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Note: The insurance policies, not this advertisement, will form the contract between the insured and the insurance company. The policies contain limits, exclusions and limitations not listed here. COVER: Mexico . . . Poland . . . Argentina. Many countries that owe large amounts to western banks are in severe financial difficulty. With some delaying payments and even threatening default, the fragile house of cards that is the international credit system may be on the brink of collapse. Our article begins on page 26. Art by Edward Miliano.

Officers and Members of the Governing Board Carrots & Sticks 16 DENNIS K. HAYS, President Author Carol Brookins argues that restricting trade to pun¬ ANTHEA S. DE ROUVILLE, Vice President ish Soviet behavior rarely has the desired effect. Commercial DOUGLAS P. BROOME, Second Vice President relations between the two superpowers should be based not on IRVING A. WILLIAMSON JR., Secretary myths but common sense. BROOKE HOLMES, Treasurer RALPH E. BARNETT, JUANITA L. NOFFLET, The Inscrutable Secretary 22 AID Representatives In tackling the many foreign policy problems of his short JAROSI.AVJ. VERNER, USIA Representative tenure, George P. Shultz has revealed a penchant for operat¬ ADRIAN A. BASORA, BARBARA HUGHES, THOMAS J. MILLER, ing in the manner of a Japanese politician. By Daniel State Representatives Southerland. L. DOUGLAS HF.CK, SPENCER KING, CHARLES S. WHITEHOUSE, Retired Representatives The Credit Collapse 26 Staff International bankers and development economists have en¬ CECIL B. SANNER, Acting Executive Director!A dministrative Director couraged many financially troubled countries to borrow large SUSAN HOLIK, General Counsel sums of money. The choice may now be between economic SABINE SISK, Members' Interest! Grievance R epresentative collapse and political stability. By Charles Maechling Jr. PAT GUILD, Executive Secretary Congressional Liaison Journal: A Letter for Charley 32 ROBERT M. BEERS The story of a young FSO in postwar Europe and his ill-fated Scholarship Programs DAWN CUTHF.LL love for a beautiful Bulgarian singer. By Fred Godsey. Letters 2 Foreign Service People 30 Book Reviews 6 AFSA Election Section 38 ForeignService Journal Plus Ca Change 14 Association News 42 Editorial 15 STEPHEN R. DUJACK, Editor FRANCES G. BURWEIX, Associate Editor SHF.IXY RONDEAU, Editorial Assistant The Foreign SendeeJournal is the magazine of profes¬ Active Members—Dues range from $52 to $117 sionals in foreign affairs, published 1 1 times a year annually. Retired Active Members—Dues are $40 Editorial Board by the American Foreign Service Association, a annually for members with incomes over $20,000, JOHN D. STEMPFX, Chairman non-profit organization. Material appearing herein $25 annually for less than $20,000. Associate DAVID WILSON, Vice Chairman represents the opinions of the writers and does not Members—Dues are $25 annually. All dues pay¬ FRANCIS X. CUNNINGHAM necessarily represent the official views of the De¬ ments include $7.50 allocation for the Journal and partment of State, the U.S. Information Agency, Association News, per AFSA Bylaws. GEORGE GEDDA the Agency for International Development, the Subscription to the Journal’, one year (1 1 issues), W. HAVEN NORTH United States Government as a whole, or AFSA. $10.00; two years, $18.00. For subscriptions go¬ CAROLINE MEIRS OSTERLING While the Editorial Board is responsible for general ing abroad, except Canada, add $1.00 annually. TAIRA ST. JOHN content, statements concerning the policy and ad¬ Second-class postage paid at Washington, D.C. LANGE SCHERMERHORN ministration of AFSA as employee representative and at additional post office. POSTMASTER: Send CAROL VAN VOORST under the Foreign Service Act of 1980 on the edito¬ address changes to Foreign Service Journal. 2101 E rial page and in the Association News, and all Street N.W., Washington, D.C. 20037. JAROSLAV VERNER communications relating to these, are the responsi¬ The Journal welcomes manuscripts of 1500- Advertising Representatives bility of the AFSA Governing Board. 4000 words for consideration by the Editorial JAMES C. SASMOR ASSOCIATES, Microfilm copies of current as well as of back Board. Author queries are strongly urged. Stamped issues of the Foreign Sendee Journal are available envelope required for return. 521 Fifth Ave., Suite 1700, through the University Microfilm Library Services, New York, N.Y. 10017. Ann Arbor, Michigan 48106, under a contract ©American Foreign Service Association, 1983. (212) 683-3421 signed October 30, 1967. 2101 E Street N.W., Washington, D.C. 20037. JOSHUA B. POWERS, LTD., Membership in the American Foreign Service Telephone (202) 338-4045. Offices in State 46 Keyes House, Dolphin Sq., Association is open to the professionals in foreign Dept.: 632-8160/2548 London SW1. 01-834-8023/9. affairs overseas or in Washington, as well as to persons having an active interest in or close associ¬ April 1983. Volume 60, No. 4. ISSN 0015- International Representatives. ation with foreign affairs. Membership dues are: 7279. What do LETTERS lke JFK Dangerous Response ( I read Mr. Gedda’s article, “A Dangerous Region” [February], with sorrow' and dis¬ appointment. My argument is not with Mr. Gedda. & Nixon He is what he is. Undoubtedly, his casual collaboration with those who seek to dam¬ age my reputation has improved his access to those unidentified top administration officials he cites so frequently. I do find it have in passing strange that a professional journal would publish such an unprofessional piece of work. Mr. Gedda characterizes my role in the controversy and even discusses my motives common? yet he has never attempted to communi¬ cate with me. Mr. Gedda writes at length on a serious subject but in the entire article supplies quotations from only one identi¬ They were moved by fied source with first-hand knowledge of the issues. Most of the author’s judgments and conclusions are based on anonymous FIDELITY STORAGE sources. A primary duty of any editorial board is to make certain that articles meet minimal professional standards. Yet the From presidents to outside of the Beltway, with board of the Journal approved for publica¬ plenipotentiaries, super-secure vault storage for tion a piece which violates not only the Washingtonians choose Fidelity your silver and other valuables. basic canons of journalism but ethical Storage, the company with We are the only State principles as well. more than 75 years of Department contractor with I have the obligation to correct two of experience. Fidelity is one of both a quality control program the many false and distorted statements which appear in the article. First, it is the area’s largest moving and and fulltime inspector to inaccurate to state I gave "full concur¬ ensure the highest standards. storage companies, with six rence” to “resumed military assistance” to locations throughout the metro El Salvador. To the contrary, I consistently area—from the District to We have moved Patton, opposed such aid until the human rights Virginia to Maryland. MacArthur and Doolittle. performance of the Salvadoran military Fidelity’s warehouses are the From generals to general improved. Those who held another view largest and most advanced service officers, join a moving pushed through a policy change while 1 containerized facilities inside or crowd. was on leave. My views were not request¬ ed. Second, it is misleading to say, as Mr. Gedda does, that I resigned from the For¬ eign Service. The Reagan administration officially notified me that I would receive rio new assignment of equivalent responsi¬ bility and that therefore under the law I would be retired. Those of us who had our careers dam¬ aged or cut short because of our role in United States policy toward Central America would have welcomed a thor¬ Inbound or Outbound, Storage or Air Freight, call Fidelity Storage ough, thoughtful analysis of the contro¬ (703) 971-5300 • PO Box 10257, Alexandria, Va. 22310 versy and its impact on the Foreign Serv¬ ice. 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FORD EXPORT DIVISION career Foreign Service has given us a slant¬ after all, is what we were being paid to do. AUTHORIZED EXPORTER ed, gossipy piece of trivia. JACK R. BINNS GENERAL ELECTRIC ROBERT E. WHITE Ambassador to Honduras, 1980—81

-U.S.A.- Ambassador to El Salvador, 1980—81 Washington, D.C. Washington, D.C. Author George Gedda responds: While I do not wish to take issue with I was a bit taken aback by Mr. White’s George Gedda’s recent article [“A Danger¬ criticism since I felt I tried to deal with his GENERAL ELECTRONICS ous Region”] on the fate of some of those particular situation as evenhandedly as INC. involved in Central American affairs dur¬ possible. Mr. White is indeed a controver¬ ing the previous administration, 1 would sial figure around the State Department, like to offer some comments on my situa¬ but I nonetheless felt constrained to say, REFRIGERATORS • FREEZERS tion as described. Being fairly well in¬ gratuitously, that Mr. White sees it as his RANGES • MICROWAVE OVENS formed about domestic American politics "patriotic duty" to speak out against ad¬ AIR CONDITIONERS • DRYERS and having experienced Senator Helms’s ministration policies, thus ascribing to WASHERS • SMALL APPLIANCES hold on my nomination, I was hardly “un¬ him the purest of motives. His hostile AUDIO EQUIPMENT • TELEVISION aware of the magnitude of the change in criticism of the article seems far out of DISHWASHERS • TRANSFORMERS attitude” that accompanied the change proportion to the provocation. in administration. Indeed, I had been He says there are “many false and dis¬ Available for All Electric informed that my name was included on torted statements” in the article but cites Currents/Cycles the hit list prepared by the new admin¬ only two. The question of whether he re¬ istration’s State Department transition signed or was retired from the Foreign Immediate Shipping/Mailing team. Service is a relatively minor one. It may be From our Local Warehouse The U.S. elections, nevertheless, did true, as Mr. White suggests, that he did not alter the conditions that prevailed in not give his “full concurrence” to the Janu¬ We Can Also Furnish Honduras in any fundamental way. But ary 1981 military aid resumption to El Replacement Parts for most important, the new administration Salvador. But I believe it is somewhat mis¬ Most Manufactures did not change my instructions to ensure leading for him to say that he “consistently that there were no doubts in Honduras opposed such aid.” A month after being regarding U.S. support for a return to de¬ SHOWROOM relieved of his duties as ambassador, Mr. General Electronics, Inc. mocracy in that country. This policy goal White told a congressional hearing he op¬ 4513 Wisconsin Avenue, N.W. was realized with the successful election of posed extensive military aid to El Salvador, Washington, D.C. 20016 November 1981 that resulted in the inau¬ leaving the clear impression he would not Tel. (202) 362-8300 guration of President Suazo Cordova in object to modest aid levels. TWX 710-822-9450 January 1982. It is also worth noting that As for Mr. Binns’s comments, he ac¬ GENELECINC WSH the installation of democratic governments knowledges his views were not entirely in Central America remains the center- welcomed by the new administration. piece of our policy in that region. Nonetheless, his letter represents a useful One cannot dictate the perceptions of elaboration of his particular situation at others. Thus, Gedda’s assertion that my the time of the change in administration. CO reporting “continued to reflect Carter’s 5 o views” may be an accurate description of Detecting Alcoholism Washington perceptions. Gedda does not H— o © specify the nature of the reports in ques¬ "Helping the Overseas Alcoholic" [Febru¬ © ** tion, but I assume they fall into three gen¬ ary] was read by us with appreciation, fo¬ > s eral categories: alleged human rights vio¬ cusing as it did on the longstanding but cc «3 o O o> lations and refugee problems; the fortunately ever-diminishing issue of earli¬ .52 3 c o magnitude of U.S. military presence; and er detection of alcoholism by the physician relations with Nicaraguan exile groups and earlier referral of the patient into treat¬ which had been closely associated with So- ment. There indeed have been times in the

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THE NEW AMERICANS FROM GENERAL MOTORS CHEVROLET PONTIAC OLDSMOBILE BUICK CADILLAC GMC cifically by the medical staff, is reflected in medical referrals. This increase should be some similarly revealing statistics. Of the reassuring to the author of the article. more than 225 new patients seen by the These statistics reflect a heightened Office of Medical Services’ Alcohol Aware¬ awareness, due largely to a program of con¬ ness Program over the past two years, bet¬ tinuing medical education in alcoholism ter than three-quarters have been in-house which has become an integral part of the BOOK medical referrals, either from physicians in staff physician’s experience within the Of¬ the Examining Clinic or Health Unit or fice of Medical Services. They also reflect a REVIEWS the regional medical officers overseas. Go¬ readiness to recognize alcoholism as a ing back to 1979, of the 68 referrals to the medically treatable disease and the compe¬ program, 57 percent were made by staff tency to deal with it as such. physicians of the Office of Medical Ser¬ A Diplomatic Science? vices. The proportion of such referrals by JEROME M. KORCAK, M.D. physicians within the department has in¬ Medical Director FORCE AND STATECRAFT: Diplotnatic Prob¬ creased gradually each year since 1979. By Office of Medical Services. Department of State lems of Our Time. By Gordon A. Craig and 1982, some 72 percent of the referrals were Washington, D.C. Alexander L. George. Oxford University Press, 1982. $19.95.

This slim book is the offspring of a mar¬ riage of diplomatic history with political science. It is a union long needed. The marriage brokers in this instance are a dis¬ tinguished diplomatic historian and an equally distinguished political scientist, both at Stanford University. Their col¬ laboration attests to the profound histori¬ cal knowledge which any study of diplo¬ macy demands and accentuates the awkward and superficial conceptualizing of diplomacy that political scientists in this country have fostered as they grope, like the proverbial blind men feeling the elephant, for a comprehension of this long- evolving political process. The historical part of this volume, deal¬ ing with international systems from the 17th century to the present, is a magnifi¬ cent compression of some 150 pages. The second part, on problems of force and di¬ plomacy, analyzes negotiation, deter¬ rence, coercive diplomacy, crisis manage¬ ment, war termination, and detente. The third part consists of two admittedly ten¬ tative chapters on the difficult problem of the role of ethics and morality in world politics. The book grew out of a course developed by the authors on “contempo¬ rary problems of foreign policy” (there is the old mesmerism of “foreign policy,” as though “diplomacy” were too effete a sub¬ ject to attract students), and the case stud¬ ies used in part II of the book were pre¬ pared by three Army officers. Why diplomatic officers were not used we do not know, but it no doubt indicates that more military officers take university courses than diplomats, a situation that has long been sounding a tocsin to many of us. This book illustrates that the limita¬ tions from which political scientists and military officers suffer are leading to the formulation of deterrence theory in terms of force, to the exclusion of political ma¬ neuver and therefore political skill. Coer¬ cive diplomacy is viewed as consisting of

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City State ZIP Code FILL OUT AND MAIL TODAY! AFN7197 J “threats of limited force,” whereas such that, to protect our export markets, the cases as the withdrawal of Soviet forces United States should meet foreign inter¬ from Iran in 1946 clearly show that discus¬ ference in free trade with similar pro¬ sions in foreign ministers’ meetings, U.N. grams. debates, and pitiless publicity—all free of The authors generally support the con¬ threats of force—are a part of the interna¬ cept of free trade but, they argue, since tional dynamic. It is this kind of historical many major trading nations subsidize ex¬ SELL superficiality that cripples much of the po¬ ports or otherwise interfere with market litical scientists’ approaches to diplomacy. forces in an effort to expand their exports at Eventually when they place proper empha¬ the expense of others, the United States INVEST sis on the role of diplomacy without should respond in kind. “The national in¬ threats of force, their theories will come terests of the United States would best be closer to the contours of reality. In the served by an elimination of export subsi¬ meanwhile, they might speed this process dies worldwide. Barring the best solution, Ed Joyce by enlisting the help of diplomatic practi¬ however, the second-best choice calls for Retired FSIO tioners in their endeavor. It might acceler¬ export subsidies sufficient to permit most LICENSED IN D.C. ate their catching up, to everyone's advan¬ U.S. exports to meet subsidized foreign and VIRGINIA tage. —SMITH SIMPSON competition.” While this line of reasoning might best Lesson in Democracy be termed a “beggar thy neighbor” ap¬ proach instead of a “second-best alterna¬ gviouNj UNCONDITIONAL DEMOCRACY: Education tive,” the book uses convincing economic and Politics in Occupied Japan, 1945—1952. arguments to outline specific areas in ^VERNOIf By Toshio Nishi. Hooper Institution Press, which the U.S. could assist exporters 1982. $19.90. through slight changes in government 'REALTY M programs and tax policy. The authors call ^INC ^ In return for its unconditional surrender in for the government to remove existing reg¬ 6257 Old Dominion Dr. 1945, Japan was given a six-year lesson in ulatory obstacles to exports, take Export- McLean, Va. 22101 unconditional democracy by the United Import Bank operations out of the current Off: 821-8300 States. That is the thesis of this provoca¬ budget, and adopt a flexible approach of Res: 821-2109 tive book by a postdoctoral fellow at the providing subsidies through support for Hoover Institution. Toshio Nishi, who research and development or tax rebates for was born and brought up in Japan but export industries subject to “unfair” for¬ received his higher education in the Unit¬ eign competition. The book advocates es¬ ed States, dwells mostly on education re¬ tablishing U.S. countersubsidies as a re¬ American Educational Trust forms in Japan, although he prefaces this sponse to already existing foreign-export book with a rapid summary of the entire subsidies. However, the existing counter¬ occupation program. Curiously, he pays vailing duties have already been chal¬ little attention to Japanese sources, but his lenged as being in contravention of the research in American records on education spirit of the General Agreement on Tariffs policy is impressive. A fair number of his and Trade. “Government support for statements of fact and opinion are argu¬ R&D could be viewed as a complement to able, while his interpretations are often government support for export finance in a challenging and not always flattering to flexible program of export subsidies that the occupation authorities. The introduc¬ would rise or fall as competition requires. ” Middle East Speaker Referral Service for academic, church and civic audiences tion contains a fascinating account of what This book also makes a number of novel it was like to be a schoolboy in occupied suggestions for the Export-Import Bank, Japan, and the thoughtful conclusion such as sales of tax-free bonds to the pri¬ Describe your speaker needs about Japan’s search for new role contains vate sector to increase the bank’s resources. and AET will provide guidance on selection, the gem that the Japanese people have The authors also stress the need for a facili¬ scheduling and costs. “discovered democracy to be a pleasant, ty tailored to the financing requirements efficient, and even commercially profitable of smaller, less well known businesses— way of life.” —RICHARD B. 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Lexington Books, 1982. $16.95. ment of exports in the world market, bet¬ Washington, D.C. 20006 or ter government coordination of the U.S. Telephone Dr. John Duke Anthony This well-researched proposal by the U.S. export effort, and flexible policies to meet (800) 368-5788 or, from Washington, Export Competitiveness Project of (and hopefully discourage) foreign coun¬ 659-1861 Georgetown University’s Center for Stra¬ tries’ actions which are prejudicial to our tegic and International Studies argues trading interests. —GILBERTJ. DONAHUE

