-
liance and European cooperation for defense as being mutually and almost naturally
- exclusive. For too long, the Americans and most E1~ropeans have refused to ~onsider
any ~uropean alternative to NATO. That attitude has, incidentally, provided a con-
venient justification for continued American domination of its allies as well as for
passivity Uy most Europeans when it has come to assuming responsibility for their
own defense. The opposite tendency, attractive to some Europeans (and the French in
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I~articular), was to feel that F.urope could exist only if it provided its own means
of security outside NATO. In fac~~ that perfectly logical line of reasoning also
served as a convenient justification for the inertia that has characterized European
cooperation in security matters since 1954.
our objective today should be to reconcile the Alliance with a determined effort to
achieve European cooperation in defense. The gradual establishment of such E~ropean
cooperation, carried out in parallcl with NATO, would make it possible to:
l. Encourage a greater contribution by the Europeans to the defense of their conti-
nent.
2. Compensate for the decline in the credibility of the American guarantee.
3. Release the American military resources necessary for protecting vital Western in-
terests in areas outside the NATO zone, while also clearing the way for a European
military role in those areas.
The attainment of those objectives would in no way require the establishment of new
institutions or even the renegotiation of the 1949 NATO Treaty--a task, incidentally,
that would be nearly impossible and in any case risky. Neither would it entail the
establishment of a new inter-European regional entity--and even less a supranational
one. In this case, it would be sufficient simply to build on what already exists--
that is, on cooperation in foreign policy and on the de facto complementarity that
already exists among the armies and defense policies of the three principal European
- states. At the overall Western level, it would be a matter of consolidating the com-
plementarity between ~ropean potentials and the American potential that is already
a part of the Ottawa Declaration of 1974.
Those initiaiives must be aimed at loosening the previously described Soviet stra-
tegic pincers through double-pronged action:
l. Raising the nuclear threshold--and this would mean a considerable strengthening
of the conventional potential.
2. The implementation cf ineans and of a doctrine capable of restoring credibility to
t}le first use of nuclear weapons.
That double-gronged action would be based on the idea of strengthening the operational
and strategic complementarity of the forces maintained by the three principal European
states (France, the FRG, and the United Kingdom), with that complementarity to be
act~ieved in parallel with NATO. Here we will simply mention in outline the measures
necessary as far as conventional armament is concerned and lay more stress on the ob-
jectives of possible nuclear cooperation.
As far as conventional forces are concerned, the Europeans will have to deal with an
increasingly difficult situation that will be characterized by two unfavorable trends:
l. Growing Soviet capability for launching a surprise attack on E~rope, taking into
accoun6 the balance of power existing before mobilization or the sending of reinforce-
ments.
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2. An American trend--and it will grow---toward moving troops and equipment currently
stationed in Europe to other theaters when necessary (the Persian Gulf in particular).
What this will mean in the future is that the Europeans will have to do a lot more
in the very area in which they have been least efficient (with the possible exception
of the FRG and its Bundeswehr) and least willing to act in the past for all kinds of
political, economic, and social reasons.
Obviously, it is not a quEStion here of defining a program for modernizing conven-
tional forces on a~ropean scale. But we will make some general remarks. From the
start, taking action to rebuild conventional forces will involve a certain number of
financial--and therefore political--choices. It is clear that in view of the consid-
erable inflation in the cost of armaments, such a buildup will require a sizable in-
crease in European defense budgets beyond the current 3 or 4 percent of GNP--meaning
a gradual rationalization of defense efforts which so far have been made separately
by each of the states in question. Considering the sizable political, economic, and
social constraints in Europe, it seems unrealistic to expect a sudden jump in defense
~ budgets. Relatively speaking, catching up with the financial resources allocated to
defense by the USSR (f rom 11 to 13 percent of the Soviet GNP) would mean tripling
~ropean defenses. Catching up with the United States would mean doubling them. The
most one can argue for in Europe is an increase of 1 percent of the GNP--and that in
itself would be regarded as an optimistic objective by any French, British, or German
military planner.
This first budgetary constraint means that we will have to make better use of what we
- have. And that is the area where a lot can be done on a European scale.
First of all, a lot can be done in the joint design and manufacture of arfnaments.
In this area, there have been many experiments in Europe, and some of them (chiefly
between France and Germany) have been very positive--the HOT Roland systems, Alpha
Jet, ar.d so on--but others (more international in nature, such as the Tornado) have
turned out less satisfactorily, mainly from the financial standpoint.
