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The Summit That Solved Nothing
The crisis affiicting the free world's
economies has been steadily build–
ing up throughout the decade of the
'70s. A major negativc factor has
been the quintupling of oil prices in
the aftermath of the
M
idcast war of
1973.
In the United States. infiation.
fueled mainly by a string of monu–
mental federal budgct deficits- $120
billion in th e last two fiscal years
alone- is threatening to get out of
hand. The nations of Wcstcrn Eu–
rope. converscly. confrontcd with
stagnant economies and growing
unemployment, havc ncver quite re–
covered from the worldwide rcces–
sion of 1974. In J apan, a sluggish
domest ic market has forccd that na–
tion 's awcsomc industrial output in–
creasingly into export markets,
principally the U.S. and Europe, rais–
ing ca lis for protection ofhome indus–
tries.
This past J uly. in an attempt to iron
out the many problems in their com–
plex trade relationships, the heads of
HEADS OF STATE
(above) from
seven nations gathered at World
Economic Summit in Bonn in July. West
German Chancellor Helmut Schmidt,
shown at left with U.S. President
Jimmy Carter,
was
dominant person–
ality at the conference.
The
PLAIN TRUTH October-November 1978
government of the free world's lead–
ing industrial powers- the United
States, West Germany. Japan.
France. Britain. ltaly and Canada
met in Bonn, West Germany.
T he so-called World Economic
Summit Conference- attended by
this writer-ended with optimistic
predictions for the year ahead. In the
concluding press conference. how–
ever. it was very evident that the
leaders of the "big three" nations
U.S.. West Germany and Japan wcrc
severely limited by political con–
straints on the home fronl.
President Carter pledged to
strengthen the dollar by cutt ing oil
imports-though he made no prom–
ise to act decisively and unilatcrally
if the U.S. Congress continucs to
ho ld up his long-sta llcd cnergy lcg–
islation.
Chancellor Helmut Schmidt of
West Germany. for his part. an–
nounced a modest package to boost
government spending. one that he
had been planning to introduce
anyway. Any attempt to pump up
the economy more than his stipu–
lated one perccnt would ha ve
evokcd críes from Bonn's con–
scrvativc opposition that Schmidt
was lcading Germany once again
down the ruinous road of "Weimar–
style" inflation- which, as history
shows, hclped pave Adolf Hitler's
path to powcr.
Gene Hogberg
Prime M inister Takeo Fukuda
only offered to keep Japanese ex–
ports ncxt year from rising above
thi year's leve!. But since the yen il.
rising and thc dollar is dropping,
this means an even greater Japanese
trade surplus than last year's record
$17 billion. To actually cut export:,
would mean increased unemploy–
mcnt- a political risk that Japan\
big-busincss-oricnted Liberal Dem–
ocratic Party, which has been
~lowly
losi ng trcngth over the years, feels
it cannot afford to take.
Collar
Crisis
lgnored
For a day or two arter the Bonn
summ it , the mild euphoria that s uch
conclaves engender seemed to have
pumpcd a bubble of new confidence
into thc West's fragile economic sys–
tcm. "Bonn has successfully bought
time," intoned an editorial in thc
Times
of London.
But hardly was the ink dry on the
summit's evasive, nebulous final
communiqué when it became abun–
dantly clear that nothing had really
becn resolved. Thc reason: o action
had bcen taken with regard to the
most critica! problem in the eyes of
Amcrica's trading partners- what to
do aboutthe plummcting value ofthe
U.S. dollar- a crisis which affects the
cntire free world, since the dollar,
weak though it may be. is the world's
leading reserve eu rrency.
S