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APRIL 1983 9 Iran: A Personal View spect for her, for American ideals, and for the unbending American individualism, GUEST OF THE REVOLUTION. By Kathryn as personified in her courageous behavior Koob. Thomas Nelson. Publishers. 1982. and strong character. $12.95. This, then, is an honest account of one hostage’s experiences, written with The Iranian hostage crisis is already being warmth, compassion, and contagious sim¬ DIPLOMATIC CAR SALES studied as history in new books on U.S. plicity. If Guest of the Revolution lacks AND LEASING foreign policy. But the event was most political sophistication, it nevertheless ALL MODELS dramatically an ordeal for individuals, the provides valuable insight into the psycho¬ OUR 20TH YEAR IN WASHINGTON hostages themselves. A new book, the logical processes that enhance a hostage’s CAVALIER VW third to date to be written by one of those will to endure and come out of the ordeal ONLY 10 MINUTES FROM KEY BRIDGE 52 Americans, has now been published, with relatively few scars, as did Kathryn 4045 LEE HWY. 703/525-1900 and it is an account of courage and Koob and most of the American hostages. ARLINGTON VA 22207 ' VO/3ZO-I VUU maturity. —-JACK KARAPETIAN Kathryn Koob’s Guest of the Revolution, „ Save on Antiques. which follows Richard Queen’s and Bar¬ Language as Politics & Interesting Furniture! ^ bara and Barry Rosen's accounts of their traumatic experiences during that period, THE CIVIC TONGUE: Political Consequences of An Opportunity to Buy for Less was not written to be an in-depth analysis Language Choice. By Brian Weinstein. Long¬ of the causes and effects of the Iranian revo¬ mans. 1982. Pickwick Antiques lution. Nor does it profess to shed new 1815 Adams Mill Rd., N.W. light on the collective ordeal of the Ameri¬ Most diplomats tend to view language Washington DC 20009 can captives. “This is not a definitive ac¬ competence as a tool of their profession. It (202) 265-5360 count of what happened to the 52 Ameri¬ enables them to communicate and negoti¬ cans," Koob points out in the foreword of ate with their counterparts in the host Featuring fine furniture, Oriental and her book. “Rather it is my recollection of country. A few view language as an impor¬ Chinese rugs, ceramics, wardrobes, din¬ how I handled the situation during days tant aspect of the host culture but hardly ing tables, chairs, buffets, desks, book¬ ‘on the job’ that ranged from a little any consider the role choosing a language cases, and much more. tougher than normal to downright or dialect—or even using words in a par¬ Open daily 11 am-5 pm. terrifying.” ticular way—plays in social problems or We Buy and Sell J Guest of the Revolution, therefore, is the political consequences of language mostly the personal story of Kathryn choice. Koob. She was assigned to Teheran as di¬ In the Civic Tongue, Brian Weinstein, a rector of the Iran-American Society, a cen¬ political scientist at Howard University, ter for cultural exchange. After the embas¬ presents a broadly based analysis of the sy seizure, Koob had the opportunity to politics of language which draws on the flee to safety, but instead she remained in work of linguists and political practition¬ her headquarters, keeping communica¬ ers. His emphasis is on the development, BOOK SHOP tions open between Teheran and the State implementation, purposes, and conse¬ • Special attention to backlist Department for the next thirty crucial quences of language choice. • We will search for any book anywhere hours. The following day, however, she Weinstein emphasizes the relationship (for out of print titles). was kidnapped by the Iranian revolution¬ between elite behavior and the politics of • Postage free to APO and State Depart¬ ment pouch addresses. No sales tax. aries and imprisoned in the embassy language. He disagrees with many socio¬ compound. linguists and concludes that there is noth¬ An Idiosyncratic But Serious Bookshop. The bulk of the book is a detailed ac¬ ing in language structure to restrain elites 24 Warren Street count of Koob’s captivity—the constant from re-ordering the use of language, ex¬ Concord, New Hampshire 03301 moving from place to place, the repeated cept for the limits imposed by the current interrogations, the accusations of espio¬ state of language development. The elites nage, and the threat of execution hanging are politicians and writers, who can trans¬ in the air. Yet despite the Kafkaesque re¬ form language into a symbol and an instru¬ CAMP CHOCONUT ality, Koob and Ann Swift—later on her ment with which they can promote their for boys 9-14 cellmate—managed to retain a measure of own political interests or those of their order and sanity out of the nightmarish group or class. Choconut is for the boy who enjoys rustic chaos. The sustaining forces were love of The nine chapters of this book deal with living in the out-of-doors, campcraft, car¬ family, friends, and true patriotism. But such topics as: language and the exercise of pentry, fishing, natural science, work proj¬ above all, a Christian faith fortified her, power, education and participation, bi¬ ects, caring for animals, group games & providing inner strength to a point where lingual education, use of vernacular lan¬ river canoe trips. ACA Accredited. High daily prayers made her feel almost uncon¬ guages in the Third World, nation-build¬ staff/camper ratio. 4 + 8 weeks. querable. In a sense, this is a spiritual ing, and world politics. Weinstein book, its main theme being a person’s attempts to answer questions such as Are S. Hamill Horne communion with God, as well as love for language choices possible? Who chooses? CHOCONUT, Box 33J humankind, including one’s enemy. The What are the effects of those choices? and Gladwyne, PA 19035 reader has a distinct feeling that Koob’s How do countries handle conflict based on 215/649-3548 captors gradually developed a healthy re¬ language and ethnicity?

10 FOREIGN SERVICE JOURNAL Although Weinstein may overestimate the ability of elites to force language shifts, it is clear that intervention into linguistic processes and manipulation of words can be a way of increasing either human suffer¬ □YM, FRANK & COMPANY ing or human freedom and happiness. UNESCO has named 1983 the “Year of Investment Manager Communications." Thus this book, point¬ for the ing out the important link between poli¬ tics and language, is most timely. American Foreign Service Association —CHARLES R. FOSTER ★ Personal Portfolio Management Palestinians & Propaganda

PALESTINIAN RIGHTS: Affirmation and De¬ ★ Institutional Funds Management nial. Edited by Ibrahim Abu-Lughod. Medina Press, 1982. $7.95 {paper). $17.95 (cloth). ★ Investment Decision-Making Models and Strategies for THE PALESTINIANS IN PERSPECTIVE: Impli¬ Financial Institutions cations for Mideast Peace and U.S. Policy. Edited by George E. Gruen. Institute of Hu¬ man Relations Press, American Jewish commit¬ For information, write or call: tee. 1982. $3.50. Dym, Frank & Company These two books offer differing analyses of 1718 22nd Street, N.W. a key Mideastern issue—the identity and Washington, D.C. 2000B future of the Palestinians. Unfortunately, the contributors have sacrificed a chance to [202] 667-5001 enlighten by using the opportunity to propagandize. The factual presentations will be useful, but the omissions, partisan emphases, and pejorative characterizations could cause some to discount that worth¬ while information. The lay reader will have great difficulty in separating the facts from the political messages. The Palestinians In Perspective approaches Palestinian issues in a largely realpolitik We have Foreign Service manner favored by those in possession of disputed territory. The contributors do not give due weight to the reality of the For the Foreign Service Palestinian condition. Neither does it pay sufficient attention to that people’s rights Whether you’re looking for just one car or an entire fleet, as set forth in various international enact¬ a purchase from H. B. Lantzsch links you to a dealer who ments including relevant U.N. resolutions and the Fourth Geneva Convention. The has served the diplomatic community for 23 years. H. B. contributors agree that the Palestinians Lantzsch—Washington’s largest and finest Volkswagen must be practical and concede Israel's right dealership—offers a Foreign Service courtesy discount and to exist. But they give short shrift to the speedy worldwide delivery. When you’re in Washington, applicability of the principle of self-deter¬ stop in at our convenient Fairfax showroom, close to State mination—from which the Jews have benefited so much—to the Palestinians. Department and Foreign Service Institute offices, and Only to a certain extent do some accept a contact our Diplomatic Sales Representative, or write us distinct Palestinian personality as some¬ from your overseas post. thing separate from a general Arab one. Palestinian Rights: Affirmation and Deni¬ al approaches the question on a legal level. Bogdan Badrich, Diplomatic Sales, H. B. Lantzsch Pragmatism must follow principle. Dis¬ Route 50, Fairfax, VA 22030 • (703) 273-6700 cussions of Israeli policy and practice are posed in absolute terms. The contributors Performance Cars from the People Who Perform For You! make little mention of Palestinian atti¬ tudes toward the existence of any Israeli SPECIALIZING IN VOLKSWAGEN state. The book will not therefore assuage the fears of Israelis, world Jewry, and the Authorized VW Dealer VA Dealer #666 supporters of the Jewish state. The ser- VOLVO • PORSCHE-AUDI (fl^QlJL^Qft) MERCEDES-BENZ APRIL 1983 11 monizing and vituperation weaken the obtainable. This work, which could be valid legal points made in the articles. The subtitled “All You Will Ever Need to most interesting and valuable portion of Know About the Mideast,” is highly rec¬ the book deals with international view of ommended to everyone desiring a good Palestinian identity. reference book on the area. All in ail, the scholarly patina of both —BENSON L. GRAYSON books does not disguise the subjective and DIPLOMATIC CAR SALES propaganda purposes behind them. This is Terrorism in Prose AND LEASING neither surprising nor bad if it is recog¬ ALL MODELS nized by whoever undertakes these vol¬ INTERNATIONAL TERRORISM. By William OUR 20TH YEAR IN WASHINGTON umes. Nevertheless, these books offer L. Waugh Jr. Documentary Publications, CAVALIER VW only a modest amount of light when com¬ 1982. ONLY 10 MINUTES FROM KEY BRIDGE pared with the heat they will inevitably 4045 LEE HWY. _ create. —VICTOR WOLF Jr. This self-conscious exercise in ivory tower ARLINGTON VA 22207 703/525-1900 pedantry deserves reading if one is a grad¬ Mideast Compendium uate student writing a thesis on the subject of terrorism, or if one is an admirer of the INSIDE THE MIDDLE EAST. By Dilip Hiro. kind of prose which these days is passed to McGraw-Hill Paperbacks, 1982. $8.95 (pa¬ unfortunate college students in the guise Visit the per). $19.95 (cloth). of textbooks. The book is a summary of NEW other writings on terrorism glued together If the rapidly escalating price of books in with the author’s few bits of opinion. Foreign Service recent years has you concerned and you are Waugh, a professor of political science at Club an observer of Mideast developments, take Kansas State University, has compiled a heart! Dilip Hiro’s new book Inside the 243-page text which looks like it was xe¬ Middle East provides a handy and inexpen¬ roxed rather than printed and reads like a Lunch • Special Events sive alternative to purchasing a bookcase government memorandum. The most full of reference works on the area. In one valuable portion of this book is the bib¬ 2101 E Street, N.W. volume of less than 500 pages,the author, liography, which may well be of use to 338-5730 a journalist whose articles have appeared in students in this important field. the London Sunday Times and other British Unfortunately, Waugh either failed cre¬ publications, supplies more useful factual ative writing or has succumbed to the data than would be found in most small worst tendencies of academic-bureaucratic reference libraries. double-speak. Some examples: Beginning with a glossary of common “The question of whether terrorist vio¬ assttttfti Arabic words, the book covers important lence can be justified by the political ends developments in the region, from the birth sought has created a major bifurcation of the prophet Mohammed and the spread within the arenas of international dia¬ |2i£sEALFA2S of the Islamic religion to the assassination logue.” Or, in discussing the problems of Sou-MERCEDES ^ of Egyptian President Anwar Sadat and the reaching an international agreement on Senate approval of the sale of AWAC’S air¬ the definition of terrorism: "The defini¬ QU-MERCEDES craft to Saudi Arabia in October 1981. tional problem cannot be pushed aside; it FREE! NEW CAR CATALOG Unlike many modern scholars, Hiro does complicates a policymaking environment BUY DIRECT not ignore pertinent events of the 19th and already convoluted by a multiplicity of na¬ The comprehensive NAI Master Catalog contains 32 pages, over 150 illustrations. DIPLOMATIC and FACTORY the first half of the 20th century in the tional and subnational actors.” The author tax-free prices, equipment, options, colors, and all the de¬ tails on how to order your car at these special savings region. For example, many contemporary concludes that the best response to terror¬ The Nemet Organization has been meeting the needs of Americans throughout the world since 1916 You will have observers would conclude from the sparsi¬ ist acts is that which the government in¬ your car. waiting where you want it. STATESIDE OR IN EUROPE—when you want it. all serviced and ready to go at ty of elected assemblies in the Mideast to¬ volved feels will permit it to come out special factory prices day that democratic traditions were entire¬ ahead. Buy your new car from Nemet because we ll be here when you get home. ly foreign to the area, but, as the book While there is no price on the dust jack¬ relates, there were elections to an advisory et, the bottom line is that if one needs committee in Kuwait as early as 1921, and access to such a shallow work, it can be Please send me a FREE copy of your FSJ-1281 32 page Master Catalog. relatively free parliamentary elections in borrowed from a good library. I am interested in: Stateside Delivery Egypt in 1923 and in Jordan in the 1950s. —MICHAEL F. SPEERS European Delivery I AUDI MG RENAULT To be sure, there are flaws. Although BMW MERCEDES TRIUMPH DATSUN PEUGEOT VOLKSWAGEN the writing style is clear and concise, the FIAT PORSCHE VOLVO Incomplete Imperialism JAGUAR abundance of factual material makes read¬ Name _ Rank _ ing the book much like reading the World EUROPEAN IMPERIALISM IN THE NINE¬ Social Security No Almanac. Again, the chapters are divided TEENTH AND TWENTIETH CENTURIES. By Address somewhat cumbersomely, so that, in a Woodruff D. Smith. Nelson-Hall Publishers. Date of Rotation _ Delivery Place _ chapter on the Arab republics, the reader 1982. $20.95 (cloth), $10.95 (paper). Nemet Auto International goes with minimal transition from a dis¬ World's Largest Distributor of Tax-Free Cars cussion of Iraq to one of Yemen. Nonethe¬ Professor Smith has, by his own admis¬ S' 153-03 Hillside Avenue, Jamaica, New York 11432 NEMET 0 Telephone (212) 523-5858/Cable NEMETAUTO less, an excellent index makes the informa¬ sion, written an unfashionable book. Dur¬ IV ~Toll Free 800-221-0177 tion contained in the book easily ing a time when imperialism has become

12 FOREIGN SERVICE JOURNAL the cause celebre of the Third World and the Fenner Brockways of the first, Smith has resumed the Eurocentric perspective all but suppressed in the western mind. On a subject drenched in polemics he has taken a dispassionate approach. Most unfashion¬ There’s a New State able of all, his book is at once comprehen¬ sive and short, "a small book on a very large subject” for the reader wanting an in Washington overview of modern European imperialism. Smith argues that modern imperialism was promoted largely as an antidote to so¬ And, we’re located right where Should you require a meeting/ conference/entertainment cial and economic changes in Europe, par¬ you want to be . . . the State Department, George Washington room, we have several to meet ticularly to the effects of industrialization. University, the Kennedy Center your heeds, seating 10 to 75 Threatened by political fragmentation at and most government agencies. associates. Catering is also avail¬ home, national leaders sought to generate Our guests stay in spacious suites, able. For your dining pleasure domestic political consensus by promoting with fully equipped kitchens, we recommend our Sherry Cafe, featuring a wide range overseas expansion, immigration for the for less than the price of most rooms in Washington. Our of appetite-pleasing poor, investment for the capitalists, and rates for weekends, and entrees. Come by and trade for the businessmen. However, with longer stays, are visit our new state the exception of the Dutch in Indonesia, equally attractive. in Washington. the British in India, and the French in Algeria, the primary motive for this ex¬ pansion was the promotion of economic development and modernization in a growing global economy. Furthermore, their own poverty and weakness obliged FORMERLY SHERRY TOWERS HOTEL colonial administrations to depend on in¬ (202)861-8200 2117 E St. NW, Washington DC 20037 (800)424-2859 direct rule and economic laissez faire. “Free trade imperialism” sufficed, in Latin America, for example, where direct inter¬ vention was impossible. Thus in the final analysis, nineteenth and twentieth century colonialism emerges as part of a larger process of global economic integration which has superseded traditional empires FREE SQUASH and continues on inexorably without them. This is a solid, even a majestic theme, a MEMBERSHIPS FOR welcome relief from the contemporary po¬ lemics that pass for history, but its whole¬ ness is deceptive. For the sake of thematic AFSA MEMBERS unity, Smith chooses deliberately to avoid consideration of the parallel process of in¬ ternational competition for economic and strategic real estate. This was, itself, a pri¬ mary driving force, especially in late nine¬ teenth century expansion (Gladstone and Egypt, for example), and produced fifty years of international crises and diplomatic lunacy, culminating in World War I. We may sympathize with the author’s side¬ ASFA members can now play squash at the Capitol Hill stepping of this topic, for North-South re¬ Squash Club without paying the $80 membership fee. By lations today present an even less manage¬ able problem is terms of numbers, issues, simply showing your AFSA membership card, you will pay and conflicts. But, as a result, the book only the court fees af Capitol Hill's most luxurious fitness leaves one in an argumentative frame of facility. Located only a block from the Capitol South mind, with a sense of something missing, of a frame without a picture, a story with¬ Metro stop, the Club also offers free use of changing out a plot. —ROBERT K. OLSON rooms, showers, and saunas before and after playing squash (There is a $10 annual processing fee.) Members of the professional diplomatic commu¬ nity who have had books published recently are Capitol Hill Squash & Nautilus Club invited to submit them for review in the Foreign 214 D Street, S.E. • (202) 547-2255 Service Journal.

APRIL 1983 13 parallel hardly suits a situation in which one satellite station, equipped with guid¬ ed thermonuclear glide bombs, can domi¬ SPARE nate the earth.” PLUS QA —WERNHER VON BRAUN YOURSELF Foreign Service Journal, April 1933: CHANGE... “It is strongly intimated on President¬ elect Roosevelt's behalf that he is not in¬ the cost of luxury clined to disturb at least two of America's without sacrificing career diplomats now at strategic points Foreign Service Journal, April 1973: abroad—Ambassador Grew in Japan and comfort. “Tomorrow, in respect to these men who Minister Johnson in China. ... To re¬ have died in the service of their country move Mr. Grew from Tokio or Mr. John¬ and in service of the cause of peace for the We offer the finest blend of convenience son from Peiping, even though each owes and economy (suites with built-in kitch¬ whole world, the flags, not only in embas¬ his present assignment to the outgoing ens, and central location — within easy sies abroad and in the State Department, Republican president, would be to strike a walking distance of the State Depart¬ but all over America, have been ordered to blow at America’s efficient representation ment, Federal Reserve, OPM, GSA, be at half-mast. I have taken this extraor¬ abroad, which, it is gratifying to learn, is Metro . . .). Take it easy on yourself at dinary action of lowering flags even remote from Mr. Roosevelt’s mind. . . . though the individuals involved were not “Some 25 or 30 career men are now members of the Congress or members of chiefs of missions at foreign capitals. . . . the Cabinet, where normally such action is The career principle finds its widest ex¬ only taken, because I think it is well for pression in the United States’ corps of dip¬ the nation to be reminded of how much we lomatic officials throughout Latin Amer¬ owe to the men and women who serve ica. Virtually all the American legations in America in the cause of peace as members Central and South America are now headed of our Foreign Service, in the civilian ac¬ by men who are not only familiar with the 2201 Virginia Avenue, N.W. tivities that we have in farflung areas languages of the countries to which they Washington, DC 20037 around the world. are accredited, but through long service in (800) 424-2870 or (202) 452-4600 “1 think of these two men, Ambassador them have acquired expert knowledge of Noel, Mr. Moore, of the country to which the Latin temperament, economic condi¬ they were accredited, the Sudan; I think of tions, and political factors. In only two or the minister from the Sudan whom I saw three cases are there among them those this morning. I know that the incident who can be classified as deserving politi¬ CANCER. which led to their deaths was one that was cians who were rewarded with their pres¬ not of this country’s making and not of ent jobs under the patronage system. NOT KNOWING theirs, and yet, they were willing to take "Under the Rogers law, which protects this risk. And for their bravery and for all grades of the Foreign Service under am¬ THE their courage, our country can be very bassadorial and ministerial rank from com¬ thankful. ” ing within the patronage orbit, there has —PRESIDENT RICHARD M. NIXON developed an esprit de corps which is RISKS IS YOUR steadily, even in the present political sys¬ Foreign Service Journal, April 1958: tem, building up a diplomatic organiza¬ GREAIEST RISK. “U.S. Army missiles have penetrated deep tion worthy of the name. Young men of A lot of people think cancer into space and have reached unprecedented fine educational background are entering is unbeatable. altitudes. Aircraft and balloons of the U.S. it in increasing numbers. They begin at That simply isn’t true. In fact, Air Force have carried men beyond most of low ratings and small salaries. They are over two million people have had earth’s atmosphere. The accomplishments justified in looking forward, in the course cancer and survived to lead of Soviet rocket developers have demon¬ of time, to that promotion and higher stat¬ happy, normal lives. strated a capability which can only lead to us to which long and faithful service enti¬ And not only can cancer be a conclusion that at least two major powers tles them. The more luscious plums, like beaten, it can also be prevented. possess space hardware. . . . the ambassadorships to the great European There are definite precau¬ “Some legal authorities, at least in this capitals, can probably never be rescued tions that have been proven to country and England, have explored the from the patronage roll. But where meri¬ decrease your risk of getting cer¬ moot question of who controls space and tain cancers. torious records have been achieved at im¬ where outer space begins. In the main they Ask your local American portant points throughout the world by Cancer Society to send you a free are inclined to look to the United Nations career men, it is the part of common sense booklet about cancer risks. as a guardian against the threat of military and in the fundamental national interest Learn the facts about cancer. domination by a single power or group of not to displace them with mere place- And make not knowing the powers. . . . hunters hankering for the lure and glory of (risks, one less risk. “Would a body of space law akin to foreign residence. America’s international maritime law eventually develop to sup¬ relations today are too vital to be risked in / AMERICAN CANCER SOCIETY' port ‘freedom of space’ in the same sense inexperienced hands.” < How you live may save your life. that ‘freedom of the seas’ is employed? The —Washington Evening Star EDITORIAL

14 FOREIGN SERVICE JOURNAL EDITORIAL

Breach of Faith

Patriotism . . professional pride . . . thirst for adventure ... a chance to have a meaningful impact on the world. Ask members of the Foreign Service why they chose the career they have and you will receive a list of reasons as varied as the individuals. Yet, there is one reason which will probably not spontaneously appear on any of the lists but nevertheless is the foundation of our entire career—the conviction that the “system” works. Today’s Foreign Service could not exist without our shared belief that in the long run excellence will be rewarded, that a “bad” assignment will be followed by a “good” one, that sacrifice will be recognized and compensated for. It is our faith in the integrity of the system that makes possible our competitive, up-or-out person¬ nel system, and which makes the phrase “worldwide available” meaningful. This is not to say that there isn’t the occasional injus¬ tice or that a few grumbles and complaints aren’t heard in the corridors or at cocktail parties. But deep down, we believe that equity and common sense will prevail. The administration’s proposed changes in the Foreign Service retirement program have rocked this faith to the core. Suddenly, the basic conditions of service under which we thought we operated are being turned inside out. The unprecedented level of interest in these proposals (more than 150 cables have been received by AFSA to date) demonstrate the degree to which members of the Service are concerned by what can only be seen as the shredding of everything we based our professional lives on. In the ASSOCIATION NEWS section of this issue and others we have gone into what these proposals will do and the impact they will have, but here we wish to make one point. A breach of faith has taken place—a breach which it is in everyone’s interest to heal. We call upon the administration to withdraw these proposals; failing that, we urge Congress to reject them overwhelmingly as a demonstration of its confidence in the skill, integrity, and dedication of the Foreign Service.

