The MacNeil/Lehrer Report; Pipeline -- Reagan's Next Move

JIM LEHRER: Good evening. The United States and France remained on a collision course today in their dispute over the Siberian natural gas pipeline. There are three compressors awaiting shipment from France to the Soviet Union to be used on the pipeline. The French government has ordered them loaded, but the U.S. government has threatened the manufacturer with several sanctions if it does so, the tricky part being the manufacturer is the French subsidiary of a U.S. company, Dresser Industries of Dallas. State Department and White House spokesmen both publicly warned Dresser again today ofswift action if it goes ahead. The loading of the compressors at the French port of Le Havre was to have been today, but it was postponed until tomorrow in an apparent move to allow more time for a diplomatic solution. The three compressors, of course, are only symptoms of a broader dispute between the U.S. and its Western European allies over how to economically punish the Soviets for the repression in Poland, among other things, a dispute that isn't going to go away easily no matter what happens to those three compressors. It's both the symptoms and the causes we examine tonight. Robert MacNeil is off; Charlayne Hunter-Gault is in New York. Charlayne?

CHARLAYNE HUNTER-GAULT: Jim, the pipeline issue was simmering long before the imposition of martial law in Poland. It first became an issue when President Jimmy Carter, angry over Afghanistan, tried to convince the West Europeans not to make a deal with the Russians. He argued it would make the West too dependent on Soviet energy. The project involves sending natural gas from Soviet Siberian gas fields to West Germany to be distributed throughout Europe. President Reagan agreed with Carter, adding that the pipeline would also provide much-needed hard cash that the Soviets could then use for further arms build-ups. The Europeans disagreed. They argued that the contracts would provide jobs for their recession-wracked economies, and posed no real threat.Following the imposition of martial law in Poland, President Reagan retaliated with sanctions on high technology transfers to the Soviet Union. Then in June, the administration said it would broaden the sanctions, possibly to include foreign subsidiaries of companies that sold equipment to the Soviets. Thus the pot went from simmering to smoldering. Jim?

LEHRER: First, to the immediate question of the compressors: if they get shipped, what does the United States plan to do? Cabinet-level meetings to decide on a course of action have been held over the last two days here in Washington -- meetings closely monitored by Don Oberdorfer in his duties as diplomatic correspondent for the Washington Post. Don, are serious efforts still being made to avoid a confrontation?

DON OBERDORFER: I don't think there's any feeling that it can be avoided now. They'd like to, but I think the general expectation is that it will come, and probably tomorrow.

LEHRER: I mean, the compressors will be shipped, and then the Reagan administration will act. And what is the feeling now as to what the administration is going to do?

Mr. OBERDORFER: They will take civil sanctions. They are going to penalize the company by putting them on some kind of a blacklist for doing business abroad, so that it will be difficult to export anything from the United States. What's not completely clear to me is whether they are going to act primarily against the French subsidiary or the American company. And you can make arguments as to which is politically best, which is legally best, and so on, but that's the kind of thing they're going to do. What they are not going to do, as I understand it, is they're not going to take any criminal action against anybody, nor are they going to take action directly against the French government as such. At least, at this stage.

LEHRER: What is your reading as to why the decision was made not to go after France, but only go after the company?

Mr. OBERDORFER: Well, the administration, or at least the State Department and most of the other people who met on this yesterday -- which was the biggest meeting on the subject -- want to try to limit the damage to this. They all are aware that there is substantial damage. The damage is going to be even greater when Britain, certainly, joins, and quite possibly the Germans and the Italians, in the same sort of action. And to take action directly against the government of France would just be to make that damage to the Atlantic alliance much worse.

LEHRER: What do they talk about in terms of damage over at the State Department -- as to what this whole incident and its possible escalation that you just outlined could lead to?

