The West's sobering prospects

AS the new year begins, what is the outlook for the Western nations? In a word, sobering. In 1988 and well beyond, it seems clear, they will face serious challenges relating to their economic welfare and their security.

The threat to the interdependent global economy has been manifest for several years. The prime cause is the profligate mismanagement of the United States economy. The nation has been living far beyond its means, with huge budget deficits of $200 billion, resulting trade deficits of $150 billion and more, foreign borrowing nearing $1 trillion and still growing, and a fluctuating dollar. Meanwhile, Germany and Japan have depended on large export surpluses to sustain their economies. And staggering third-world debts are an added source of fragility, worsened by the slow growth of the advanced nations.

The US must cut its budget deficit so that the nation will consume less and save and invest more; export more and import less. (The recent deficit package was pitifully inadequate.) And Japan and Germany will have to reduce their export surpluses by domestic expansion. Achieving so massive a shift in trade flows without bringing on a global recession will require close cooperation among the US, Europe, and Japan.

The security challenge arises from several factors. NATO is already under stress because of declining European confidence in US leadership and the US nuclear guarantee, as well as issues of strategy, burden sharing, unilateralism, and out-of-area conflict. Mikhail Gorbachev's declared readiness for radical nuclear and conventional arms control seems likely to cause added strains. If serious, it could offer a chance for greater stability and less risk of war at much lower levels of forces and armaments. But the consequent reshaping of NATO strategy and forces could create serious tensions among the allies as a result of differing priorities, geography, and strategic conceptions. Indeed, less tense East-West relations will tend to generate allied friction regarding trade, credits, intervention, and human rights. NATO should create a special high-level group to work out its adaptation to changed conditions.

Coping with both sets of problems will require cooperation well into the 1990s. The solutions will entail extensive technical, economic, and strategic analysis, and judgment. But the key will be political leadership.

Forty years ago, the Atlantic nations were confronted with a much greater challenge at the start of the cold war. With their hopes for Soviet cooperation and rapid European recovery dashed, they faced the necessity for completely recasting their relations and policies. It took seven years of dedicated effort to form the alliance, to develop the forces and strategy for defense, to initiate the European Community, and to integrate West Germany into the Community and NATO. By 1955, they had put in place structures and policies for containment, deterrence, and coexistence which have underpinned four decades of peace.

That construction required the resolving of economic, military, and political problems of great complexity. But success in their solution depended on the remarkable quality of the leaders of the period - in both the US and Western Europe. They were men of strategic vision, practical judgment, and above all political courage.

Conditions now are different: greater interdependence, the US less dominant, the Soviet Union less feared. But the problems themselves are no more daunting than those of 1947-54. The real reason for concern is the caliber of the leadership both here and abroad. Whatever his merits, the President lacks virtually all of the qualities needed to deal with our predicament, as the state of our economy and foreign policy testify. Nor do the candidates to succeed him inspire much confidence in their capacity for leadership.

And among the allies, the situation is not much better. Europe's GNP now surpasses ours, and Japan's is almost as high per capita. Yet the hope of the 1960s that the European Community would evolve by now into an entity able to assume a political and economic role commensurate with its potential has not been fulfilled. As the recent Community summit showed, its members are still bogged down in squabbles over agricultural subsidies and similar concerns, too parochial and jealous of their autonomy to form an effective political force. Even if the Community achieves its target of a true single market by 1992, it will still be far from a real partner of the US.

As for the Community, the US can only hope that the desire for more influence on economic security and East-West issues may spur its members toward greater unity. On our side, however, we must reform the process for choosing the president. The popular primary deters some of the most qualified people from running, and gives undue influence to the extremes in both parties. We should change that process before the 1992 election.

Robert R. Bowie has been concerned with foreign affairs for over 40 years on the Harvard faculty, in government posts, and as a consultant.