APRIL 1983 15 Soviet diplomat Maxim Litvinov explained the failure of U.S.-So¬ viet understanding in 1921 as: "Complete lack of confidence on the Carrots & Sticks one side; absolute distrust on the oth¬ er." Despite brief spells of coopera¬ tion, the U.S.-Soviet relationship re¬ mains one of underlying antagonism, competition, and distrust. Today each side claims the other is most responsi¬ ble for the mutual collapse of confi¬ dence that followed detente. Constructive commercial relations U.S.-Soviet trade increased dra¬ matically during the 1970s, but at¬ between the tempts to expand and normalize the bilateral relationship in other areas United States and Soviet Union were aborted on numerous occasions because of political strains. The broad areas of conflict between these two su¬ depend on both countries' perpowers present tremendous obsta¬ cles to taking a common sense ap¬ acting on the basis of reality proach to commercial relations. Yet the benefits of subjecting trade to the rather than prevailing myths fortunes of the political relationship are far from clear. The United States seldom dominates a market to an ex¬ tent that its refusal to trade could pro¬ duce such severe and lasting conse¬ By CAROL BROOKINS quences that the Soviets would be willing to alter their policies or behav¬ ior to secure continuation of that trade. By using trade as a political weapon, basis.” Detente was intended to reduce tion status and credit arrangements to the United States often harms its repu¬ confrontation and encourage Soviet re¬ the Soviet Union. Moreover, the trade tation as a reliable trading partner, straint by developing a network of ties pattern was generally one of U.S. ex¬ doing more damage to its own export- in critical areas between the two coun¬ ports to the U.S.S.R. rather than of oriented businesses than to its in¬ tries. It was hoped that increased eco¬ imports from the Soviet Union. Final¬ tended target. nomic interdependence would contrib¬ ly, though nonagricultural trade grew During the first half of the 1970s, ute to a lessening of tensions. modestly, trade with the U.S.S.R. in¬ relations between the United States Popular Beliefs creased primarily due to substantial and the Soviet Union improved sub¬ Soviet grain imports in the wake of stantially. But for those with high ex¬ Today it is popularly believed that several bad harvests. Given the obsta¬ pectations on both sides, detente was a the United States was naive and thus cles repeatedly placed in the way— disappointment virtually from the easily deceived into expanding trade grain-sales suspensions and denial of start. The policy of detente was not without restraint, thereby granting MFN and credits—one might ques¬ meant to entail the sudden disappear¬ enormous benefits to the Soviet tion whether any significant rise in the ance of all antagonism and rivalry from Union, while getting little in return. level of bilateral trade would have oc¬ the superpower relationship. Rather, In fact, the United States did not sepa¬ curred without poor Soviet weather according to Soviet specialist Marshall rate trade from political considerations and U.S. dominance in the world agri¬ Shulman, it was merely "a series of during detente. Secretary of State cultural export market. groping efforts toward putting the re¬ Henry Kissinger attempted to build a The concept of detente embodied in lationship on a somewhat less hostile network of economic interdependence the “Basic Principles of Relations Be¬ as a means of gaining leverage and re¬ tween the United States of America Carol Brookins is president of World Per¬ ducing potential areas of conflict. But and the Union of Soviet Socialist Re¬ spectives, Inc., a news and consulting firm although U.S.-Soviet trade did ex¬ publics," signed by Richard Nixon specializing in international agricultural pand, it was rarely without some inter¬ and Leonid Brezhnev in May 1972, trade. This article is adapted from a chap¬ ruption or restriction imposed by the was short-lived. Differing perceptions ter in a forthcoming book on East-West United States. Kissinger was never undermined the code of conduct set trade to be published by the American Com¬ able to deliver the substantive incen¬ forth in the agreement. Despite word¬ mittee on East-West Accord. tives or "carrots” of most-favored-na¬ ing that no countries should "be sub-

16 FOREIGN SERVICE JOURNAL break of the Watergate scandal in 1972. The relationship did not improve significantly under the Ford adminis¬ tration. Even the boom in agricultural trade did not proceed without inter¬ ruption. The White House temporar¬ ily suspended sales of grain to the Sovi¬ ets in October 1974 and again in August 1975—the second time at least in part because of domestic price and supply concerns. The United States then proceeded to negotiate a five-year grain agreement, establish¬ ing upper and lower limits, for Soviet purchases in the United States, unless the U.S. government granted permis¬ sion to buy additional corn and wheat during bilateral consultations. Apart from these commercially motivated in¬ terruptions in trade, political conflicts also disrupted trade development. In 1976, the United States refused to schedule its regular session of the Joint Commercial Commission and post¬ poned other bilateral meetings in reac¬ tion to the Soviet/Cuban intervention in Angola. After assuming office in 1977, President Carter continued the prac¬ tice of imposing commercial restric¬ ject to outside interference in their in¬ while not put into practice, was left on tions on U.S.-Soviet trade. Well be¬ ternal affairs," the Soviet government the books. However, in her book on fore the Afghanistan invasion in believed it was not prevented from as¬ the subject, Water’s Edge, Paula Stern December 1979 led to sweeping sanc¬ sisting ‘‘national liberation move¬ points out that Senator Henry Jackson tions against the Soviets, Carter could ments” in the Third World. As for the (D.-Wash.) had drafted language re¬ not be described as “soft” when deal¬ United States, despite Nixon’s Octo¬ stricting trade at least two months be¬ ing with the U.S.S.R. His emphasis ber 1972 commitment to a bilateral fore the education tax was announced on human rights contributed to new trade agreement that included the and reaffirmed by the Soviet Council of trade sanctions in 1977 and 1978, im¬ granting of MFN treatment to Soviet Ministers. Despite Kissinger’s strong posed in response to Soviet treatment imports, Congress passed and Presi¬ lobbying against the amendments and of dissidents and increased Soviet and dent Ford signed into law the Trade near-successful diplomatic efforts with Cuban involvement in Angola. Ac¬ Act of 1974. The act, with the addi¬ the Soviets to resolve the conflict, the cording to Department of Commerce tion of the Jackson/Vanik and Steven¬ ill-advised publicity Jackson gave re¬ information, export licenses were de¬ son amendments, linked MFN privi¬ garding private commitments of the nied for an advanced Control Data leges to Soviet emigration practices Soviets on the sensitive issue killed the Cyber 76 computer and for a Sperry and effectively denied Soviet access to diplomatic initiative. The effect of the Univac computer ordered by TASS for Export-Import Bank credits. The So¬ entire controversy was to block imple¬ use in the 1980 Olympics. Neither viet government rejected the trade mentation of the bilateral trade agree¬ computer was considered sensitive and agreement under these new condi¬ ment. Due to the restrictions in the therefore subject to export controls by tions. Trade Act of 1974, U.S. officials lost the Coordinating Committee on East- Controversial Amendments significant positive leverage—a criti¬ West Trade (COCOM). Carter also es¬ cal aspect of the ‘‘carrot and stick” di¬ tablished licensing requirements for There is much controversy sur¬ plomacy for dealing with the Soviets. export of U.S. oil and gas equipment. rounding the Jackson/Vanik and Ste¬ Although Nixon continued to work During the era of detente, U.S. venson amendments. The impetus for toward improving bilateral relations trade with the U.S.S.R. was not unre¬ these restrictions is generally attribut¬ until he left office in August 1974, he stricted, nor did all of the advantages ed to a Soviet decision in 1972 to place lost any significant credibility and in¬ accrue to the Soviets. In fact, the Unit¬ an education tax on emigrants, which, fluence with Congress after the out¬ ed States has maintained a substantial-

APRIL 1983 17 ly favorable balance in this bilateral Role of Foreign Technology in the the Washington, D.C., Metro as well trade, as Table I shows. Development of the Motor Vehicle In¬ as hundreds of other sites. Hungarian Those who support tighter restric¬ dustry,” analysts concluded that the technology for producing armored tions on U.S.-Soviet trade often center Soviets have made strides toward self- drilling hoses is used by U.S. oil com¬ their argument on the subject of tech¬ sufficiency. "If the U.S.S.R. has panies as well. nology transfer. In the area of technol¬ turned to the West, it is mainly for Further, since imports compose ogy there are conflicting images of the economic, not technological reasons,” such a small percentage of the Soviet Soviet Union as both a giant and a the report states. The controversial GNP—and high-technology imports cripple. On the one hand, some see the Bryant Grinder case, in which the are barely more than 10 percent of to¬ Soviets as threatening the United Commerce Department approved the tal imports—the extreme view that States through major technological ad¬ sale of 168 precision micro—ball-bear¬ the United States is transferring a ma¬ vances in the Soviet strategic arsenal. ing machines to the Soviets in 1972, jor advantage to the Soviet Union ap¬ On the other, the press is full of reports less than a year before they first began pears somewhat misleading. This is of the U.S.S.R.s dependence on west¬ flight-testing MiRved missiles, led particularly true in light of the tight ern technology and its inability to some analysts to conclude that the controls already in place on technology produce and maintain even simple ma¬ U.S. sale had contributed significantly and equipment with military applica¬ chinery within the economy. The So¬ to the production of the new Soviet tions. viets do place a tremendous amount of weapons. However, an April 1981 Finally, the United States imports capital and other resources into defense Rand study, “Selling the Russians the not only eastern bloc technology but at high cost to development in the ci¬ Rope?” concluded that U.S. technol¬ also important strategic minerals— vilian sector. And, there is proof that ogy did not play a “crucial gap-filling gold, chromium, and platinum-group the Soviets seek to obtain specific west¬ role in the development of the Soviet metals. The export of these minerals ern technology by both illegal and le¬ fourth-generation missiles.” In assess¬ from the Soviet Union has continued gal means. However, as Table II ing the Soviet decision to act on this without interruption even when trade shows, the pattern of documented So¬ machine-tool project when it did, the sanctions were imposed on exports to viet trade with the West does not show authors say, “It is perhaps closer to the the Soviets. This is not to dismiss the a growing or disproportionate level of truth . . . that the Soviet move was importance of export controls on stra¬ trade in high technology. motivated by the rapidly growing de¬ tegic technology nor to deny the vital Moreover, a Trade Information and mand for micro-ball bearings in Soviet importance of western technology in Analysis Staff Paper released by the industry and the growing liabilities of some priority programs of the Soviet Department of Commerce in Febru¬ importing them, and not by any par¬ economy, particularly the energy sec¬ ary 1982, entitled ‘‘The Quantifica¬ ticular event in the West.” tor. Yet, the available evidence does not suggest that the Soviets have been tion of Western Exports of High Tech¬ Erroneous Assumption nology Products to Communist able to make massive strides in their Countries,” concludes that the compo¬ It Soviet planners import western military capabilities or economy be¬ sition of western exports to Commu¬ technology for economic reasons, then cause of a generous flow of western nist countries does not differ signifi¬ an argument could be made that this is technology. cantly from the general pattern of still critically relevant to western secu¬ Those who favor restricting U.S.- western exports to the world as a rity—as denial of technology would Soviet trade believe that economic le¬ whole. The share of high-technology- force the Soviets to pay an ever-increas¬ verage can produce political results. product exports to the U.S.S.R. from ing cost to keep their economy grow¬ But, some recently released CIA stud¬ the industrialized West was 16.2 per¬ ing. There is some truth to this, but it ies counter the popularly held view cent of the total in 1970; this de¬ assumes erroneously that technology that the Soviet Union is on the verge of creased steadily to 11.7 percent in transfers only move from West to East, economic collapse. Rather, analysts 1980, virtually the same level (11.6 and that the Soviets would be the only portray the U.S.S.R. as generally self- percent) as the share of western high- ones damaged by cutting off the flow sufficient and predict that the Soviet technology-product exports to the en¬ of technology. A small, but impor¬ economy will continue to grow tire world in 1980. These figures, of tant, transfer of technology from the through the 1980s, albeit at a lower course, do bear out the fact that the eastern bloc to the United States still rate than in recent years. Also, the im¬ Soviets have been able to maintain a exists, and the United States also pact of the 1980 agricultural embargo level of high technology imports de¬ stands to benefit from scientific ex¬ and energy-technology sanctions on spite controls. changes. Of U.S. imports of eastern the Soviet Union, as well as that of the The Soviets obviously want western bloc technology, the most celebrated is 1982 gas pipeline sanctions, was not as and U.S. technology in certain key the soft contact lens, introduced by severe as projected. In fact, the adverse areas, particularly those relevant to the Bausch & Lomb under a Czechoslo¬ effects of these actions on U.S. agricul¬ military. Yet, that desire may not nec¬ vakian sublicense. A recent Soviet ture and industry call into question the essarily be due to inadequacy in their pipe-welding license was granted to a ability of unilateral sanctions to pro¬ own capabilities. In a research paper pre¬ U.S. company and the rail-welding vide enough strategic and foreign pol¬ pared by the CIA in 1979, “U.S.S.R.: versions of the technology are used on icy benefits to offset the adverse eco-

18 FOREIGN SERVICE JOURNAL nomic effects. It is doubtful whether el. Therefore, the possibility of build¬ sanctity of registered agricultural ex¬ unilateral sanctions provide a strategic ing a multilateral consensus for trade port contracts for delivery for up to benefit over the long term. Generally, sanctions is limited even in the best of 270 days if an embargo is imposed. short-term gains are offset by long¬ circumstances. During periods of eco¬ Additionally, there is strong support term losses. nomic recession, the resistance to sanc¬ for revisions in the Export Administra¬ The misconception that the United tions is even greater. tion Act of 1979 that would tighten States can affect the behavior of the Furthermore, contrary to popular the criteria under which the President Soviets, or any other government, by U.S. opinion, many Europeans believe can impose export controls for foreign denying trade benefits should be ex¬ that detente and the accompanying policy reasons. Although the early im¬ amined in the context of U.S. history. trade has had a moderating effect on petus for these limits on executive au¬ Traditionally, the United States has Soviet conduct. Some will argue that thority came from the agricultural not been a major trading nation. Only one of the reasons the Soviets did not community, the pipeline sanctions of recently has it become more dependent intervene directly in Poland was for 1982 spurred the industrial communi¬ on exports and imports. Even so, trade fear of losing the valuable commercial ty into supporting such limitations as accounted for less than five percent of and financial ties with Western Eu¬ well. GNP in 1972; today it is only around rope. West German Foreign Minister President Reagan’s decision last eight percent. U.S. administrations Hans-Dietrich Genscher, writing in June to impose extraterritorial sanc¬ considered trade to be a privilege ex¬ the Fall 1982 issue of Foreign Affairs, tions on exports of technology and equipment for use in construction of the Yamal gas pipeline brought out strong congressional opposition and European defiance. The Soviets claimed they would complete the pipe¬ TABLE I: U.S.-Soviet Trade 1974-81 line on time and began working on production of substitute turbines to re¬ place those contracted from General (millions of dollars) Electric and its European licensees. 1974 1975 1976 1977 1978 1979 1980 1981 The governments of Britain, France, U.S. Agricultural Exports 300 1,136 1,487 1,037 1,687 2,855 1,047 1,665 Germany, and Italy rejected the sanc¬ U.S. Total Exports 608 1,833 2,306 1,624 2,249 3,604 1,510 2,339 tions and proceeded to ship compres¬ U.S. Imports 350 254 221 234 254 324 453 347 sors to the Soviet Union to meet their Turnover 957 2,087 2,527 1,858 2,503 3,928 1,963 2,686 contract schedules. Following a series U.S. Surplus 257 1,579 2,085 1,389 1,995 3,279 1,057 1,991 of negotiations between U.S. and Eu¬ ropean officials, President Reagan lift¬

Source: Department of Commerce (figures may not add due to rounding) ed the extraterritorial sanctions in No¬ vember, as well as those originally imposed on U.S. companies in late 1981, in exchange for an allied under¬ standing to develop closer coordina¬ tion of trade and commercial arrange¬ tended to those nations complying claimed that “true pressure for reform ments with the eastern bloc. Although with U.S. standards or principles. In in the Soviet Union and the eastern the sanctions caused the Soviets to ad¬ recent years, both Congress and the bloc as a whole comes from within. just their plans and undergo delays, President have used trade sanctions re¬ External pressure would paradoxically the short-term effect was marginal, peatedly—and not only against Com¬ reduce this pressure from within.” given the European suppliers’ refusal munist countries—to make a political Obviously, there are actions which to comply. Over the long term, the statement opposing other countries’ warrant a strong official response. In adverse effect of unilaterally imposed policies. Yet these attempts at using addition, it is in the nature of Ameri¬ sanctions on U.S. companies will be economic leverage have generally been can politics to demand action, and in far greater. Buyers may lose faith in ineffective. The United States does not today’s world, political or military re¬ the reliability of American suppliers dominate international markets and sponse may be viewed as too precipi¬ due to volatile national policies which has been unsuccessful in getting mul¬ tous and dangerous. In such a case, violate the sanctity of export contracts. tilateral support. America’s allies are making a necessary “statement” may The adverse effects of trade sanctions very dependent upon trade; commerce suggest a need for use of economic have been much more far-reaching on is part of their tradition and their eco¬ sanctions. Yet, the risk/reward ratio of agriculture, however, due to its rela¬ nomic lifeline. Trade composes more economic sanctions is far from positive tively larger share of Soviet trade. A than thirty percent of the GNP of and highly debatable. Recognition of look at the U.S.-Soviet grain-trade re¬ the European Community; Japan’s de¬ this is reflected in current policy shifts, lationship and the effect of the 1980 pendence on trade far exceeds that lev¬ including legislation guaranteeing the embargo and subsequent sanctions re-