Second, the problems of coproduction, which are very complex (because they go beyond
t11e military sphere to affect the economy, technological innovation, and employment),
can nevertheless be solved provided that the political will to cooperate exists. The
case of French-Gennan cooperation is significant in this respect. So there is reason
to think that a rationalization of production programs in France, Germany, and Great
Britain will make it possible in the future to improve the quality of the systems
whilc~ also permitting longer production runs and thus ending the current dispersion
of resources and the redundancy of competing systems produced separately by each of
those states.
L~ut beyond the coproduction of armaments, the main effort at rativnalization will
liave to be concerned with the overall concept of defense forces in the tYiree coun-
tries. Tn this respect, greater operational complementarity and even a specializa-
tion of duties among European armies seem inevitable. Incidentally; that specializa-
tion already exists: the Bundeswehr is currently West Europe's strongest conventional
army, while France and Great Britain are in fact nuclear powers to a greater extent
than they are conventional ones (with France retaining a second specialization: ex-
ternal intervention). In the future, it will be a question of strengthening that
specialization both operationally and financially. It is clear that France and Great
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Britain will find it increasingly difficult to finance the modernization of their
nuclear arsenals and their conventional potential simultaneously. (And in France's
case, we would have to add the cost of outfitting the external intervention forces.)
Rather than scattering valuable resources in that way, London and Paris should inten-
sify their nuclear specialization and be content with a main body that is smaller but
better equipped than Great Britain's current BAOR [British Army of the Rhine] and
France's First Army. For France, such a plan would have the advantage of permitting
a rapid and needed modernization of its army and navy while releasing more credits
for more numerous and more mobile intervention forces.
As far as nuclear weapons are concerned, it is clear that the French and British
forces will be called on in the future to play an increasingly important role in the
reorganization--which we consider inevitable--of the Alliance's nuclear posture in
Europe. The reason is that as American credibility declines, the importance of
French and British European forces increases almost proportionately--whether Paris
or London likes it or not, incidentally. It is an almost natural development and
one that could be compared to the interaction between co~nunicating vessels. As long
as the American guarantee was clearly protecting nonnuclear Europe, the two European
nuclear powers could confine themselves--to their own great benefit--to a posture of
minimal deterrence covering only their own territories. But as soon as that American
protection weakens, those same French and British nuclear forces find themselves be-
ing hurled, as it were, into a European role. We should note, by the way, that their
role--already recognized implicitly in the Ottawa Declaration--is being strengthened
in fact by the quantitative and qualitative increase in the French and British arse-
nals, which are capable now and will become increasingly capable of covering more
than just the national territory (this is true of the French forces, which will have
MIRVed rockets beginning in 1985, and of the British potential, which will include
Trident missiles armed with MRV warheads). In practice, it will therefore be impor-
tant to confi nn that "evolution"--which, let us repeat, is alreacly underway--by as-
signing to those forces the trigger role in escalation to the nuclear phase, a role
that is no longer performed credibly by the American systems alone. Because while it
is possible that the Soviets may have reason to doubt whether the United States would
defend the cor~tinent by engaging in a first strike with the nuclear weapons it has
deployed in Europe, such a doubt would no longer be possible if the Europeans them-
selves declared themselves willing and were able to make that first strike in the de-
fense of their continent. Such an expansion of French and British deterrence to in-
clude the FRG and west Europe would therefore have the a8vantage of offsetting the
decline in American credibility while not eliminating (but, on the contrary, strength-
ening) the link with the use of the American central systems.
Conclusion
It would be illusory for the Europeans to believe that they can with impunity become
a"big Switzerland" protected from external upheavals. Because if Switzerland--or
- Finland--exists today, it is precisely because other Europeans have so far manifested
the will to exist as independent nations determined to defend themselves. And al-
though such expressions are fashionable today, there will be no "Finlandization" or
"Euroneutralism" in Europe, because there is no third way between defense and enslave-
ment.
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FOOTNOTES
1. The program for modernizing theater weapons and that for conventional forces (the
Long-TeYm Defense Plan) have been analyzed by C. A. Blacker and F. Hussain respec-
tively, as well as by Richard Burt in "European Security in the 1980's."
2. See Fritz Stern, "Germany in a Semi-Gaullist Europe," FOREIGN AFFAIRS, Spring
1980.
3. See Robert W. Tucker, "America in Decline: the Foreign Policy of Maturity,"
FOREIGN AFFAIRS, "America and the World, 1979."