Mr. OBERDORFER: Well, it's a very unfortunate situation. I think the State Department, as you know, was opposed to this whole thing from the beginning. Secretary Haig was very much opposed to taking the kind of action that the President took, and it was one of the causes for Secretary Haig's resignation. I think interadministration politics had something to do with the presidential decision, though I can't prove it. And Secretary Shultz has accepted the President's decision. His decision is made, and he's not trying to refight it, but he wants to limit the damage to the Atlantic alliance, and when you have the countries of France and Britain and others going down a totally opposite path of that of the United States, and legal actions flying back and forth across the Atlantic, you have a very messy situation with a lot of room for long-term trouble.

LEHRER: Don, I finally read somewhere today that President Reagan, and on the other side, France, in this specific case, are in such positions neither one could back down now even if they wanted to. Is that a correct reading?

Mr. OBERDORFER: I think it is. And in my view, and from what I can understand of it, really, this whole thing was, on June 18th, when Mr. Reagan made his decision to extend the sanctions to the pipeline to American subsidiaries and others using U.S. technology, this was more or less inevitable from that time, because the position of the Europeans was clear. And people at the State Department and the Commerce Department certainly knew what the European attitude was.

LEHRER: Thank you, Don. Charlayne?

HUNTER-GAULT: Diplomats aren't the only group concerned with the pipeline issue. Lawyers are involved, too. For a look at some of the legal aspects, we have Stanley Marcuss, an international law specialist. He is a partner in the Washington office of the firm of Milbank Tweed Hedley and McCoy. During the Carter administration, Mr. Marcuss was the senior deputy assistant secretary of commerce in charge of trade administration, which included export controls. Mr. Marcuss, you just heard Don Oberdorfer say it's going to be difficult to figure out whether the action would be against the parent company or the foreign subsidiary. What would your guess be?

STANLEY MARCUSS: Well, it's very difficult to say. The administration has the authority to take action against the foreign subsidiary as well as against the parent company. One of the things it could do would be to impose fines against the foreign subsidiary, in this case, amounting to the possibility of several hundreds of millions of dollars. Another possibility, which is much more traditional, is to deny that foreign subsidiary the ability to import any goods or technology from the United States.

HUNTER-GAULT: So the U.S. can enforce its law overseas?

Mr. MARCUSS: It has the authority to do so under the statute and the regulations. Whether the courts would uphold an effort to impose penalties is quite another matter, and that would involve difficult questions of international law, and perhaps U.S. constitutional law.

HUNTER-GAULT: I see. If the administration goes beyond blacklisting, might it violate French rights or sovereignty, as it were?

Mr. MARCUSS: Well, there isn't any question but that when the United States, or, for that matter, any country attempts to regulate the activities of companies in a foreign country, that it is in some fundamental way interfering with the sovereignty of another country. That kind of conflict unfortunately occurs quite often in international business affairs. The key question is whether that conflict can be resolved, and typically the courts are reluctant to try to reach compromises which the governments themselves cannot reach.

HUNTER-GAULT: Isn't the French subsidiary subject to French law as well?

Mr. MARCUSS: The French subsidiary is indeed subject to French law, as well as to American law, and it finds itself in the unhappy circumstance of being, as I think you suggested earlier, between a rock and a hard place. It is a classic case of a private company or private individual being caught between two nations that are at loggerheads with each other over an important matter of foreign policy.

HUNTER-GAULT: If you had to advise at this point, what advice would you give?

Mr. MARCUSS: Well, the company of course needs to do all it can to protect itself. It can go into a U.S. court, as Dresser has already done, to seek protection in the United States. It could, on the other hand, wait to see what the administration decides to do, and then, if it seeks to impose penalties, defend itself on the ground that it had no alternative but to comply with French law. Ultimately, as I suggested before, private parties that find themselves in situations like this must look to the governments involved to reach an accommodation.

HUNTER-GAULT: If the United States went ahead with blacklisting, how difficult would it be to enforce blacklisting? I mean, are there precedents for this that would give you some clue to that?

Mr. MARCUSS: There are precedents.Certain aspects would not be very difficult to enforce at all. It would be illegal, if the French subsidiary were blacklisted, for any American company, or, for that matter, any subsidiary of an American company, to export U.S.-origin goods or U.S. technology to that company, and it would be not very difficult at all to impose penalties on those firms that disobeyed those restrictions. In addition, any companies that find themselves in a situation where they are financing or transporting goods of the French subsidiary might themselves be subject to penalties by the U.S. government.