APRIL 1983 19 veals the extensive, long-term nega¬ Soviet Union. The Canadian govern¬ the only reason for U.S. agricultural tive impact of sanctions on the growth ment promised not to sell more than problems today. It seems clear, howev¬ of U.S. agricultural exports. its traditional share to the Soviet mar¬ er, that sanctions have contributed to a U.S. companies first sold grain to ket, but the figures it used for defining broad shift in worldwide agricultural the Soviet Union in 1963, although no “traditional” allowed it to expand its production and trading—to the detri¬ additional grain was sold until 1971. base substantially. The Soviet Union is ment of U.S. agricultural exports. Massive sales in 1972 were welcomed now the market for more than 35 per¬ Nevertheless, the United States by farmers but triggered a strong do¬ cent of Canada’s grain exports, against probably still retains some potential mestic protest against the resulting 10 percent before the embargo. Argen¬ political leverage in the supply of higher prices. The erratic Soviet tina has substantially expanded its grain. The Soviets will still want to buying pattern led U.S. and Soviet of¬ sales to the Soviets; Australia and such retain formal and continuing access to ficials in 1975 to negotiate the long¬ smaller exporters as Thailand and Bra¬ the U.S. market as a means of gaining term grain agreement in order to regu¬ zil have also followed suit. In 1982- leverage with their other suppliers. late and control Soviet access to the 83, the U.S. export share may drop to The U.S. market is the most cost-ef¬ U.S. market. From 1974 to 1979, the 6—8 million metric tons out of project¬ fective in terms of transportation costs, U.S. share of Soviet agricultural im¬ ed Soviet imports from the world of shipping facilities, and available prod¬ ports rose from 50.4 percent to 70 per¬ between 30—35 million metric tons. uct. And, Soviet buyers know how dif¬ cent. Over the same period, the U.S. Nor was grain the only U.S. export ficult it was to gain access to U.S. sup¬ share of total Soviet imports rose from affected; an embargo on superphos¬ plies in the early 1970s when their 8.6 percent to 20 percent, primarily phorus fertilizer sent Soviet buyers to needs were great. If world supplies because of the increase in agricultural other phosphate markets like Moroc¬ contract and Soviet productions fails, imports. But in January 1980 the co. the United States is the only supplier United States forced the cancellation of Lost Leverage large enough to handle Soviet require¬ contracts covering 17 million metric ments. Finally, trading with the Unit¬ tons of grain and other agricultural ex¬ How effective was the embargo? ed States allows the Soviets to increase ports not included in the agreement. The U.S. lost any potential leverage it their influence in the bilateral relation¬ The Carter administration did allow 8 retained when it was supplying the ship and demonstrate their legitimacy million metric tons to be shipped as lion’s share of grain to the Soviet mar¬ to the international community. What guaranteed by article II of the long¬ ket. The embargo forced the Soviets to has changed, however, is that the Sovi¬ term agreement. In 1980 the U.S. diversify their sources of supply and ets are now aware of the danger of de¬ share of the Soviet agricultural import improve their own feeding efficiency. pending on the United States as a prin¬ market fell below 20 percent. Spurred by very poor harvests and fear cipal supplier. This has and will affect The embargo was lifted in the of supplies being used as leverage, the Soviet buying patterns and agricultur¬ spring of 1981, after Reagan’s election Soviets are diverting major resources to al policies for the foreseeable future— and another poor Soviet harvest, and a new food program aimed at sharply excepting a potential crop disaster, Soviet purchases did increase some¬ reducing the country’s dependence on only overall improvement in political what. However, the United States has imports by 1990. The chances of the relations will bring the Soviets back now become the residual supplier to Soviet Union reaching self-sufficiency strongly to the U.S. market. the Soviet Union—its share of agricul¬ are slim, given climatic conditions. Commerce with the Soviet Union is tural imports is estimated at 30 per¬ However, changes in production, mar¬ enmeshed irrevocably in the web of po¬ cent. The 1980 embargo had forced keting, processing, and management litical and strategic considerations that the Soviets to scramble for supplies at a could improve overall agricultural out¬ determine the broad direction of bi¬ time when their own harvest was poor. put and performance. lateral relations. The inherent confron¬ Although the Europeans, Canadians, In the meantime, the Soviets have tational attitude between the two gov¬ and Australians generally agreed not to signed a series of long-term supply ernments has deep roots in the past. replace U.S. sales at that time, their agreements with other major exporters That strained relationship will contin¬ eventual sales did just that. The EC and because of the current glut of grain ue to underlie all other consider¬ switched already-issued pre-embargo are in a much better position to negoti¬ ations—including commercial—un¬ licenses to Soviet destinations and is¬ ate a new long-term agreement with less new understandings can be sued new export licenses for replace¬ the United States. For foreign policy developed. ment grain to other eastern bloc coun¬ reasons, the U.S. administration re¬ A leading Soviet economist, Geotgy tries. West German soybean crushers fused in both 1981 and 1982 to nego¬ Skorov, deputy director of the Insti¬ imported large quantities of U.S. soy¬ tiate a new multi-year agreement with tute for U.S.A. and Canada Studies, beans, which they processed into meal the U.S.S.R. The embargo cost the recently wrote in Moscow News that the and oil to sell to the Soviets. European United States billions of dollars in ag¬ motivation for trade sanctions on the sales of compound feed and flour were ricultural-support programs, and it is part of the United States is rooted in a also widely reported, while port traffic now carrying 50 percent of the world’s number of myths surrounding East- at Hamburg expanded significantly grain stockpiles. This is not to say that West trade. The myths he perceived due to transshipment of grain to the lower exports to the Soviet market are are, first, that the Soviet Union’s great

20 FOREIGN SERVICE JOURNAL dependence on western technology, Perhaps that is one of the main diffi¬ day’s realities rather than on past prob¬ grain, and credits makes the Soviet culties in taking a common sense ap¬ lems or misconceptions. Both sides economy vulnerable to sanctions. Sec¬ proach to the U.S.-Soviet trade rela¬ have legitimate complaints concerning ond, that this vulnerability makes it tionship: the Soviets do not approach the other’s behavior during the 1970s. possible for the United States to use commercial relations from the same Both will remain competitive interna¬ trade sanctions to pressure the Soviet perspective as the United States. Nor tionally. Although progress will not Union to change its domestic and for¬ are there popular pressures in the come easily, a common sense approach eign policies. Third, that the benefit U.S.S.R. urging that trade be used to to U.S.-Soviet commercial relations to the broad U.S. national interest respond to political developments. can be developed if misconceptions are from these sanctions far outweighs These factors imply that unless politi¬ replaced by clear perceptions of the their negative impact on the U.S. cal relations improve, the outlook for needs of both nations. What is needed economy; and, fourth, that the United expanding trade will remain uncer¬ is clear communication of the condi¬ States has the power to involve the en¬ tain. tions for developing trade. tire western world in an economic war Events of the past decade have prov¬ In this context, three points might against the Soviet Union and the east¬ en that embargoes or other economic be considered. First, trade sanctions ern bloc. Skorov writes, “It stands to “sticks” do not increase leverage and are much easier to impose than re¬ reason that trade is developing, not in control over another nation. In fact, move. If the U.S.-Soviet relationship a vacuum, but in a real political situa¬ both common sense and historical data improves sufficiently in the future, so that all or most existing commercial sanctions can be removed, a coherent long-range policy must be developed to prevent the disruption of short-term sanctions from reccuring. Without TABLE II: Soviet Trade with Industrialized West (IW) clear guidelines, commercial interests and U.S. 1974-80 on both sides will fear that the risk of sanctions outweighs any potential benefit to be derived from expanded (millions of dollars) bilateral commitments. 1974 1975 1976 1977 1978 1979 1980 Second, trade relationships evolve Imports from IW 7,032 11,867 12,938 12,914 14,870 18,114 19,837 gradually. Building a bridge of mutual High Technology 1,059 1,615 1,690 2,085 2,345 2,370 2,330 trust and benefit is a step-by-step proc¬ (percent of total) ess. This must be understood from the U.S. 4.3 3.0 2.2 2.0 2.1 4.9 1.9 outset, so expectations are not raised European Community 52.1 55.2 60.3 59.8 61.5 61.0 64.4 for immediate results which cannot be fulfilled, such as occurred in the early

Source: United Nations years of detente. Third, trade terms are only viable if fully understood. The rules of the game cannot be ambiguous and vola¬ tile. Many problems arose in the past because of misconceptions on both tion which itself influences trade in the suggest just the opposite. There was a sides about the nature of the competi¬ same way as trade influences politics. substantial drop in emigration from tion and the relative importance of po¬ But this mutual influence is not infi¬ the Soviet Union in the years immedi¬ litical and economic variables. Trade nite. To believe that one can secure ately following passage of the Jackson/ cannot and does not take place in a political concessions in exchange for Vanik Amendment. “Carrots” seem to vacuum. Objectives must be defined, some goods is unrealistic, to say the work better: in 1978 and 1979, when clearly explained, and accepted in pri¬ least.” Although some may dismiss the United States was considering vate diplomatic exchanges so that mis¬ Skorov’s remarks as self-serving, that reinstating MFN for the Soviet Union, understandings can be avoided in the would not necessarily invalidate his Jewish emigration figures expanded future. points. There is truth in Skorov’s ob¬ sharply. It is difficult, if not unrealis¬ Trade ties are fibers that link the servations, though they do not address tic, to expect any major government to world together. Competitive coexis¬ directly the issue of linkage between yield to public demands or economic tence does not negate the possibility political and economic relations. Nor pressure from another power on vital for constructive commercial coopera¬ does he consider the Soviets’ lack of national questions. But the heart of tion. Yet, this can only come about realism in believing the United States this issue is not who holds how much when both the U.S. and Soviet govern¬ can be made to isolate trade benefits economic leverage over whom but ments are committed to dealing with from other aspects of the bilateral rela¬ whether these two governments have each other on the basis of reality rather tionship. the will to base future policies on to¬ than misconception.

APRIL 1983 21 The first bit of information needed to understand George Shultz is that he operates in a very Japanese manner. The second is that he traveled to China without visit¬ ing the Great Wall. Shultz’s trip to East Asia last February, while devoid of major accomplishments, reveals a lot about the man, how he operates, and why he is well on his way to be¬ coming one of our most effective secre¬ taries of state. Not only has Shultz placed a renewed emphasis on relations with Japan, but with the caution of a traditional Japanese politician, he has been able to protect himself from the bureaucratic wars that defeated Alex¬ ander Haig. And, on the subject of China, Shultz has demonstrated that he is capable of viewing that great na¬ tion without the romanticism that has befogged many an earlier American visitor. In Beijing, George Shultz was all business, with no time for the Great Wall. Past visits to China by high- ranking Americans have often seemed like pilgrimages, with a trip to that symbol of China’s strength part of the ritual. But Shultz came neither as pil¬ grim nor missionary, neither to do homage nor to convert. In choosing to view the Temple of Heaven, the secre¬ tary of state did show an appreciation for Chinese culture. For the most part, however, Shultz was simply “Mr. Fix- it”—a diplomatic repairman doing a The Inscrutable workmanlike job. Thus, it could be that under George Shultz, U.S.-Chi¬ nese relations will move beyond either euphoria or disappointment to a new maturity. Secretary Japan, meanwhile, looms larger for George Shultz than it has for many a past secretary of state, in part because he approaches the world’s problems as Sometimes George Shultz acts like an economist. In addition, Shultz is the first secretary since Dean Rusk to a Japanese politician, sometimes come to office with a sophisticated like a cautious elephant, and knowledge of our principal Pacific ally. It took Henry Kissinger a few sometimes like a strong but friendly bear years to realize that talking with the Japanese might be worthwhile. Those who fault Shultz for lacking a world¬ view or grand design, such as Kis¬ By DANIEL SOUTHERLAND singer had, forget that Shultz under¬ stands the interrelations of the world’s economies. He does not need to be told that Japan is the world’s second largest

22 FOREIGN SERVICE JOURNAL industrial power as well as the largest deliver more. This is partly because nese relationship on a more stable foot¬ overseas trading partner of the United Shultz has what can be described with ing. When Shultz appeared to make States. It made no headlines, but dur¬ only slight exaggeration as a very Japa¬ limited progress in all these areas, the ing his East Asia trip Shultz did a great nese manner. The traditional Japanese trip looked like a modest success. At deal to help correct an imbalance in political leader (the current prime the end of it, he acknowledged that U.S. policy. There had been a tenden¬ minister being the exception) never Washington and Beijing still had cy to overemphasize China to the ne¬ makes a move until he is certain of some disagreements. He made no glect of Japan. It is not that Shultz is widespread support within his party as great claims for what had been accom¬ de-emphasizing China—he considers well as within the bureaucracy. Once plished. it to be immensely important—but he moves, however, more often than The contrast with Haig’s visit to the secretary has started to place great¬ not he moves forcefully. One of China in the summer of 1981 could er importance on relations with Japan Shultz’s achievements has been to pro¬ hardly have been more striking. At the than did some of his predecessors. tect his flanks, acting only once he end of his trip, Haig declared that the Henry Kissinger, first as national knows that his decision will not be¬ United States and China shared objec¬ security adviser and later as secretary of come a target for the Pentagon or the tives on virtually all regional issues. state, was fascinated with China. He National Security Council. As Joe Lai- He spoke of a “common resolve” to would spend nearly a week in Beijing tin, a former press aide to the secre¬ coordinate policies. He foresaw a “ma¬ and then stop for half a day in Tokyo to tary, says: “Shultz is a slow mover. jor expansion” of Sino-American brief the Japanese. Zbigniew Brze- He’s like an elephant. He puts his foot friendship and cooperation. And Haig zinski, who took the lead in shaping forward to see if the ground is solid made it sound like the United States the Carter administration’s China poli¬ before putting another foot forward.” would soon begin selling to China, on cy, was equally taken with the Chi¬ And a leading expert on Japan, Na¬ a case-by-case basis, certain “defen¬ nese. The United States and China thaniel B. Thayer of Johns Hopkins sive” weapons. That idea collapsed faced a common enemy and, at the University, who happens to be close to within hours, as President Reagan, Great Wall, the visitor would look out Japan’s prime minister, Yasuhiro back in Washington, reaffirmed his toward the wastes from which came Nakasone, says that because Shultz support for Taiwan. A top Chinese for¬ the threatening hordes. In a joking moves by consensus and believes that eign ministry official was dispatched to mood during his 1978 visit, Brze- economics is the key, he is “a superb the Beijing airport to deliver a finger- zinski climbed a steep incline of the Japanese politician.” wagging protest to Haig even before wall, saying that the last person to Setting Modest Goals his plane could take off. Instead of ex¬ reach the top would have to fight the panding, relations with China grew Cubans (and presumably the Soviets) Shultz also has a modest bearing, tense. Instead of cooperating in new in Ethiopia. Like Kissinger and Brze- which helps him in dealing not only ways with Washington against the So¬ zinski, Alexander Haig saw China as a with Asians but also with diplomats viets, China opened a dialogue with counter to the Soviet Union and envis¬ from other regions. According to Moscow. aged what was beginning to look like a aides, the secretary of state is able to When Reagan agreed to reduce strategic alliance between the United assert himself and make criticisms arms sales to Taiwan in a joint commu¬ States and China. He offered the Chi¬ without seeming to push people nique last August, the United States nese “defensive” weapons from the around. Shultz expresses his disagree¬ went a long way toward accommodat¬ United States. The Chinese, however, ments for the most part in such a low- ing Beijing. But this did little to re¬ began to feel that they were being ma¬ key manner that his counterpart on the store trust to the relationship. By the nipulated and that U.S. arms sales to other side of the negotiating table is time Shultz arrived in early February, China might become a justification for never in a position of losing face. One he was not coming to consolidate an continued arms sales to Taiwan. They of his ploys is to set public expecta¬ ever-expanding relationship but to also could never be sure that Haig had tions for any diplomatic meeting or mend fences. enough backing from the President to negotiation so low that any kind of Shultz found the Chinese much be able to fulfill his promises. agreement looks like a success. For in¬ more interested in U.S. trade and tech¬ In George Shultz, both the Chinese stance, when speculation began to nology than in arms. Being expert in and Japanese have found a secretary of grow over the possible warming of the ways of trade, Shultz might indeed state who tends to promise less than U.S.-Soviet relations following Yuri be able to deliver more in the economic Haig did but who might be able to Andropov’s rise to power in the Soviet field than did Haig. But this will have Union, Shultz quickly punctured the to be part of a process of give and take. Daniel Southerland has been the Christian balloon. As always, Shultz presents the unhur¬ Science Monitor’s diplomatic correspon¬ Shultz set goals for his China trip ried air of a man who cannot be driven dent in Washington since 1976. Prior to that were modest indeed: getting to to make concessions—certainly not his current assignment he was its Asia cor¬ know the Chinese leaders, clearing up until Reagan is on board. Shultz’s old respondent, based in Hong Kong. He cov¬ misunderstandings, finding common- firm, Bechtel, had lost a lot of money ered George Shultz’s trip to East Asia for interests and objectives, and, finally, trying to establish itself in China, and the Monitor last February. exploring ways to put the U.S.-Chi¬ Shultz is reported by one China expert