4. Incidentally, Moscow did not fail to play on that double detente just after the
Afghanistan affair. The Soviet press noted after the summit meetings in Warsaw
and Moscow that "the U.S. partners are continuing to cultivate the field of de-
tente, while the United States continues to undermine it" (TEMPS NOUVEAUX, quoted
in LE MONDE, 1 July 1980). PRAVDA went so far as to marvel at "the peacemaking
role" of the French-German connection {quoted in LE MONDE, 11 July 1980).
For his part, Brezhnev warned Chancellor Schmidt during the Moscow summit meeting
that the "United States couldn't care less about Europe's fate; if there is a nu-
clear war, it will be on the other side of the ocean" (PRAVDA, quoted in IHT,
8 July 1980).
5. See Wilfrid Dohl, "French Nuclear Diplomacy," Princeton, Princeton University
Press, 1971, chs 2, 7.
6. On the central front, the ratio is currently 1 to 2(27 NATO divisions to 46 Warsaw
Pact divisions, or, in terms of battle tanks, 7,000 to the Warsaw Pact's 19,500).
See IISS, "Military Balance," 1979-1980, pp 110-115.
COPYRIGHT: 1981 S.A. Commentaire
11798
CSO: 3100/954
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POLITICAL UNITID KINGDOM
SOCIAL DF~IOCRATS PUBLISH DRAFP CONSTITUTION
PM~31507 London THE TIMES in English 23 Sep 81 pp 1, 4
[Report by Julian Haviland: "Policy Voice for Every Social Democrat"]
[TextJ Leaders of the Social Democratic Party yesterday published a draft
constitution designed to give every party member a voice in formulating policy
and in choosing the party's representatives at almost every level.
Every member would have the right to choose by postal ballot candidates for
election to Westminister, to the European Parl.iament and if they wish, to
local~authorities. The significant exception is that it would be open to the
party's MPs to choose the parliamentary leader (who would be prime minister
if the party held office) provided only that they were of one mind. That
hitherto undisclosed provision, which, like everything else in the constitution
- is subject to ratif ication 1iy the entire membership, seems likely to extend the
controversy over choosing the leader, on which the fou~ founder members are
already divided.
There is to be a dual leadership. A president, who as leader outside Parliament
would be the second most powerful figure, would be chosen by th e whole membership.
- The constitution incorporates the expertise of many constitutional lawyers and
- seeks to avoid the divisions notably over the manifesto and the rights of MPs,
- which rack the Labor Party. It provides for:
A councl.l for social democracy--described as "the parliament of the party"--with
about 400 members, elected every two years, and meeting at least three times a
year. The council will debate and adopt policy.
A national committee, meeting monthly to run the party's aff airs outside Parliament.
It will include MPs, regional representatives and some members elected by a national
ballot of all-party members.
There will b e no~corporate membership--"no block votes," Mr Roy Jenkins said
yesterday. "Representative democracy has to work," Mr Jenkins said, "on the basis
of a certain degree of trust--of independence and of people who democratically
e].ected have the opportunity to make up their minds."
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Special provision is made at all levels for women representatives. Short-lists
of parliamentary candidates must have a proportion of women and of inen.
_ The national panel of candidates will include "a reasonable balance between both
sexes and different age-groups, and include representatiivea of different social
and economic groups and not ethnic minorities."
On the rights of MPs and their relationship with the party outside Parliament,
the Social Democrats' constitution is explicit. "It is hereby declared that
the parliamentary committee must have full regard to the election programme and
- all the statements of policy adopted by the council. But SDP members of Parliament
shall not be mandated nor subject to direction or control by an organ of the SDP."
The president is to chair both the council and the national committee. But his
position is carefully circumscrib ed, to limit the poss3bility of rivalry with th e
leader--the putative or actual prime minister.
The leader is to be chairman of the national committee's policy sub-committee,
of which half the members will be MPs. The committee will formulate policy,
"after wide consultation," for the council to ratify,
The constitution reads: "An election programme shall. be based upon statements of
policy adopted by the council, but if no statement of policy has been adopted on
some issue which in the view of the policy sub-committee needs to be referred to,
the sub-committee shall have power to pronounce a pol3cy on that issue for
inclusion in the programme."
Mr Jenkins said yesterday that the method of electing the leader would not cause
great upheaval. The constitution provides that the MPs should f irst choose the
leader from among their ranks. Each candidate would have to be nominated by
15 per cent of MPs, and the winner would have to be endorsed.by.the council.
If endorsement was withheld, the choice would go to the whole membership.
COPYRIGHT: Times Newspapers Limited, 1981
CSO: 3120/2 END
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