It is a marriage between the Hatfields and McCoys. Few presidents manage to pull it off. But if Ronald Reagan and his secretary of State-designate, Alexander M. Haig Jr., expect to succeed, it is a union they will need to make. Somehow, they will have to force domestic policy and foreign policy to work together -- not against each other.
For the past 15 years, it's been the other way around. We have pursued self-centered domestic policies with little appreciation of their effect, real and psychological, on our allies.
Our energy policies (mainly artificially low prices) exaggerated our demand for oil and fanned our allies' fears of perpetual scarcity. Our inflation made the dollar less suitable as an international currency and promoted anxieties about the world trading system. And our weakened competitive positions made us more protectionist.
Americans do not yet seem to have grasped the connection between these events and our diminished stature abroad. A general feeling persists that we are victims of monstrous ingratitude on the part of the Europeans and Japanese. This is not how they see it. Rather, they feel they accepted unquestioned U.S. leadership when the facts no longer warranted quiet obedience.
Governments live on their instinct for survival. After World War II, U.S. policies, reflecting our own long-term interests and anchored in overwhelming economic superiority, actively fostered European and Japanese recovery. But as the effects of U.S. policies changed, European and Japanese attitudes also were bound to shift. Fragmentation of the Western alliance was inevitable.
Repairing that fragmentation is now at least as important as refurbishing the West's military arsenal. So much of world conflict today is economic that no alliance can hope to succeed if it is constantly tugged apart by economic disagreement. The evidence everywhere demonstrates the need for cooperation -- and just how difficult it will be.
A recent staff report for the Senate Energy and Natural Resources Committee warns, for example, that even if the Iran-Iraq war ends quickly, a "major oil supply disruption within the next decade is likely." The report urges that Western governments coordinate their energy policies more closely and specifically, build substantial strategic petroleum reserves. But if fears that the actual result will be "growing competition among governments of the consuming nations for scarce crude supplies."
Oil isn't the only potential problem; slow economic growth is another. In a recent paper, the Central Intelligence Agency made hypothetical assumptions about the major industrial countries over the next decade. With slow economic expansion, unemployment easily could grow from today's 21 million to 31 million in 1985 and 37 million in 1990, according to the CIA's estimates.
More worrisome is the nature of unemployment. In most industrialized countries, populations will be growing older rapidly. The number of teenagers actually will decline, and there will be sizable increases in both the prime working-age population (25 to 54) and the elderly (over 65.) But younger age groups in southern European countries -- Greece, Portugal and Spain -- will continue to expand rapidly.
The CIA analysts see two major potential danger in these changes. First, higher joblessness in the 1980s probably will fall on the middle-aged, and the social and political consequences of their idleness may be especially high; in the 1970s, most of the new jobless were young. And second, rising unemployment in southern Europe may cause migration to the North (where wages and unemployment rates still would be relatively attractive), creating "ethnic, political and diplomatic tensions."
The days are long gone when the United States could remedy such problems simply by exhortation or spreading more dollars abroad. And the more we behave as World War II's victors, the less our allies are likely to listen. Political analysts I. M. Destler and Hideo Sato, in a recent study of U.S.-Japanese economic diplomacy, pointedly conclude:
"One problem was that Americans increasingly lacked credibility on economic policy as U.S. inflation rose and the dollar's value plummeted. [The Japanese] increasingly resent foreign actions -- however well-motivated -- which seem to imply that Japan remains a protege requiring tutelage, or a weak nation which must submit. Americans should find this easy to understand, for they react strongly to hints of foreign intervention in their domestic policy-making."
None of this means that the enormous size and wealth of the United States count for nothing. We still consume almost a third of the world's oil production. We still represent the largest single market for traded goods, about a seventh of the world total. We still serve as the world's bread basket, accounting regularly for more than half of global grain exports. And, finally, the dollar still functions as the most widely used international currency.
The American problem today is that we can only exercise leadership by example, not command -- and we have been setting bad examples.
But setting good examples isn't easy. Possibly the most dramatic foreign policy act we could take today would be to adopt a 50-cent-a-gallon gasoline tax and urge our allies to do likewise; such taxes would cut world oil demand immediately and provide a political foundation for further cooperation. Governments need to demonstrate that they can make difficult decisions -- that they can, in fact, govern.
Effective foreign policy now involves the most sensitive and difficult questions of domestic politics. And as domestic economic difficulties increase, so do the temptations to look abroad for scapegoats. In a world of rising economic nationalism, the pressures for everyone to become more nationalistic are huge and reinforcing. They will be difficult to resist even if, in the end, they don't serve our true national interests.