APRIL 1983 23 to believe that this was the result as When it comes to Japan, the secre¬ But some reporters aboard the secre¬ much as anything else of a failure on tary of state is interested in an idea tary’s plane complained that he was the part of the Chinese to take intelli¬ which could result in creative give and being too cautious. One declared that gent advantage of what was being take. Short of energy, Japan would like the most colorful thing Shultz uttered offered. Perhaps this explains—al¬ to buy Alaskan oil and natural gas. during the entire trip was in Tokyo though he was too discreet to utter a But, remembering the domestic oil after the Superbowl, when he said to word on the subject during his trip— shortages, Congress has banned such Nakasone, “Hail to the Redskins.” why Shultz is believed to be less than sales. American maritime unions sup¬ Then on the way to Beijing, Shultz overwhelmed by China’s chances for port the ban, not wanting to see the oil was asked jokingly whether or not he success in carrying out its ambitious shipped in foreign vessels. And ship¬ could handle chopsticks. Shultz de¬ economic modernization program. ping it in high-priced U.S. ships clined to commit himself on this cru¬ Some reporters now believe that the would be much too expensive. Yet an cial question. “Well, we’ll see,” he re¬ success of Shultz’s fence-mending mis¬ end to this ban might do more than plied. sion to Beijing may have been dimin¬ any single action to reduce the trade Does Buddha-like impassivity mask ished—if not demolished—by re¬ deficit with Japan, and it would do so depth or ignorance? wondered one re¬ marks since made by the President. In to the tune of several billion dollars a porter aboard the plane. It does not an interview with the conservative year. The situation calls for a Shultz- mask ignorance. Lacking depth, one publication Human Events, Reagan type compromise: Ship some of the could not move the way Shultz has less seemed to minimize the importance of Alaskan oil in American vessels and than a year into his job. In his first the U.S. commitment to the commu¬ some of it in foreign ships. Then more months as secretary, he grasped the nique. In that document, the Reagan oil could be brought into the lower 48 difficult Mideast problem and played administration had agreed to “reduce states from Mexico, at cheaper rates the key role in shaping a policy that gradually” the sale of arms to Taiwan, than from Alaska. helped to restore negotiating momen¬ “leading over a period of time to a final But until he can achieve a consensus tum. He then moved to defuse ten¬ resolution.” But in his interview, Rea¬ among key bureaucrats both in Japan sions with Western Europe over the gan said the administration “did not and at home, Shultz is not likely to Soviet-European gas pipeline. Next, give an inch” in the communique. He push hard on this issue. In the mean¬ he managed to prevent what could declared that “if the day ever comes time, he has already checked with sen¬ have developed into a trade war with that those two [China and Taiwan] ators from Alaska, and they are in favor the Europeans. He is now playing the find that they can get together and of a deal; that’s half the battle. In re¬ lead role, through an undersecretary, become one China in a peaceful man¬ turn for a little Alaskan oil, the Japa¬ in preparing for the next summit ner, then there wouldn’t be any need nese might open their markets a bit meeting of the industrialized democra¬ for arms sales to Taiwan. . . . And more. cies, set for the end of May in Wil¬ that’s all that was meant in the com¬ liamsburg, Virginia. Typically, Shultz munique. Nothing was meant beyond Giving Cautious Answers is already lowering expectations. He that. We're not going to say, ‘Well, Asked about Alaskan oil aboard his says he wants to make it an informal just as time goes by, we’re going to plane en route to Japan at the start of meeting which will not necessarily reduce arms to them.’ ” Reagan also his trip, Shultz gave a cautious, Japa¬ produce specific agreements. He wants said, without explanation, “We are nese-like answer. He said, among oth¬ to avoid a disaster like the Versailles making progress in other areas that en¬ er things, that a working group had summit of last June, when Haig sure the representatives and people of been established to look at the subject thought everyone had agreed to princi¬ Taiwan are treated with the respect and that for the oil to go to Japan, the ples limiting East-West trade only to which the American people demand.” ban would have to be lifted. Shultz find within days of the summit that In a statement to the Conservative also said: “The people who are very Europe and the United States were Political Action Conference in Febru¬ interested in this development, par¬ squabbling again. ary, Shultz himself may have alarmed ticularly the Alaskans, many of whom Shultz’s seemingly effective involve¬ Beijing when he said, “We’re not go¬ wonder why it should be that oil from ment in so many disparate areas of for¬ ing to turn our backs” on the people of 49 states of the Union should be possi¬ eign policy has made it almost a cliche Taiwan and claimed that “they fought ble to go anywhere the owner of the oil for many of those attending Washing¬ on our side” in the Korean and Viet¬ wants to send it, but the oil produced ton cocktail parties to refer to him as nam wars. State Department officials in the most difficult of circumstances is the Reagan administration’s most later explained that in the Vietnam restricted. But the Alaskans, certainly competent cabinet member. But at war, the United States used Taiwanese the senators particularly, I know, want some of those same parties, the gossip air bases for repairs and for logistical to see this subject move forward. . . .” now has it that he is spread too thin. In support. It was not clear what Shultz Translated into plain English, this addition to all of his foreign policy du¬ meant by the remark about Taiwan’s meant that Shultz favors a U.S.-Japa¬ ties, for instance, Shultz played a sig¬ participation in the Korean conflict. nese deal over Alaskan oil. This time nificant role at the end of last year in Taiwanese troops were not involved in Shultz was not being inscrutable; he White House deliberations on the fed¬ either war. was just being cautious. eral budget.

24 FOREIGN SERVICE JOURNAL The secretary of state has felt sure secretary excluded U.N. Ambassador But Shultz’s style is to avoid a brawl. enough of himself to delegate consid¬ Jeane Kirkpatrick from a briefing on One former associate predicts that if a erable authority to subordinates, and Latin America late last year but includ¬ conflict develops with the secretary of that has taken off some of the heat. ed scholars and former officials consid¬ defense, “Shultz will wrap Wein¬ Deputy Secretary of State Kenneth W. ered by conservatives to be softliners. berger in a bear hug and gradually take Dam does much of the day-to-day “I think George Shultz is just a big over.” work on Lebanon and on arms control, business, country club, moderate, Great initiatives should not be ex¬ for example. But many observers claim Ford-type Republican,” said John Lof¬ pected from George Shultz. In his that they now detect an edginess and ton, a prominent though unconven¬ most comprehensive foreign policy unevenness in some of Shultz’s public tional conservative columnist. But he speech to date, delivered last Septem¬ statements that indicate that he is feel¬ added that Shultz “will manage the ber to the U.N. General Assembly, he ing the pressure of the job and is being mess in a marginally better way.” cautioned that major progress in inter¬ pulled in too many directions. Liberal Where other critics fault Shultz is in national relations cannot be easily critics point in particular to some of arms control. He was slow to get into achieved. “We must recognize the his remarks on El Salvador made in this field at a time when the adminis¬ complex and vexing character of the congressional testimony in late Febru¬ tration could have used more coordina¬ world,” he said. “We should not in¬ ary and early March. Shultz’s tone on tion and cohesion. Had Shultz moved dulge ourselves in fantasies of perfec¬ El Salvador has grown uncharacteristi¬ faster, perhaps George Bush’s rescue tion or unfulfillable plans, or solutions cally harsh, they say. Other liberals mission to Europe in February might gained under pressure. It is the respon¬ complain that Shultz is such a team sibility of leaders not to feed the grow¬ player and consensus builder that it is ing appetite for easy promises and difficult to know where he stands on grand assurances.” Concluded Shultz: some issues or how hard he might fight “One of Shultz’s “We face the prospect of all too few for a position that he really believed in. decisive or dramatic breakthroughs.” “You can never figure out where achievements has Those are the words of a man of Shultz stands on an issue, because he considerable experience as well as con¬ just sort of listens,” said a member of been to protect his siderable caution. One suspects that the Senate Foreign Relations Commit¬ they would not be words that Ronald tee staff. flanks, acting only Reagan would find easy to utter. One sign that Shultz’s honeymoon once he knows that Although Reagan too has shown a with the press may be ending came on capacity for compromise and pragma¬ March 6, when Washington Port colum¬ his decision will tism, George Shultz, the industrial- nist Mary McGrory wrote that the ad¬ relations expert and veteran labor- ministration’s Mr. Calm was losing his not become a target management mediator, has made cool. McGrory cited his rebuke of a pragmatism a way of life. He may be a group of American businessmen in for the Pentagon conservative in ideology, but he is con¬ Beijing who complained about U.S. or the NSC. ” stantly testing that ideology against trade policies, his comment that Lib¬ reality. After asking a group of aca¬ yan leader Muammar Qaddafi was now demics to help him prepare a speech “back in his box,” and his brusque “no for the National Press Club when he dice” rejoinder to congressmen inquir¬ not have been so necessary. And had was an assistant to President Nixon, ing about the possibility of negotia¬ Shultz been more carefully consulted Shultz then told his aide Joe Laitin to tions with the guerrillas in El Salva¬ on whom to appoint as the new direc¬ put into the speech “some things from dor. But what most upset McGrory tor of the Arms Control and Disarma¬ the real world.” was Shultz’s criticism, at a Senate Ap¬ ment Agency, perhaps the battle over When Shultz attended Princeton propriations Committee hearing, of the White House’s hurriedly made University during the war, he pre¬ what he described as “churchmen who choice of Kenneth Adelman could have pared an undergraduate thesis on the want to see Soviet influence in El Sal¬ been avoided. Tennessee Valley Authority. Having vador improved.” Shultz later said in . But one man cannot do it all. Arms compiled his statistics, he then went to an interview with the Post that he had control is a field in which Shultz has Tennessee and lived with a poor family misspoken. had no great experience, so he has tak¬ for a few days. He found the family Some conservatives, however, have en his time in asserting himself. In the members to be uneducated yet shrewd applauded the secretary’s hard line on end, Shultz will probably lean in favor and intelligent, and he feels that he El Salvador. What they find upsetting of a slightly more flexible negotiating learned a great deal from them. Shultz are Shultz’s appointments and the par¬ position. This willingness to compro¬ has been testing his ideology and his ticipants he has chosen for some of the mise could bring him into debate, if statistics against the real world ever briefings he has convened with experts not conflict, with his former business since. The combination is producing, from outside the State Department. and government subordinate, Secre¬ if not yet a great secretary of state, Human Events pointed out that the tary of Defense Caspar Weinberger. certainly an effective one.

APRIL 1983 25 tinguishable from each other mainly in the mix or magnitude of the dosage recommended. Few address long-term social and political consequences. The magnitude of the global debt problem has been clear for some time. Third World countries owe $540 bil¬ lion to western creditors, chiefly pri¬ vate banks. Five Latin American coun¬ tries alone have debts amounting to about $215 billion. The total debt of the Comecon countries of Eastern Eu¬ rope has now reached about $80 bil¬ lion—over $100 billion, if Yugoslavia is included. Poland, with an external debt of $30 billion, was formerly the most publicized basket case; but today Brazil and Mexico, with external debts of $100 and $80 billion, respectively, constitute graver threats to interna¬ tional financial stability. In 1982 alone, creditor governments and lend¬ ing institutions were forced to resched¬ ule debts amounting to $20 billion. The present crisis is the direct result of massive OPEC price shocks in 1973— 74 and 1979—80 and the resultant flood of petrodollars that inundated capital markets. At times during the 1970s, OPEC oil surpluses reached an annual level of nearly $100 billion, much of it parked in western banks in the form of short-term deposits at high interest rates before being lent out to developing countries. The non—oil The Credit producing developing countries, pressed for hard currency to meet tre¬ bling and quadrupling oil costs and caught up in ambitious internal devel¬ opment programs, went deeper and Collapse deeper into debt, assured by bankers and development economists that ris¬ ing productivity and world inflation would enable them to pay off interest At the same time that the world is and principal with progressively more stagnating in a deep economic abundant and cheaper dollars. k. recession, a mountain of pub¬ Once astride the development tiger, lic and private debt accumulated by there was no way for Third World the developing countries and Eastern leaders to curtail social programs and Europe threatens to destabilize the fi¬ tailor their economic development nancial systems of the leading indus¬ plans to the vicissitudes of the global By CHARLES MAECHLING JR. trial countries. To quote Henry Kauf¬ economic cycle; that course was pre¬ man, the influential Wall Street cluded by the revolution of rising ex- economist, the international credit structure is “in a situation of high Charles Maechling Jr. is a Washington economic and financial risk.” Pre¬ lawyer with extensive Latin American scriptions for shoring up the rickety experience. He is currently a senior associate structure abound. Most, however, are at the Carnegie Endowment for Interna¬ variations of traditional nostrums, dis¬ tional Peace.

FOREIGN SERVICE JOURNAL pectations. What had begun as a rea¬ tual rate and inflation—remain as high through one expedient or another, sonable gamble on rising productivity as ever. Oil import costs have started Mexico, Argentina, Brazil, and the and progressive inflation swiftly to decline but not enough to offset the other 13 nations with inordinately turned into a struggle to maintain mo¬ corresponding fall in exports. high debt-service ratios will certainly mentum in the face of pyramiding in¬ As a result, the debt-service ratios be given a fresh round of credits to terest and oil costs, and then simply to of the five leading Latin American keep them afloat. stay afloat. debtors—Brazil, Mexico, Argentina, The situation is almost as acute in The 1970s, however, except for a Chile, and Ecuador—are now well Eastern Europe, but for different rea¬ steep dip in mid-decade, was a period over 100 percent, while according to sons. During the era of detente, with of relative economic prosperity. The the Economist, the ratios of the three its accompanying growth in East- Third World as a whole managed to highest, Argentina, Mexico, and Bra¬ West economic ties, the Eastern Euro¬ preserve an average growth rate of 6-7 zil, are at 180, 130, and 120 percent, pean countries embarked on ambitious percent, with higher rates for countries respectively. If external reserves are programs of industrial expansion and like Brazil, Venezuela, and Singapore. left out of the calculation and short¬ economic development financed by an Nevertheless, the combination of OPEC term debt is thrown in, all the worst- Amazonian flow of western loans that currency surpluses and abundant cred¬ case debtors of the Third World would in total exceeded U.S. credits to Eu¬ it led to an unprecedented expansion of show a debt-service ratio of over 100 rope under the Marshall Plan, even al¬ the global money supply. Between percent, while Brazil, Mexico, Tur¬ lowing for inflation. When recession 1972 and 1982 all this new money was key, and Egypt would have ratios over struck Western Europe, the lower de¬ recycled; $50 billion was lent to gov¬ the 300 percent mark. Thus, if con¬ mand for East European imports com¬ ernments and state enterprises in East¬ ventional banking standards applied, bined with rising energy costs to in¬ ern Europe and nearly $400 billion to Argentina, Brazil, and Mexico would crease Eastern European reliance on developing countries. long ago have been declared insolvent. foreign loans for debt-servicing, leav¬ Conventional Wisdom So, at various times in the recent past, ing little to expand industrial produc¬ would Turkey, Zaire, Nicaragua, Su¬ tivity. Today, according to the Econo¬ During this period conventional dan, and a dozen others. mist, the total long-term debt of economic wisdom depicted inflation Bankers and development econo¬ Eastern Europe to western banks and and overheated economies as the prin¬ mists must bear a large part of the governments is over $80 billion. Po¬ cipal enemy of continued economic blame for this deplorable situation. land’s debt-service obligations are well growth for developed and developing After the influx of petrodollars, the over 100 percent of exports; the debt- countries alike. This scenario assumed worst features of competitive lending service ratio of East Germany is 54 per¬ that the voracious demand and high took over in the international market. cent, of Hungary 37 percent, of Bul¬ prices for fuel and raw materials would Bankers pursued every tactic from ca¬ garia 38 percent, and of Romania and continue. For raw-material producers jolery to bribery to press loans on debt¬ Czechoslovakia 22 percent. at least, the practice of going ever or countries. Various forms of creative Holding the Bag deeper into debt seemed to be an ac¬ financing were devised and, regardless ceptable risk. The alternative was to of the long-term consequences, loans Who holds the bag for this moun¬ stunt economic growth and end the were peddled to countries that had tain of debt? In the early part of the revolution of rising expectations. only limited capacity to pay back. century, when bank capitalizations This highly optimistic picture was Economists dressed up this irresponsi¬ were relatively low, governments supported to some extent by the man¬ ble borrowing in conceptual finery. raised capital primarily through pub¬ ageability of most countries’ debts. Al¬ They erected a body of theory in which lic bond offerings. Ever since the de¬ though the external long-term debt of credit became a talisman for unlimited faults of the 1930s and World War II, non—oil producing developing coun¬ economic growth. Even the piling of the prevailing pattern has been to fi¬ tries grew from $97 billion to $540 debt on debt in order to pay off debt nance foreign-government borrowing billion between 1973 and 1981, the was treated not as a last-resort expedi¬ through government or private bank ratio of debt payments to exports of ent, but as a normal and indeed benefi¬ loans, supplemented by development goods and services remained in the 20- cial prerequisite to growth. Geomet¬ loans from the World Bank and emer¬ percent range, after taking external re¬ rically rising interest costs were gency credits from the International serves into account. However, the eco¬ dismissed as being either of little con¬ Monetary Fund. nomic situation of the debtors became sequence, or manageable through ex¬ Today, more than 1000 banks all much more precarious after the two oil change devaluations. over the world are in the business of shocks. The inflationary expansion of For large parts of the Third World lending to foreign governments and the 1970s gave way to worldwide re¬ the chickens have come home to roost. state enterprises. According to Mor¬ cession and prices of commodities and Countries are now accumulating debt gan Guaranty statistics, Poland is in raw materials dropped sharply. Com¬ that can never be paid off, however debt to 501 banks, Turkey to 240 modity export prices are now one-third often rescheduled or buried under new banks, Brazil to more than 200 banks, lower than in 1980, while real interest loans. The industrial world has such a chiefly American—even tiny Nicara¬ rates—the difference between the ac¬ stake in not permitting default that, gua is in debt to 140 banks. Coordina-

APRIL 1983 27 tion of lending has become unman¬ ity program and make it stick, a debt¬ ageable; the Polish debt rescheduling or government normally has only three of 198 1—82 was handled by a multina¬ ways to avert default. First and easiest tional negotiating group of 70 banks. is for the debtor to approach the banks Sixty percent of the Third World debt for even more credit, to be used to pay of $540 billion and the Eastern Euro¬ off arrears on interest and keep current pean debt of $80 billion is owed to on repayments of principal. Second is private banks—$320 billion of it to to convince creditor banks to resched¬ U.S. banks. ule existing debt; to stretch out the life Again according to Morgan Guar¬ of loans, thereby reducing payments of anty, the nine largest U.S. banks have principal and interest proportionately. $66 billion in loans outstanding to (Rescheduling is normally confined to non-oil producing developing coun¬ principal; in most cases bankers draw tries (including, for statistical pur¬ the line at waiving or reducing interest poses, Mexico) even though their com¬ payments, which changes the original bined capital—including reserves terms of the deal.) Third, the debtor against losses—amounts to only $26 may fall back on the International billion. Two crisis debtors, Mexico Monetary Fund, while at the same and Brazil, are in debt to these nine time undertaking to reform its internal It took the present banks for $ 11.6 and $ 10.6 billion, re¬ finances and economic practices. spectively—a sum amounting to 85 Unfortunately, none of these ap¬ financial crisis percent of the nine’s equity. To set the proaches goes to the heart of the mat¬ exposure in even broader context, the ter, which is the mountain of debt that to make the combined equity of the 30 largest U.S. caused the crisis in the first place. In¬ International bank holding companies is $40 bil¬ deed, from the standpoint of attacking lion, of the 100 largest foreign banks, the illness itself—overborrowing—the Monetary Fund’s $116 billion. Since 1975 the amount banking community has been a failure. of foreign debt in arrears has risen from Banks have a selfish interest in extend¬ critics aware that $500 million to $5.5 billion. ing new loans, and even when acting For countries like Mexico, Brazil collectively rarely have the clout to in¬ the private sector and Argentina, the repayment prob¬ duce economic reform. Peru, which in lem has been aggravated by the fact 1976 tentatively agreed to stringent no longer has that a large percentage of their out¬ economic measures proposed by its standing loans—20 percent for Mexi¬ creditors, is a classic example. The the capacity to co, 50 percent for Argentina—fall due banks exacted stiff budget reductions cope with global in 1982 and 1983- Furthermore, as a quid pro quo for resumption of short-term loans to developing coun¬ loans, but public pressure soon forced credit needs, much tries have jumped from $42 billion in the Peruvian government to renege on 1977 to $ 120 billion in 1982. It is the its promises. principal owed on short-term obliga¬ less to exercise a Emergency Credits tions that often brings debt-service ra¬ parental role in tios to such alarming levels. One traditional source of emergency With cross-default clauses the rule, credits from the private sector has been correcting even a single default by a major debtor the Bank of International Settlements profligate practices. nation, let alone two or more at a time in Basel, which, apart from its regular or in close sequence, would be cata¬ function of straightening out foreign strophic to both the international cred¬ exchange imbalances, puts together it structure and national banking sys¬ syndicates of private institutional tems. For this reason, governments lenders in crisis situations, e.g., the and private bankers have so far turned $ 1.5-billion package that took care of a blind eye to even the most flagrant Poland’s 1981 arrears. The so-called instances of arrears: Poland in 1981, Paris Club, consisting of treasury offi¬ Argentina in 1982, Chile and Brazil in cials from 11 members of the Organi¬ 1983. Creditor and debtor are thus zation for Economic Cooperation and handcuffed together, with neither dis¬ Development, also provides a first-re- posed to let the other go under. course option for debtors. It puts to¬ The options available to creditors gether packages of government-to- and debtors are limited. Apart from a government loans and export-credit unilateral decision to impose an auster¬ guarantees, with debt relief exclusive-

