The seven-nation Western economic summit conference opened here today amid indications that despite agreement on the need for a common strategy to cope with the world recession, deep divisions remain between the United States and many of its major allies on a series of economic and political issues.
As expected, President Reagan's call for tough credit curbs against the Soviet Bloc and his defense of U.S. economic and monetary policies met with resistance from other participants. There was also clear disagreement between Reagan and French President Francois Mitterrand over how the Western nations could best cope with the challenges posed by the skyrocketing growth of new technologies.
The summit, which besides France and the United States includes leaders of Britain, West Germany, Italy, Canada and Japan, is taking place amid the splendor of the historic Versailles palace and its gardens. It began this morning with Mitterrand's call for Western governments to control technological development in an effort to avoid the large-scale unemployment problems that accompanied earlier industrial revolutions.
Reagan followed with a firm defense of his economic policies, coupled with a prediction that the high interest rates troubling Europe will eventually recede. The president also made clear that while he welcomed Mitterrand's initiative, he believed that the future drive to benefit from technology should be focused primarily on private enterprise rather than the public sector.
Thus, the central issue dividing the United States and most of its summit partners--the American concentration on the free marketplace versus the European assumption that the enterprise system cannot do it all--was quickly joined. While officials talked of a "new reasonableness" between the Western powers here, there appeared to be little shift in ideology.
This central fact--for all of the rhetorical emphasis on "convergence" likely to highlight Sunday's communique at the end of the two-day summit--was illustrated by flat denials from the American side that there would be any change in the Reagan policy of intervening in monetary exchange markets only in extreme circumstances
"If it is a strong dollar, we are not going to intervene to weaken it," Treasury Secretary Donald T. Regan said today after the first summit session. "If it is a weak dollar, we are not going to intervene to make it strong. If it is a disorderly market in the dollar, we will intervene."
Another divisive issue unsolved tonight was the question of extension of subsidized credits to the Soviet Union. Although he denied a report there had been a "heated" discussion of this problem among the leaders at lunch today, Secretary of State Alexander M. Haig Jr. acknowledged at a briefing for reporters there had been a "very lively and enlightening" debate on that and other issues around the luncheon table.
Among other topics that the leaders discussed informally, Haig said, were "transitions in the Soviet Union"--presumably changes in the Soviet hierarchy--Poland and limitations on technology transfers to the Soviet Union.
Haig, Regan and their fellow foreign and finance ministers were scheduled to try to resolve differences on the export credit issue at a dinner tonight. Haig and Regan said they were optimistic that some compromise would be hammered out, but another key American official said he thought there was little chance.
The leaders spent much of the morning debating the technology question raised by Mitterrand, agreeing to set up a study group and then discussing broader economic issues. Recognizing European concern with high American interest rates, as summarized at the request of Mitterrand by West German Chancellor Helmut Schmidt, Reagan conceded that unemployment was too high. But he gave an upbeat report on the American economy, emphasizing figures released yesterday that show a record of more than 100 million Americans employed.
The president said that the reason behind the high interest rates was "psychological." He predicted that they would come down as soon as financial markets are convinced that federal budget deficits would come down during the next three years and that there would be a "balanced budget" in sight.
Asked later by a reporter what had led the president into a new promise of a balanced budget, Regan wisecracked, "President Reagan is a man of long vision."
Schmidt, who noted that U.S. interest rates were at a record high, nonetheless, insisted he was "not pointing a finger at the United States." He said all nations must get their domestic policies in shape, and he criticized what he said were too many transfer payments and "too much public borrowing" among nations.
To deal with macroeconomic questions, the summit leaders were preparing to launch Sunday a two-phased effort designed to coordinate policy. One element of this effort will be new authority for the International Monetary Fund to persuade the major countries to join together in pursuit of antiinflationary programs. The other element will be a study by finance ministers of what the practical effects of government intervention in the exchange markets have been.
For the past several days, French officials, anxious to return to an era of more fixed relationships among currencies, have spread rumors that the United States would agree to greater intervention.
Although Regan did his best to put those reports to rest, rumors about American intervention persist. West German Finance Minister Manfred Lahnstein told a reporter, "The United States has adopted a different philosophy. You can expect a greater U.S. readiness to intervene. Don Regan has shown a great deal of understanding."
In his discourse on technology, Mitterrand pointed out that since last year's summit in Ottawa, 5 million people had lost jobs in the seven summit countries and that nearly 30 million people in the poverty-stricken Third World "have died of starvation."
That theme was echoed by Japanese Prime Minister Zenko Suzuki, who predicted that "the road ahead will be long and rocky."
Suzuki outlined the thrust of new and liberalized trade measures announced last week by Japan, and he called on the others to back up their demands for a more open trading system by supporting a broadening this fall of the authority of the General Agreement on Tariffs and Trade.
Mitterrand's long-awaited initiative on technology was generally received well by his fellow heads of state. However, President Reagan and British Prime Minister Margaret Thatcher and some others made the point that the industrial world should not fear the advent of the technological potential so graphically detailed by Mitterrand.
Unless the world contrives to put new technology in areas such as biochemistry, electronics and communications to beneficial use, Mitterrand warned, "several million jobs could be destroyed by 1990 in the industrial countries alone." In his concept of what he called "concerted action," Mitterrand clearly was suggesting a dominant government role--something that was certain to trouble Reagan and Suzuki.
In his response, Reagan gave a pointed critique of Mitterrand's assumption that careful planning was necessary on how to use technology. The president noted that a study commissioned by Franklin Roosevelt in the early 1930s on what would be the great new innovations over the ensuing quarter century failed to mention such things as television, plastics, space technology and laser beams. According to Treasury Secretary Regan, the president said that the study even failed to note "such a common item as a ball-point pen," holding one up in his hand.
Mitterrand nonetheless maintained his posture of friendship toward Reagan, refusing at a press conference to be drawn into harsh criticism of American economic policy.
"He Reagan is not so simpleminded as to think I do not care about inflation, nor am I so simpleminded as to think he does not care about unemployment," said Mitterrand.