28 FOREIGN SERVICE JOURNAL ly confined to rescheduling of princi¬ terms, a syndicate of 10 western banks ting over its head in short-term bor¬ pal. The Paris Club does not normally has agreed to make a bridge loan of rowing—which in 1982 rose from $8 provide new credits to repay old debt, $1.1 billion to take care of the imme¬ billion to $ 14 billion—Brazil was a function assumed by the private diate arrears. But Argentina is already forced to turn to the IMF for $6 billion lending that usually follows along in in trouble on its 1983 payments: in in emergency IMF credits and to ar¬ its wake, sometimes under the aegis of March the Bignone government an¬ range a bridge loan of $600 million the BIS. Neither the BIS nor the Paris nounced suspension of interest pay¬ from a syndicate of New York banks. Club lays down stringent economic ments on $1.4 billion of debt. None of the above measures is any¬ programs for insolvent debtors. In the more serious case of Mexico, thing but a stop-gap or temporary so¬ The ultimate resort of government with $20 billion in private debt and lution. For countries, as for families or borrowers and the most authoritative $60 billion in public debt outstand¬ individuals, the best policy is not to source of financial advice for insolvent ing, the Reagan administration first borrow at all—at worst, to limit bor¬ governments is the International Mon¬ put together an emergency aid package rowing to what is affordable based on etary Fund. The IMF provides a reser¬ of $3 billion, consisting of Federal Re¬ conservative estimates of future in¬ voir of credit for member countries serve purchases of pesos, advance pay¬ come, taking adverse contingencies from which they can draw a minimum ments for oil imports for the strategic into account. Nations dependent on of four times the amount of their con¬ petroleum reserve, and agricultural fluctuating commodity prices for the tribution, and considerably more than credits to finance Mexican grain pur¬ bulk of their external income court dis¬ that in emergencies. The IMF buys chases. At the same time, the IMF ne¬ aster if they borrow to the hilt for cur¬ time—time for debtors to tighten up gotiated an agreement to provide rent expenditures instead of accumu¬ their financial practices, cut back so¬ Mexico with $3.9 billion in credits lating reserves in good times to cial programs, and change economic over a three-year period, plus the third cushion the effect of recession and fall¬ course; time for creditors to write off tranche of a $ 1.8-billion bridge loan. ing commodity prices in bad. Indeed, loans gradually, to cushion or disguise The conditions were that Mexico cut the fourfold rise in oil prices, coupled the effect of reschedulings on quarterly its budget deficit from the present with the paradoxical coexistence of de¬ profit-and-loss statements, and to re¬ 16.5 percent of GNP to 8.5 percent in pression in commodity markets, has target lending. 1983 and 3.5 percent in 1984, and taxed even the soundest economies to IMF credit assistance to borrowers is also raise taxes, cut spending, and the limit. always in some degree conditional. adopt other austerity measures. There But, for those countries that have The principal conditions to which a is still some doubt as to whether Mexi¬ already borrowed large amounts and developing country must agree before co can meet these terms, since any re¬ now find themselves in serious eco¬ getting a substantial chunk of IMF fi¬ duction of the budget deficit below 10 nomic trouble, the question is not nancing are reduction of imports and percent of GNP would eliminate social whether they should borrow but how drastic curtailment of domestic expen¬ programs considered vital for preserv¬ they can meet the next payment. Are ditures until the current account is ing internal order. The Mexican gov¬ lenders who contributed to the present brought into balance—a program ernment is relying on a large increase predicament in a position to bail out analogous to tightening the liquor in¬ in oil exports beyond the current 1.73 debtors indefinitely? What are the take of an alcoholic. Take the case of million barrels per day to restore its likely political consequences for im¬ Argentina, now $1.7 billion in ar¬ balance of payments. But the current poverished borrowers forced to adopt rears. Its fundamentally sound econo¬ drop in oil prices may puncture this the remedies prescribed for them by my was brought to the edge of disaster expectation. affluent lenders? through years of mismanagement. In Austerity Measures Certainly private sector lenders are exchange for a $ 1.5-billion line of no longer in a position to bail out debt¬ credit to be made available over 15 The critical role of the IMF is also ors on an unlimited scale. OPEC sur¬ months commencing last January, apparent in the case of Brazil. With an pluses have shrunk drastically in recent plus another $500 million in credits to external debt of $ 100 billion—60 per¬ years—from $80—100 billion in the compensate for losses during the Falk- cent of it owed to U.S. banks—Brazil 1970s to $6 billion today, with an lands war and the drop in grain prices, at first elected to impose its own aus¬ even more drastic drop in the offing. the IMF exacted the following condi¬ terity program rather than that of the The bankers are getting cautious, both tions: a massive cut in government IMF. Last September and October, in institutionally and personally. Prob¬ spending to bring the deficit down accordance with a new plan of the Na¬ lem loans of U.S. banks, domestic and from 3 percent of GNP to 2 percent; a tional Monetary Council, the Brazilian foreign, were up 63 percent in 1982. rise in the interbank loan rate to levels government took steps to reduce the According to the New York Times, for¬ roughly equal to inflation (now about budget deficit from the existing 6 per¬ eign lending was down from $ 100 bil¬ 500 percent annually); periodic cur¬ cent of GNP to 2.5 percent, impose lion in the first quarter of 1981 to $39 rency devaluations to keep exports import restrictions, and reduce bor¬ billion in the first quarter of 1982. competitive; and reductions in subsi¬ rowing. However, after an expected $3 New loans by U.S. banks to Latin dies to state-controlled industries. billion trade surplus turned out to be America in the fourth quarter of 1982 Predicated on acceptance of the IMF less than $300 million, and after get¬ fell to an estimated $4.3 billion from

APRIL 1983 29 $12 billion in the fourth quarter of lion available from a Saudi loan. 1981. At a recent meeting of leading The economic expansion and infla¬ bankers and economists in Philadel¬ tion of the last thirty years has reduced phia, there was general agreement that the IMF to relatively modest dimen¬ the borrowing needs of developing sions. Before the recent increase in its countries face a shortfall of $45-50 bil¬ capitalization, the fund ranked 28th lion in 1983. among international banking institu¬ A recent study by Morgan Guaranty tions, just below Morgan Guaranty, paints an alarming picture of the im¬ the fifth largest U.S. bank. The devel¬ pact that a slowdown in international oping countries had complained for lending to developing countries could years about the fund’s limited capital¬ have on the world economy. Assuming ization and restrictive lending prac¬ that in the next few years new lending tices, but during the petro-dollar eu¬ grows by only 10 percent instead of 20 phoria, European and U.S. bankers percent (the annual rate in 1979—81), rather welcomed the relative decline of the study estimates that economic the IMF since it eliminated a potential growth rates in Latin America would competitor in the lending free-for-all. drop by 3 percent. If new lending stays It took the present financial crisis to flat, Latin American growth, to the make the fund’s critics aware that the In the future, the extent it still exists, would fall by 5.5 private sector no longer has the capac¬ percent. Since OECD countries ship a ity to cope with global credit needs, struggle between quarter of their exports to the Third much less to exercise a parental role in left and right in World, such reductions would cause a correcting profligate practices. corresponding drop in the growth rates Drastic Increases of North America, Europe, and Japan. these countries is Unless international institutions fill At the 1982 Toronto meetings of likely to center the gap, bankers foresee such a con¬ the World Bank and IMF, both devel¬ traction of imports in developing oped and developing nations strongly around formulas countries that the economic recovery of urged a drastic increase in IMF mem¬ the industrial world would be indefi¬ ber-country quotas. At first, the Rea¬ politicians devise nitely delayed. gan administration took the position When the risks are too high or that no increase was needed. But when to make the amounts too great for private lenders other countries continued to urge an and governments, the IMF and World increase of 50-100 percent, the United prescriptions of the Bank, in theory at least, act as stabiliz¬ States in February notified Britain, ers of the international financial sys¬ France, West Germany and Japan— banks and the IMF tem and lenders of last resort. Howev¬ the other contributors to the Special digestible for the er, the purpose of the World Bank is to Drawing Rights basket—of its agree¬ foster long-term economic develop¬ ment to an increase of 47.4 percent of ment, not to mount financial rescue the fund’s capitalization, provided populace — and operations. Its capitalization, now Congress concurs. Such an increase around the tactics stretched to the limit, allows an annual would add $32.5 billion to the fund's lending rate of only $11 billion, not present lendable capital of $66 billion adopted to contain enough to make a dent in national for a total of $98.5 billion and should deficits and at the same time continue be sufficient to enable the IMF to meet the resultant discord. development lending. all current demands for credit. In Jan¬ It is the IMF that is supposed to be uary, 10 industrial nations agreed to the financial stabilizer of the world make available to the fund for emer¬ community. But until recently the gencies an additional $20 billion. fund suffered from a serious disability: Even with these increases, however, it was too-thinly capitalized, and in¬ the gross amount of Third World and deed, it may still be. The fund’s pres¬ Eastern Europe indebtedness will still ent $98.5 billion capitalization, based dwarf the fund’s capacity to deal with on quota contributions from member more that three or four major problem countries, may appear ample at first debtors at one time. One solution, glance, but the amount of capital actu¬ proposed by Henry Kaufman, is to cre¬ ally available for lending, even after ate a $50-billion permanent supple¬ the recent increase, is still no more mentary fund. Another is to develop a than $30 billion, with another $7 bil¬ more structured reporting system to

30 FOREIGN SERVICE JOURNAL provide early warning of deteriorating domestic upheaval has been averted diplomacy of Canada and the major economic conditions in borrowing only by massive illegal emigration to countries of Western Europe—with countries. But traditions of banking the United States. For the first time in the occasional exception of France— secrecy, national regulations, anti¬ its history, Argentina has an unem¬ nor full-scale intervention in which the trust policies, and legal obligations to ployment rate of more than 15 percent United States at least assumes some depositors and stockholders, plus a va¬ and an inflation rate of an unbelievable degree of responsibility. Instead we riety of other constraints, make overall 500 percent. Argentina is already in a have sought to “protect” U.S. interests coordination of lending, much less of state of endemic chaos, and if Mexico by identifying them with the estab¬ coordinated banking action, a virtual enforces the IMF prescription of slash¬ lished order, regardless of the latter’s impossibility. Thus, the present struc¬ ing the national budget by eliminating brutality, greed, or corruption. ture is likely to stay rickety for some or drastically cutting back welfare and This policy is breaking down in time to come. employment programs, the results Central America and will break down The international credit crisis has could be equally disruptive. Neither elsewhere if the credit crisis intensi¬ not only economic but political conse¬ country has a social welfare safety net fies. If the oligarchies of the Third quences, and these should get more adequate to cope with massive unem¬ World are unwilling to take note of attention. An insolvent Poland would ployment, inflation, and population their citizens’ concerns, violence will be a drag on the European economy, increase. become inevitable. Agitation from the but a full-scale default would have The predicament of the Third Marxist left will push governments to catastrophic consequences on the Eu¬ World is that while leaders are fully the right, and the bloody cycle of re¬ ropean banking system. German aware that to pyramid debt is to mort¬ pression, state terrorism, and left- banks hold over a third of the Polish gage the future, the pressures to relieve wing insurgency will start again. The loans, and since the German govern¬ hardship and keep up the pace of de¬ United States will then face the choice ment guarantees 50 percent of these velopment create an irresistible temp¬ of whether to back the government in loans, it also is a virtual hostage to tation to borrow for the present and let power, thereby losing credibility with keeping Poland afloat. Even the recent tomorrow take care of itself. For the the masses and remaining the prisoner Christian Democratic victory in the foreseeable future the struggle be¬ of the so-called client regime, or to use German parliamentary elections will tween left and right in these countries its financial clout to push for reforms. not prevent the political effects of the is likely to center around the formulas The United States is already in the Polish debt crisis from imposing heavy that politicians devise to make the pre¬ front line of the international credit constraints on German participation in scriptions of the banks and the IMF crisis, not only through exposure of any economic and political measures digestible for the populace—and U.S. banks but through our 27-per- directed against Poland. Renewed around the tactics adopted by govern¬ cent share in IMF funding. As a society threats by the Reagan administration ments to contain the resultant discon¬ the United States has intervened on a to impose economic sanctions on Po¬ tent. massive scale at the economic and fi¬ nancial level in the economies and soci¬ land would only make matters worse. Inevitable Compromises In this sense, the United States too is a eties of less-developed nations. When political captive of the Polish debt If the past is any guide, compro¬ the United States insists on making problem. mises in the form of emergency pro¬ stringent austerity measures a condi¬ In the Third World, the austerity grams intended to stem the tide of un¬ tion for credit, and then tries to disas¬ measures imposed by the IMF are po¬ rest are inevitable. The poor in these sociate itself from the inevitable conse¬ litical dynamite, and the fund is al¬ countries traditionally have borne a quences, the inconsistency is obvious. ready included in leftist demonology. much larger burden of sacrifice than A more realistic policy for the Unit¬ In the 1980 Jamaican elections, for in¬ the rich and have been taught to accept ed States would be to assume that if stance, Michael Manley, the defeated economic and social injustice as inevi¬ austerity measures are forced on less- socialist candidate, ran against the table. But today the media, mass liter¬ developed societies by the IMF and in¬ IMF as much as against his conserva¬ acy, radicalization of the university ternational banks, social unrest will be tive opponent. population, and a socially conscious inevitable. The United States should Latin American counties most se¬ Catholic Church have so broadened the insist that the preponderant share of verely affected by the credit crisis are political base of social dissent that any the austerity burden be borne by the already treading a fine line between effort to dismantle social programs in rich and not the poor. Progressive tax¬ authoritarian repression and revolu¬ the name of fiscal prudence is likely to ation, rigid exchange controls, land tionary explosion. If the austerity be met by demands for social and eco¬ distribution, nationalization of utili¬ measures prescribed by the IMF are nomic reform. Chief among these will ties and banks, and criminal penalties imposed, even tighter political con¬ be cries for redistribution of wealth for the export of private capital should trols may be needed to keep societal through land reform and nationaliza¬ be part of any austerity package. It is turmoil within bounds. Mexico, for tions, and heavier taxes on the rich. time to end the hypocrisy of interven¬ example, has an annual inflation rate Until now the policy of the United ing at the level of investment and fi¬ approaching 100 percent and under¬ States in developing countries has been nance and rejecting intervention at the employment of 40 percent; to date, neither the low-profile, limited-scope level of social reform. C]

APRIL 1983 31 A Letter

The true story of a love They also had to cope with the Soviet proper costume for singing my songs occupation forces, who were still loot¬ on the stage, but if you would perhaps affair shattered by the ing, raping, and murdering civilians. have an American parachute here in Since adequate housing for Ameri¬ your consulate which you would not aftermath of war can personnel was scarce, I invited need—now that the war is finished—I Charley to move in with me. I had could make from it a very nice dress for been fortunate enough to find a small myself.” By FRED GODSEY apartment in the city, within walking I explained that 1 didn’t have one at distance of the consulate. The first the moment. Then I recalled that It is the end of a beautiful late sum¬ thing he unpacked was a suitcase filled Charley sometimes drank beer with mer day. As twilight approaches, with books. He also brought a record one of the sergeants from the military I sit alone with a small glass of player and a supply of records, includ¬ attache’s office. It was just possible the wine in my study, surrounded by me¬ ing his Victor Herbert favorite. sergeant might be able to find one. mentos of half a lifetime spent in var¬ A few bars, restaurants, and night I don’t know where or how Charley ious corners of the world. As I turn on clubs soon opened, with meager fare managed to get the parachute, but he the stereo, the soft melody of an old but with good music, and a group of did. The following evening we took it Victor Herbert tune begins to tug gen¬ young entertainers reopened the small to the theater. I had described Leila in tly at my memory. A pleasant female variety theater just two blocks from glowing terms, and Charley was look¬ voice is singing Kiss Me Again. The our apartment. They had no stage fur¬ ing forward to meeting her. The the¬ half-whispered words are like a lulla¬ nishings but managed to assemble an ater was giving performances only once by, and my thoughts take the first excellent orchestra and several good a week, on Friday evenings. The other steps of a familiar journey into the singers. The costumes were made from days were spent in rehearsals and in past. I remember Charley, for this was curtains and drapes. I didn’t know that making repairs to the stage and the Charley’s favorite song. And I remem¬ the theater had opened until the day I seats, badly damaged by a shell. ber Leila. Through the growing eve¬ had a visit from one of its company. I The entire troupe, including the or¬ ning shadows I can see her again, had just finished interviewing a pass¬ chestra members, were doing the car¬ dressed in her sequined gown, stand¬ port applicant in my office when the pentry themselves. When we arrived ing there on the little stage, as she sang secretary came in. at the theater we found Leila, with a that song for Charley. “There’s someone from the variety red bandana around her hair, nailing Charley arrived in Budapest a few theater here to see you, sir; she says it some boards onto a stage prop. Several weeks after I did. We were part of the will only take a minute.” of her colleagues were similarly occu¬ staff sent there to reopen the American A Raven-haired Vision pied. I introduced Charley, who pre¬ legation and the consulate after World sented Leila with the parachute. She War II. He was a young man at his I grudgingly said yes and soon the was jubilant and gave both of us a big first post, about the same age as I, door opened to admit a vision! Her kiss. slim, with curly blond hair and blue raven hair, drawn into a bun at the Since none of us had eaten, we per¬ eyes shielded by a pair of metal - back of her neck, accentuated a pair of suaded Leila to join us at the Apostles rimmed glasses. green eyes and a beautiful complexion. bar and restaurant for some beer and Hungary was still in a state of chaos. She was probably in the early twenties whatever the cook could prepare. De¬ The siege of Budapest had left a large and had a perfect figure, covered by a spite the poor quality of the food, it part of the city in ruins. Thousands of dress much too thin for the prevailing was a memorable meal. For Charley people who had been in Nazi concen¬ weather. and Leila, it was the beginning of a tration camps were returning to the “I am Leila,” she said, with a daz¬ love affair. city and attempting to find shelter zling smile before I could recover my Leila was a Bulgarian. After finish¬ among the bombed-out buildings. voice. “I am singer at the variety the¬ ing high school in Sofia, she had come ater.” to Budapest to live with a relative and Fred Godsey was in the Foreign Service Her request caused me almost as to take singing lessons. She wanted to from 1942-51. He served in Budapest, much consternation as did her beauty. become an opera star. She had been Hungary, from 1945—50. He now lives in Leila wanted an American parachute. trapped in Budapest by the war, retirement in West Germany. “You see,” she said, “I have not a spending many days and nights in the

32 FOREIGN SERVICE JOURNAL his plans. I feit that I should mention some of the consequences of his deci¬ sion—especially how it would affect his career. “Of course you know the rules, Charley. Since Leila is not an American citizen, you will be expected to submit your resignation to the State Depart¬ ment at the time you report your in¬ tention to marry a foreigner. They may not choose to accept your resigna¬ tion—but what happens if they do?” “Couldn’t care less,” Charley re¬ plied. “Leila means more to me than anything else in the whole world. I would take a job digging ditches if necessary. The only important thing is that we are to be married!” “Fine, Charley. I know how you feel. And when will the big event take place?” “We haven’t set a date. I told her I would have to inform the department. She asked me not to report it yet. She’s waiting for a letter from her mother in Bulgaria. I think she wants to have her mother come to Budapest for the cere¬ mony.” cellars, surviving by eating horse meat side. Charley’s love for Leila gradually It was about two weeks later, on a and a few dried fruits. She later learned became almost an obsession. From all Friday morning, when Leila came to that most of the male members of her appearances, she fully returned his af¬ see me in my office at the consulate. family in Bulgaria had been deported fection. When the secretary announced her, I to concentration camps. She was anx¬ As predicted, the winter was hard. assumed that she had come with the iously awaiting word from her mother We managed to get a small coal-burn¬ usual minor request for help in finding about their fate. ing stove for the apartment, and Char¬ some stage prop or other. She was Within a month, work on the the¬ ley got one for the small room that wearing a pair of dark sunglasses, but I ater had made such progress that the Leila had rented. There was no heat in could see that she had been weeping. troupe was performing twice a week, the theater, but each performance con¬ “I need your help,” she said. “It’s Tuesdays and Fridays. There was usu¬ tinued to be sold out—the audience about Charley. I can’t marry him.” ally a large audience. The orchestra sitting in heavy coats and sipping from “Why not?” and singers learned many of the cur¬ bottles of plum brandy. Leila had “I’m leaving tonight, after the rent popular American songs, and it made a magnificent gown from the show, for Bulgaria,” she continued, was not unusual to hear hits such as parachute, decorating it with sequins ignoring my question. Don’t Fence Me In, Deep in the Heart of which glittered in the spotlight. She “Have you told Charley?” Texas, and As Time Goes By. also learned a few of Charley’s favorite “No, and I can’t. That is why I need Charley and Leila were soon spend¬ songs, including Kiss Me Again. your help. I have here a letter which ing almost all their spare time togeth¬ Winter passed, and spring was I’ve written to Charley. Please read it. ” er. He would go to the theater and turning into lovely summer weather She handed me a small white envelope watch rehearsals, then take Leila to when Charley returned to the apart¬ which contained a single sheet of pa¬ dinner. On Tuesdays and Fridays, it ment that Sunday evening from his per. The letter was not a long one, and became established practice for Char¬ usual weekend with Leila. I saw imme¬ it was certainly no love letter. ley and me to attend the show in the diately that this was to be a special evening, then go to the Apostles bar, occasion. He was exultant. Dear Charley, where we would wait for Leila to “Pull up a chair and sit!” He I’m sorry I cannot marry you as I change and join us for a late supper. brought out a bottle. “I have wonder¬ promised because I do not love you. I On Saturdays, Charley would get a ful news! Leila has finally said yes. We realize that what I did was wrong, but I jeep from the legation garage, and they are going to be married.” promised to marry you only to get the would spend the weekend at Lillafured His news was not exactly a surprise, visa to the United States of America. I or some other village in the country¬ but he had never talked with me about wanted only to sing some day in the

APRIL 1983 33 opera there and to get the American very much, and I want to marry him. notice that he had died in the camp. citizenship. Do not try to reach me. But I cannot.” When I heard that Milko was dead, I When you read this I will be en route to She took other letters from her came to Budapest. But yesterday came Bulgaria. I am sorry. handbag. “I received these letters yes¬ this letter from Milko and my mother. Leila terday from Bulgaria. You see, after I Milko was among the survivors return¬ finished school in Bulgaria, I became ing to Bulgaria. He is very ill and I read the letter and looked up to see engaged to a boy from my village. We needs me. So, you see, I must go Leila sitting uneasily in the chair, dab¬ have known each other since we were back.” bing at her eyes. She was a picture of children. Milko and I had made all of “Then why don’t you tell Charley misery. the arrangements for our marriage, but the truth?” I asked. “Is this true—what you’ve written then he had to go into the Bulgarian Leila pondered this for a moment. here to Charley?” I asked. army. Then the Nazi’s came, and he “No,” she said,“once I heard a very old She shook her head. “No, it is not was taken to a concentration camp. gypsy woman in my village say that we true. It is all a lie. I do love Charley Later, his parents received an official forget more quickly those we hate than

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34 FOREIGN SERVICE JOURNAL we do those we love. When Charley night. After the show, as was our cus¬ comic skits, in which Leila had minor reads this letter, he will hate me. I tom, we would go to our booth at the roles, a few juggling acts, and a magi¬ want him to forget me quickly.” Apostles and have a few drinks while cian sawed a girl in half. Leila was “Well, what do you want me to waiting for Leila to join us. I placed obviously the star and, after a lively do?” the little white envelope in the inside Hungarian folk dance, the audience re¬ “I want you to give the letter to pocket of my jacket. alized that it was closing time and be¬ Charley—tonight in the Apostles bar, “Wait for me there for one hour,” gan shouting for Leila. As always, she after the performance. I’m not strong Leila said, “then please give Charley would close the show with two songs. enough to talk to Charley. I’m afraid the letter.” As the orchestra played a fanfare, to see him again. I’m afraid I wouldn’t The theater was sold out that night; the curtain parted, and the master of have the courage to leave.” many people who could not get seats ceremonies walked to the microphone, So it was agreed, reluctantly on my were standing. Charley and I went di¬ holding up both hands in a vain at¬ part, that Charley and I would be in rectly to our reserved seats in the cen¬ tempt to halt the applause. our usual seats at the theater that ter of the fifth row. There were several The audience, ignoring the signals Y MGMB, inc. Realtors S Will Your Home Still Be A 3624480 Castle When You Return? Experienced competent staff ready to serve your needs Personalized Property Management by Mrs. Wyatt in sales, rentals, management, investments. • Serving Foreign Service personnel since 1959. John Y. Millar* Carol Owens* • Planning for necessary expenditures Carolyn Rayfield • Leases tailored to fit owners' needs William C. Trueheart* Starke Meyer* Pauline Barnes* Lynn Moffly Magruder* Fran Dixon* Henrietta Seitz • Updates on real estate laws and regulations Patricia Garrison Boorman Rosemary Dircks John Turner* • Frequent inspections • Sales Susan Raehn Carole B. Hersman Call Mrs. Wyatt — 202/362-7397 Mary Ann Stoessel* Foxhall Square 3301 New Mexico Ave. WALSH, MESMER & ASSOCIATES, INC. Foreign Service Washington D.C. 20016 r 4713 MAPLE AVE., BETHESDA, MD 20814 CAN ARRANGE FINANCING AT BELOW MARKET RATES FOR A HOME OR INVESTMENT PROPERTY!

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APRIL 1983 35 from the stage for quiet, stood and ap¬ "What a voice she has!” he said. plauded as Leila came from the wings "She would be a star anywhere in the and took her place before the micro¬ world!” FOREIGN phone. She was wearing her beautiful With a shaking hand, 1 poured parachute dress and seemed not to hear Charley another double. SERVICE the applause nor to see the audience as As the hour grew later, Charley be¬ she stood, unsmiling, with her hands gan consulting his watch more often. PEOPLE clasped tightly in front of her bosom. "What’s keeping her,” he moaned, It was cool in the theater, but I sud¬ “she’s never been this late before.” denly felt sweat on my neck. When the hands on the Apostles’ 1983 AFSA/AAFSW The orchestra opened with the first wall clock reached midnight, I poured Merit Awards to Honor few bars, and Leila sang J'attendai in one more brandy for Charley and Clare H. Timberlake French, to the obvious delight of the placed a hand on his shoulder. audience. I impulsively felt for the en¬ "Charley, 1 have bad news for you. Foreign Service volunteers will meet this velope in my pocket. It was still there. Leila is not coming.” I tried to keep month in the Levin Library at the Foreign Without waiting for the applause to my voice steady. “She has gone back to Service Club for an orientation session for cease at the end of the song, Leila sig¬ Bulgaria.” I then told Charley the true the convening of the 1983 AFSA/AAFSW naled the orchestra, and her rich con¬ story—just as Leila had told it to me Merit Award panels. The 24 panelists will then review the applications of our Foreign tralto drifted smoothly into the lyrics that morning in my office. Service high school students who will be of Kiss Me Again. The orchestra caught At first, he seemed to be in a trance, graduating this year to determine approxi¬ her mood and played a subdued back¬ and I knew it was not the brandy. As mately 22 winners in this academic com¬ ground. She sang the words softly, al¬ the shock wore off, tears came to his petition. The awards of $500 each will be most as a lullaby. An enchanted hush eyes. He began to ask questions. “How based not only on academic excellence but settled upon the crowd in the theater. could you let her do this? She loves me! also on the students’ extracurricular and I know she loves me! Quick! Let’s go to community activities, both at home and Sweet summer breeze—whispering trees the railway station—we can stop her!” abroad. Stars shining softly above . . . It was all I could do to restrain him. Similar to the concept of Selection Finishing the bottle of brandy helped. Boards, the four Merit Award panels are I mopped the sweat from my fore¬ Even so, it was around three when we chaired by members of the AFSA Commit¬ tee on Education. They include represen¬ head and looked at Charley from the returned to the apartment. tatives from State, AAFSW, AID, US1A, As the weeks and months passed, corner of my eye. He was sitting very and the retired Foreign Service. The panel¬ straight in his seat, smiling and proud Charley at last gave up hope of receiv¬ ists will review all the applications and as a peacock. ing a letter from Leila. His spirit was rank each student on transcripts covering Leila turned her head slightly and broken. At the end of the year he re¬ four years of high school grades, rank in looked directly at Charley. The spot¬ signed from the Foreign Service and class, SAT scores, grade-point average, light reflected from the sequins on her returned to California. I received two letters of reference, activities list, and the dress—and from the tears which sud¬ or three letters from him during the student’s personal essay. Last year, more denly appeared on her cheeks. next five or ten years, as he drifted than 100 students entered this competi¬ from job to job, before I finally lost tion. They represented 18 states and more than 30 overseas posts. The Foreign Ser¬ Safe in your arms—far from alarms, touch. I heard from friends that he be¬ vice has good reason to be proud of the Daylight shall come—but in vain! came an alcoholic. Charley never mar¬ high scholastic standings maintained by ried. students in the difficult situations we ac¬ I loosened my tie and wished that I The evening shadows lengthen in cept as normal in the diplomatic profes¬ could be somewhere else—anywhere my study. The day is coming to an sion. Serving on a Merit Award panel can else. I looked at my watch. It was elev¬ end. The pleasant voice on the record be a fascinating and enlightening experi¬ en. sings the final words of Kiss Me Again, ence. Leila finished the song. There was and the stereo clicks off. As sounds of This year the awards will be named in complete silence in the theater for the village church bell float through memory of the late Clare H. Timberlake, what seemed like several minutes be¬ my open window, I reach into a cranny former ambassador and a long-time sup¬ fore a storm of applause came from a of the old roll-top desk at my side and porter of the Scholarship Programs. Tim¬ standing audience. She bowed, threw a pull out a small envelope, once white berlake began his Foreign Service career in 1930 and served in Toronto, Buenos kiss to Charley, and the curtain closed. but now yellowed. I don’t open it, for I Aires, Montevideo, Zurich, Vigo, and know well its contents. The Apostles was almost empty as Aden. Returning to Washington in 1943, Charley and I went to our booth. We As I pass the envelope through my he became chief of the Division of African usually ordered beer, but this time I fingers, I wonder what happened to Affairs. After a detail to the National War suggested that we start with a full bot¬ Charley, and to Leila. And I wonder if College, he was appointed consul in Bom¬ tle of strong Hungarian brandy. Char¬ I made a mistake by not giving the bay in 1948. Subsequent assignments ley was effusive in his praise of Leila’s letter to Charley—by not doing it Lei¬ were to New Delhi as public affairs officer performance. la’s way. CH and counselor, to Hamburg as consul gen-

36 FOREIGN SERVICE JOURNAL eral, and to Lima as counselor. He was department’s representative on an 18-na¬ benefitted over the years from scholarships counselor and deputy chief of mission in tion disarmament commission in Geneva given in his name. Buenos Aires, 1957—59, and Bonn in in 1964. His last assignment before retir¬ 1959-60. ing in 1970 was to the Board of Examiners Birth A minister-counselor, Timberlake for the Foreign Service. served for one year as a faculty adviser at From 1971—74, Timberlake was presi¬ COURTNEY ANNE HORMAN-JONES was the Air University and then became special dent of the Greater Washington chapter of born on October 7 to Thomas A. Horman assistant to the under secretary for political the Leukemia Society of America. He also and A. Elizabeth Jones. The father, an affairs. In I960 he was appointed the first was a trustee and former national vice- FSO in USIA, is on detail to the State ambassador to the Congo (now Zaire). He president of that organization. Timberlake Department as deputy director, public af¬ was named chief of the Disarmament Ad¬ died in February 1982. He will long be fairs, in the Near East bureau. The mother visory Staff at the Arms Control and Disar¬ remembered by his Foreign Service col¬ is the deputy director of NEA’s office for mament Agency in 1963 and became the leagues and the many students who have Lebanon, Jordan, Iraq, and Syria.

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APRIL 1983 37 AFSA ELECTIONS COMMITTEE P. O. BOX 57121 WEST END BRANCH WASHINGTON, D.C. 20037

In accordance with AFSA Bylaws, and pursuant to the terms of the 1983 AFSA Election Call, the following AFSA members have been duly nominated and have ac¬ cepted their candidacies for the positions indicated below in the 1983 election of State, AID, and USIA Constituen¬ cy Representatives of the AFSA Governing Board.

STATE CONSTITUENCY REPRESENTATIVES 1. Francis X. Cunningham 2. JoAnn McMahon Jenkins (Unity Slate) 3. Thomas J. Miller (Unity Slate) (Choose Four) 4. James W. Spain (Unity Slate) 5. James A. Williamson (Unity Slate) 6. John T. Sheely

AID CONSTITUENCY REPRESENTATIVES 1. Herbert L. Woods 2. Richard J. Delaney (Unity Slate) (Choose Two) 3. Juanita Nofflet (Unity Slate)

USIA CONSTITUENCY REPRESENTATIVE 1. Jaroslav J. Verner (Unity Slate) (Choose One)

It is each AFSA member’s responsibility to see to it The campaign statements which follow are published that his or her proper address and constituency are on in accordance with Article VI(4) of the AFSA Bylaws. In record with AFSA. Ballots will be mailed on or about publishing them, AFSA and its Standing Committee on May 15, 1983, and marked Ballots must be returned by Elections are required by Chapter 10 of the Foreign 5 P.M., June 30, 1983. If you have not received your Service Act of 1980, as interpreted by the Department Ballot by June 7, 1983, notify the Chairman of the of Labor, to do so without making any modification of AFSA Elections Committee IMMEDIATELY in writ¬ their contents. AFSA therefore disclaims any responsi¬ ing at P.O. Box 57121, West End Branch, Washing¬ bility for the content of any campaign statements made ton, D.C. 20037, or by “AFSA Channel" cable marked by the candidates. Content is solely the responsibility of for delivery to AFSA Elections Committee. the candidates.

38 FOREIGN SERVICE JOURNAL FRANCIS X. CUNNINGHAM HERBERT L. WOODS STATEMENT OF State Constituency (Independent) AID Constituency (Independent) THE UNITY SLATE

I’ve been a member of AFSA ever since 1 Last year a coalition of different groups joined the Foreign joined together to work for the improve¬ Service in 1973. I ment of the Foreign Service through the came from a private building of an active and effective Associ¬ sector career in tech¬ ation. This coalition put forward for the nical project man¬ officer and retired positions on the Gov¬ agement. I’ve served erning Board a “Unity Slate” of candi¬ as a GSO in Brus¬ dates which sought to represent all of the sels, a consular offi¬ diverse interests of the Service fairly and cer in Manila, in the AID foreign service employees have vigorously. This year, the Unity Slate IO Bureau, and I’m currently on detail to many serious problems facing them; a believes that the need for wide represen¬ NASA Headquarters, International Af¬ loophole-ridden open-assignments sys¬ tation remains as pressing as ever. AFSA fairs. I will return to State this summer. tem despite the Obey Amendment; an must continue to focus on both its histor¬ I’ve been a member of the Foreign Service unfair and unwise share of AID/W jobs ic, foreign service wide interests, but also Journal Editorial Board since 1981. and authority; insufficiently fair and ob¬ devote resources to the concerns of AFSA is doing a very effective job in jective promotion system; a retirement groups which have their own special reg¬ its dual role of professional society and system in serious jeopardy; an often arbi¬ ulations and requirements—security of¬ labor union. But we have entered a peri¬ trary management climate and decision¬ ficers, senior officers, secretaries, junior od in which AFSA must strive to protect making process; selection-out on an officers, communicators, and retired its members’ interests even more effec¬ unfair basis; insufficient management members to name just a few. tively. It must be alert and forceful in concern for the rights of our children and As there are only a limited number of protecting us from any moves to lump the integrity of our families; an overhead constituency seats, we cannot run candi¬ the Foreign Service into some of the det¬ pay cap that is unfair to some officers. I dates from every group. Instead, we have rimental changes that are being contem¬ am interested in assuring that AFSA as¬ chosen individuals who have demonstrat¬ plated for the Civil Service. It must fol¬ sumes a creative as well as firm and dedi¬ ed, through long hours of work, a com¬ low up on concerns that were raised by cated role in resolving these and other mittment not only to their specific con¬ the recent FSJ article which was very important issues such as commissioning, stituency, but to the broader issues critical of the Foreign Service personnel tenure, fair compliance with the Obey which affect us all. Over the past year, evaluation system; concerns that I believe Amendment, and increased security for the Unity Slate’s candidates have worked that most of us, staff corps as w'ell as the senior foreign service. on: officers, have had for a long time. AFSA Aside from having the personal quali¬ —Advance of Pay should move rapidly to evaluate and ties and commitment needed to contrib¬ —Domestic Relocation Allowance comment on the forthcoming report of ute towards resolution of these problems, —Danger Pay the Secretarial Task Force, particularly if I have a sufficient level of thoughtful —Separate Maintenance Allowance it does not adequately address concerns of experience and academic background to —R & R to the United States our staff membership. offer: I am an FS-2 Program Officer with —Tenuring, Grievance, and Appoint¬ For AFSA to be fully effective on issues an MPA from Syracuse University ment Regulations such as these, it must continue to in¬ (I960). I have served in the East Asia, —Protection of the Obey Amendment crease both its membership base and its Near East, and Africa Bureaus overseas. —Stand-by Pay political clout. AFSA might be more ag¬ And I have served in the Africa and PHA —Performance Pay gressive in recruiting new junior staff and Bureaus in AID/W. My experience with —The new EER officer personnel, and in striving to wid¬ AID’S regulations and practices is both —Travel of Children of Separated Par¬ en its constituency in the foreign affairs deep and broad. It has also enabled me to ents community by vigorous recruiting understand the AID system from the —Family and Emergency Visitation among Foreign Commercial Service peo¬ point-of-view of both the supervised and Rights ple, for example. Political clout is a func¬ the supervisory employees. In addition, I —Pay levels for Senior Officers tion not only of a large membership, but have benefitted from working on the In addition, many hours have been of a concerned, informed, and articulate AFSA Standing Committee since July spent in monitoring compliance with ex¬ membership. AFSA must continue to 1982 as a capstone to long membership isting AID/State agreements and taking alert its members to issues that concern in AFSA. I feel I am well prepared to appropriate action when these agree¬ them, and it must look for more creative serve you in the best interests of the for¬ ments are not implemented as they ways in which the membership can ar¬ eign service and improved management should be. In a season of cutbacks and ticulate its concerns to the public, the of the Agency, to the extent AFSA might OMB/OPM opposition to federal em¬ administration, and the Congress. have influence over the resolution of your ployees’ receiving any benefits at all, I would appreciate your support in concerns. And I am anxious to do so. AFSA must be represented by skilled, this election. Please vote. I hope you will vote for knowledgeable negotiators. me. Also, I hope you will write to me c/o On the professional side, the Unity AFSA so I can better represent your Slate has taken the lead in working to¬ views. ward a more dynamic, effective Foreign

APRIL 1983 39 Service. We have on numerous occasions have turned the Club into a profitable fight over implementation of the Foreign testified on pending legislation or in op¬ enterprise. The Foreign Service Journal Service Act. We must have experienced, position to unqualified political candi¬ continues to improve its already high proven leadership. dates. standards. AFSA has also gotten directly The individual members of the Unity The Unity Slate is also committed to into the insurance business, providing Slate will publish detailed positions on bringing new services to ASFA’s mem¬ members with protections unavailable to major Foreign Service issues and oppor¬ bers and to improving those we presently many Foreign Service personnel before. tunities in the Election Section of the provide. The past year has seen a Phoe- This year will be a crucial one in the May edition of the Foreign Service Journal nix-like rise in the fortunes of the For¬ history of the Foreign Service as AFSA and in campaign statements. eign Service Club as a new manager, new must take the lead in defending our Re¬ Brief biographical sketches of the Uni¬ staff, and a major renovation program tirement System and in the continuing ty Slate candidates follow below.

JOANN MCMAHON JENKINS State Constituency

Tom Miller (FO-2) has worked actively 1951, left in 1953, and returned in on a wide range of issues of importance to 1963. His first assignment abroad was Born: Pittsfield, Mass. 1940. Education: all Foreign Service personnel (staff, offi¬ vice consul in Karachi, his latest ambas¬ BA Smith College, MAT Johns Flopkins cer, communicator, specialist and re¬ sador in Ankara. In between he served on University. tired). Miller has been particularly in¬ the Policy Planning Council, as Director FS Experience: Asmara, Ethiopia volved in negotiations involving of the Near East and South Asia Office of 1967-70 Consular Officer. A/OPR promotion board precepts, performance INR, Country Director for Pakistan and 1970-72 Staff Assnt. S/S 1972-73 Special pay, retirement issues, and danger pay. Afghanistan, Charge d’Affaires in Islam¬ Assnt. SY/EX 1974-76 Admin Officer. He has been an active participant on the abad, consul general in Istanbul, DCM Abidjan, Ivory Coast 1976-78 Budget State Standing Committee, dealing with in Ankara, ambassador to Tanzania, and Officer. Tunis, Tunisia 1978-80 Consul¬ the full range of issues of interest to State Deputy Permanent Representative at ar Officer. PER/PE 1980-81 Personnel employees. Since joining the Foreign USUN. Educated at the University of Officer. EA/EX 1981-83 Post Mgt. Offi¬ Service in 1976, Miller has worked in Chicago and Columbia University, he cer. INR, Office of the Undersecretary for taught at Florida State University and at Present Grade: FO-02. Political Affairs, in Thailand, and in the American University and wrote two AFSA Experience: AFSA Keyman Office of Israeli and Arab-Israeli Affairs. books about the Pathans and numerous 1975-76. AFSA Treasurer 1975-76. He -will join the Bureau of Congressional articles on South Asia, the Eastern Medi¬ Ivory Coast—Keyman 1976-78. Tuni¬ Relations this summer. He has received terranean, and diplomacy. sia—Keyman 1978-80. the Department’s Superior Honor and Active in AFSA affairs both at home Meritorious Honor Awards, the Depart¬ and abroad since 1974, I have been par¬ ment’s Meritorious Step Increase, and JAMES A. WILLIAMSON ticularly oriented toward seeing that several awards from other agencies. Mil¬ State Constituency AFSA serves the entire community of ler received his Ph.D. in Political Science Foreign Service Personnel equitably and from the University of Michigan. He is James A. Williamson is an FS-3 econom¬ that the concerns of people in the admin¬ married with two children. ic officer. He joined the Foreign Service istrative cones and specialties are heard in 1975 and has served in Vienna in both and served. JAMES W. SPAIN the embassy and the mission to the State Constituency IAEA, Melbourne and the department. THOMAS J. MILLER In the department he has served in OES State Constituency James W. Spain is a Foreign Affairs Fel¬ and EB. Mr. Williamson has a bachelor low at the Carnegie Endowment for In¬ of mechanical engineering from the Uni¬ Since joining the AFSA Board as a State ternational Peace and at the Rand Corpo¬ versity of Virginia, a J.D. from Ameri¬ Department Representative a year ago, ration. He joined the Foreign Service in can University, and an MBA from the

40 FOREIGN SERVICE JOURNAL JOHN T. SHEELY State Constituency (Independent)

University of Connecticut. He is a mem¬ Desk Officer for Indonesia. During the ber of the State Standing Committee. past year she has been a member of the AFSA Standing Committee and the AFSA Governing Board. RICHARD J. DELANEY AID Constituency JAROSLAV J. VERNER The AFSA 1983 Governing Board Elec¬ USIA Constituency tions concern you! At times, does it seem like your prob¬ lems are unique or insurmountable when working through the “System”? This is usually the time when members come to AFSA and ask, "What can AFSA do for me?” I ask you now not to wait until you are in need of AFSA assistance, but take a look ahead by getting to know your can¬ didates for this year’s election. Take a look at each candidate. Please do not wait to find out the hard way that the quality of service is not what you expected from your Board. During the ten years I have Joined AID Foreign Service in February served the Department in Security and 1967. First assignment was Libreville, General Services, I have found that very Gabon, as Assistant AID Operations Of¬ few members show any genuine interest ficer. Served as Program Officer in Bu¬ A Minnesotan born and bred, I entered in the AFSA election process. To my reau for Latin America from 1969 to the Foreign Service with USIA in 1959 alarm, lack of participation in the AFSA 1972; Assistant Program Officer in immediately after spending three Board election process has acutely dimin¬ USAID/Manila from 1973-76; Assistant months in the Soviet Union as a guide at ished over the last two years. Please do General Development Officer and Pro¬ the U.S. National Exhibition. Prior to not remove yourself from the electoral gram Officer in Chad 1976-79; Officer- that time I had taken degrees at the Uni¬ process by not voting. You are only do¬ in-Charge in Office of Caribbean Affairs versity of Minnesota and the Russian In¬ ing yourself and AFSA a disservice. (Jamaica, Haiti, Dominican Republic) stitute at Columbia as well as having I want to make you, the members, from 1979 to present. served with the Army in Korea. aware of my desire to sincerely represent Overseas service began in Zagreb as a your interests. You may contact me dur¬ JOT and then as a Vice Consul in Poznan ing the day at 235-8790 or at 922-8199 JUANITA NOFFLET for four years. In the Fall of 1964 I re¬ in the evening. I will do everything in AID Constituency turned to Zagreb as a Cultural Officer my power to use those mechanisms pro¬ and then went to the Soviet Union as vided by AFSA and the Department to Juanita (Bobbie) Nofflet joined the For¬ deputy director of two traveling exhibits. serve you. VOTE! eign Service in 1967 and served with Following assignments took me to Mos¬ AID for eight years in Vietnam. After a cow, Washington—which included the year's detail to HEW to work with the National War College—Kabul and Indo-Chinese Refugee Task Force she Hamburg. After leaving Hamburg I was was assigned to the Philippines as a Proj¬ spokesman for the American Delegation ect Manager in Rural Development. A to the CSCE talks in Madrid before re¬ native of Oklahoma, she has both her turning to Washington to assume my B.S. and M.S. from Oklahoma State current position as Counselor for Cultur¬ University. She is presently the Assistant al and Educational Negotiations.

APRIL 1983 41 Association News

Beers to the lunchtime crowd in the AFSA has advised that they have the Hundreds Gather Dean Acheson room (see picture). The right to make known their views, as indi¬ to Express Concern plan “would wreck the Foreign Service viduals, to their elected representatives. personnel system as -we know it,” added In doing so, however, they should use on Retirement AFSA President Dennis K. Hays. The their personal stationery and place the Foreign Service personnel system was proper postage on letters when writing, Evidencing the considerable concern on created as a separate entity, he said, for and they should be scrupulous in con¬ the part of government workers about reasons that are still valid, such as the ducting any such activities on their own how proposed changes in the federal re¬ Foreign Service's "up-or-out" provisions time. The Association stressed that indi¬ tirement system may affect them, 800 and its unusual and difficult conditions viduals’ own representatives should be AFSA members and other Foreign Serv¬ of employment, involving hazards dis¬ contacted, not just heads of congressional ice employees overflowed the Dean Ach- tinct from those faced by the Civil Serv¬ committees. eson Auditorium on February 17 for a ice. AFSA is continuing with its intensive briefing by the Association on the pro¬ The debate within the Foreign Service efforts to generate congressional support posals and on AFSA action to counter was joined when separate telegrams and to retain the present structure of the For¬ those it considers potentially damaging notices were issued by the State Depart¬ eign Service retirement system. Mem¬ to the Foreign Service personnel system. ment and by AFSA describing the pro¬ bers will be kept advised of develop¬ Two weeks later a similar briefing held in posed changes [for an explanation of the ments. the Loy Henderson Conference Room administration plan, see the March Asso- drew an equivalent proportion of the As¬ CIATION NEWS], The Association is keep¬ sociation's USIA membership. The pro¬ ing all posts advised of developments, as Board Urges Members posals also yielded a considerable re¬ well as reporting on its efforts to head off to Recruit to Fight sponse from the field, as scores of the proposals, through frequent circular telegrams and letters came in to AFSA’s telegrams and other bulletins. AFSA will Retirement Changes Washington office protesting the sug¬ be opposing the changes to the Civil gested changes. [See related story.] Service system in consort with a number The AFSA Governing Board has asked The majority of questions at the meet¬ of federal-employee and retiree organiza¬ the Association membership to recruit ings and from the field expressed resent¬ tions and, at the same time, stressing the additional members from the foreign af¬ ment about attempts to "change the unique conditions of service for members fairs agencies to help in its fight to pre¬ rules in the middle of the game” for those of the Foreign Service. AFSA’s main serve the present Foreign Service retire¬ who elected a career in the Foreign Serv¬ thrust has been on Capitol Hill, where ment system. “AFSA is only as strong as ice on the assumption that the provisions Beers, a retired Foreign Service officer its membership,” said AFSA President of the present retirement system consti¬ who is now a registered lobbyist for the Dennis K. Hays. “If we are to successful¬ tuted a condition of their employment. Association, has been meeting tvith key ly prevent the implementation of these This is the first time that the current legislators and their aides as well as testi¬ proposals, we need adequate resources.” administration has proposed retirement fying before crucial congressional com¬ The board emphasized that increased changes that would adversely affect those mittees. membership will help the Association fi¬ still working for the government, said In response to questions as to what nance its campaign to preserve the cur¬ AFSA Congressional Liaison Robert M. individuals in the Service can do to help, rent Foreign Service retirement system.

42 FOREIGN SERVICE JOURNAL Retirement Proposals cost.” Several posts thanked Galbraith. IAIIV | ( 11 Most expressions of outrage were in Spur Worldwide accord. “A breach of contract,” said drinks at special prices many posts. "Breaking a basic trust,” free hors doeuvres Chapter Protests said others. Career ambassadors in Indo¬ nesia, Syria, Israel, Colombia, Nairobi, EVERY FRIDAY At the same time that hundreds of For¬ and other posts concurred with their em¬ ; eign Service employees were meeting ployees and echoed Galbraith's senti¬ 5—7 30 pm with AFSA in Washington to discuss ad¬ ments. ministration retirement proposals, over¬ In addition to pledging chapter sup¬ Foreign Service Club seas chapters from Amman to Welling¬ port, missions throughout the world, in 2101 E St. NW ton held their own meetings, where more than 150 telegrams, concurred comments ranged from "outrage” to with AFSA’s strategy and applauded its don.” Manila noted that a consensus was “shock.” An unprecedented flood of long efforts while offering suggestions of their reached at its meeting that the proposals and thoughtful cables poured into the own. Ideas included establishing a lob¬ “would seriously jeopardize the ability of Association’s offices expressing common bying warchest [see related story], em¬ the Service to perform its mission.” For¬ concerns and offering help in the battle to phasizing the separate conditions of em¬ eign Service employees “have worked for prevent, in the words of one post, the ployment in the Foreign Service [see years under harsh and unusual condi¬ "rape” of the Foreign Service Retirement EDITORIAL, page 15], noting potential tions,” said Amman, “in the expectation and Disability System. harm to retention and recruitment, and that the government would honor its Special chapter meetings were held in calling on members and other employees promise of a compensatory retirement.” Rome, Manila, Santiago, Capetown, to write members of Congress with their Nairobi noted that the “parallel suggest¬ Bangkok, Montevideo, Jakarta, Ham¬ views. In addition, several posts called ed by these hardships is closer to a mili¬ burg, Berlin, and dozens of other posts. for a media publicity campaign and for tary career . . . than a typical career in Individuals, from Foreign Sendee na¬ forming a panel of former ambassadors, the Civil Service.” But, it continued, a tionals to ambassadors, weighed in with secretaries of state, and even presidents senior FSO at that post of rank equivalent protests and suggestions. Even a non¬ to speak on behalf of the career Foreign to a major general would, if the proposals career ambassador, who would not be af¬ Service. were enacted, receive the annuity of an fected, Evan Galbraith in France, won Many posts expressed their concerns army warrant officer. “No private sector worldwide cheers from diplomats when for FSNs, who are covered under the employer would unilaterally alter those he cabled the secretary of state: “{These Civil Service retirement system. Tokyo conditions without expecting to be proposals] would weaken a unique and pointed out that, particularly in Japan, hauled into court.” Among many of the valuable national asset.” They would moving FSNs into Social Security would case-study examples of potential hard¬ constitute "a dishonorable breach of cause grave concern on their part about ship sent in, one secretary noted that her faith," Galbraith continued, whose “sav¬ long-term employment prospects. Oth¬ decades of planning to retire with 30 ings [would be] ludicrous. I am certain ers expressed additional worries. “As years’ service would be ruined four years you will agree with me that this adminis¬ with almost every administration,” said short of her goal. tration should not destroy the Foreign Rome, “we discovered that the special One telling point was made by Da¬ Service retirement system. . . . The re¬ conditions of the Foreign Service were mascus. Only two and a half years after sult would be a weakened capacity for being ignored. . . . The Foreign Service enacting the Foreign Service Act, it managing U.S. foreign policy, at higher as a career is in grave danger of mutila- noted, when the legislative and executive branches “crafted a delicate system in which, to function effectively, all compo¬ AFSA Briefs US!A on Retirement nent parts must be in balance,” such as pay, performance, progression, reten¬ tion, and retirement, “to radically alter such an integral part of the system with¬ out consideration of the effects on the system as a whole is, in any case, impru¬ dent and capricious, and in this case dan¬ gerous.” Concluded the post: “AFSA Damascus pledges 100 percent participa¬ tion” in writing Congress. “We chal¬ lenge our colleagues to do the same.” Space does not allow us to highlight comments from all posts, in particular the lengthy comments from New Delhi, Beijing, Guangzhou, and Shanghai. All of them have been extremely helpful in Braving inclement weather and traveling to the State Department's Loy Henderson identifying the crucial issues and conse¬ Conference Center during their lunchbreaks, some three dozen members of the Asso¬ quences. The Association requests all ciation’s USIA constituency heard a briefing on proposed administration retirement changes from AFSA President Dennis K. Hays (left) and Congressional Liaison Robert chapters make their views known M. Beers [see story on opposite page]. through cables to AFSA.

APRIL 1983 43 AFSA Acts on AFSA favors certain of the depart¬ competence of ambassadorial nominees a ment’s amendments, such as authorizing part of the public record; provide that Proposed FS storage of household effects at govern¬ Foreign Service positions may be filled ment expense for longer than three only by Foreign Service members except Act Amendments months under extraordinary circum¬ in exceptional circumstances; authorize stances; extending to AID and USIA pro¬ additional compensation for on call duty; Though the Association supports a num¬ vision for extra per diem for employees and permit travel of children of separated ber of the amendments to the Foreign accompanying dignitaries; extending parents from residence to post with no Service Act that the State Department home service transfer allowance from 30 other restrictions (AAFSW has joined and AID are proposing to Congress this to 60 days for payment of temporary AFSA in this amendment). spring, it has objected to several of the lodging and subsistence; permitting ad¬ measures to management and to Con¬ vance payment of differentials and gress and proposed some amendments of allowances; providing educational allow¬ Filing Requirements its own. The House Foreign Affairs Com¬ ances at the time of transfer for depend¬ for New Jersey mittee was to hold hearings last month. ents where the employee does not arrive Some of management’s objectionable at post until after the start of the school Domiciliaries proposals would broaden exceptions to year; granting educational travel funds the five-percent limit on appointment of for dependents attending non-degree in¬ The State of New Jersey’s Division of non-career members of the Senior For¬ stitutions; and authorizing an education¬ Taxation has informed AFSA that a New eign Service; delete provisions for auto¬ al allowance for handicapped children be¬ Jersey domiciliary (legal resident) in the matic annual and biannual step increases, ginning at age three. Foreign Service is considered a nonresi¬ replacing them with a provision for “pe¬ AFSA’s additional proposed amend¬ dent for tax purposes and is not required riodic” salary increases; repeal standby ments would codify in the statute AID’s to file a resident return if the three fol¬ pay and instead provide for combined Obey regulations to preclude further tin¬ lowing conditions are satisfied: compensation of standby and on-call kering with them; allow re-employed an¬ • The individual maintains no perma¬ duty, at a maximum overtime rate of 10 nuitants to be rehired at the current nent place of residence inside New percent; conform the Foreign Service re¬ grade level of the class they held at the Jersey during the tax year; tirement system to changes made in the time of retirement; ensure that agency • The individual maintains a perma¬ Civil Service retirement system during decisions on performance pay and move¬ nent place of residence outside New the past year, including requiring em¬ ment within class of Senior Foreign Serv¬ Jersey during the tax year; ployees to make contributions to the re¬ ice officers be made in accordance with • The individual spends no more than tirement fund for military service after Selection Board rankings; mandate that 30 days of the tax year in New Jer¬ 1976 to get credit for such service; ex¬ the secretary of state waive limitations on sey. clude AID auditors from the bargaining payment of medical expenses where in¬ Copies of this determination may be re¬ unit; force the union to share the costs of jury was incurred abroad; authorize use quested from AFSA in Washington. institutional grievances where the de¬ of accumulated home leave in lieu of an¬ partment or AID has violated a collective nual leave if the leave is taken in the bargaining agreement; and provide AID United States; provide more generous FSLRB Issues additional authority to begin “selection survivor annuities for employees killed in Complaint on Special out” for relative performance. action; make the department's report on Incentive Pay eral personnel system. This process AFSA Establishes might well extend over the next several Last February, the Foreign Service Labor Legislative years. Relations Board issued a complaint Accordingly, AFSA is setting up a against the State Department charging it Action Fund Legislative Action Fund, which will be with refusing to bargain on the AFSA used exclusively to defray the costs of proposal for implementation of the Spe¬ In the wake of the uproar over the admin¬ seeking to preserve the present structure cial Incentive Differential. The differen¬ istration’s proposals which would ulti¬ of the Foreign Service personnel system tial was established in the Foreign Serv¬ mately dismantle the present Foreign by actively opposing any legislation ice Act to serve as a recruitment-and- Service Retirement and Disability Sys¬ which would undermine or compromise retention incentive for filling positions at tem, many AFSA members in Washing¬ its basic components. posts with especially adverse conditions. ton and overseas have expressed a will¬ Anyone wishing to assist in AFSA’s The law provides for a differential of up ingness to contribute to a special fund to lobbying efforts by contributing to this to 15 percent of basic pay. [See February help defray AFSA’s expenses in carrying fund may send a check to: ASSOCIATION NEWS.] out a lobbying effort on Capitol Hill to Legislative Action Fund or The FSLRB contended that the de¬ oppose these measures. Actually, it ap¬ AFSA Room 3644 partment had committed an unfair labor pears that these changes, which are set 2101 E Street N. W. Dept, of practice. A hearing on the matter was forth in the President’s fiscal year 1984 Washington, D.C. 20037 State scheduled for early this month before an budget document, may only represent Several IRS examiners have indicated administrative law judge. The depart¬ the first salvo in an upcoming barrage of that contributions to the fund are tax ment will be given the right to appear legislative recommendations looking to¬ deductible. We are awaiting a ruling on and give testimony in its defense. An ward a drastic overhaul of the entire fed- the issue. update will appear in a future issue.

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