HUNTER-GAULT: All right, thank you. Jim?

LEHRER: Opinions vary on whether the Reagan administration is pursuing the right course in its sanctions policy concerning the pipeline, and one of those who thinks it's correct is Milton Copulos, director of energy policy studies at the Heritage Foundation, a Washington-based think tank. He writes a syndicated column on energy issues, and has done a number of studies of the Soviet pipeline. You think the U.S. should go ahead with sanctions, full speed, right?

MILTON COPULOS: Without question.

LEHRER: Not only as outlined by Don Oberdorfer in terms of the company? You think they should go after France as well?

Mr. COPULOS: Absolutely. You either have sanctions or you don't, and if you're going to try to impose them, then you should do so to the full extent of the law.

LEHRER: What is your reading of what the damage? You heard damage control, and the damage that this might do to our relationship with Western Europe. How do you read that?

Mr. COPULOS: Well, you know, the Europeans have likened this to a gradual divorce, but sometimes if a marriage is bound to split up anyway, it's to your advantage to precipitate the divorce and try and save some of the financial loss that would occur otherwise.

LEHRER: I'm not sure I understand what you're saying -- that this was inevitable?

Mr. COPULOS: I think this was inevitable; I think there's an attitude that's been growing in Europe for a long time that's highly unrealistic vis-a-vis the Soviets, and the pipeline is really a symptom of that attitude rather than an event unto itself.

LEHRER: Well, how would you characterize the difference in attitudes -- the Western European attitude and the U.S. attitude?

Mr. COPULOS: Well, I think what has evolved in Europe is a position which is tantamount to neutrality vis-a-vis the Soviet Union, whereas in the United States we still are, to some extent, in an adversarial position with them. Not in the sense of being in hostilities, but there is no question that the Soviets hardly have our best interests at heart, and that we perhaps have a different view of what the world should be than they do.

LEHRER: You think the United States and the alliance could survive a major breach over this pipeline issue?

Mr. COPULOS: I don't know that the alliance was going to survive regardless of the pipeline issue. Whether it is the sole event that leads to a re-examination of our relationship with Europe, or the catalyst toward that re-examination remains to be seen, but I think at some point that re-examination must come. You know -- let me expand just a bit. We have 550,000 NATO troops in Europe. We bear -- the American taxpayer bears the overwhelming burden of defending Europe.Why should we stand by and continue to pay those costs when Europe undermines its own security?

LEHRER: Which is what you feel they're doing with this pipeline?

Mr. COPULOS: Oh, I don't feel there's any question. As one West German put it, Europe may have the pipeline, but the Soviets have the valve.

LEHRER: I see. Do you believe that these sanctions are going to work in either slowing down, delaying, or in fact stopping the construction of this pipeline?

Mr. COPULOS: Well, they've already worked to some extent. Isvestia had an article which appeared yesterday decrying the fact that there had been a slowdown in the construction of the pipeline, and stating that -- as a matter of fact, they were trying to find experienced welders to bring into their factories to help offset the loss of American equipment. So there's no question it's slowing it down. Whether it will stop it altogether remains to be seen.

LEHRER: Finally, I would take it that you don't think much of the European argument that the U.S. policy is an attempt to interfere in the internal affairs of these European countries?

Mr. COPULOS: Oh, I think Europe has the right to do whatever they want with the pipeline; if they do, however, decide to go ahead, then we need to take actions that are in our best interest. If they see that as interference, I'm sorry.

LEHRER: So we have a right to do what we want to do as well?

Mr. COPULOS: Yes.

LEHRER: Thank you. Charlayne?

HUNTER-GAULT: Now to a view more sympathetic to the Europeans. It comes from Simon Serfaty, an analyst who has written extensively on U.S.-European relations. Mr. Serfaty is a professor of U.S. foreign policy at the Johns Hopkins School of Advanced InternationalStudies in Washington, D.C. Mr. Serfaty, just how upset are the Europeans over this issue?

SIMON SERFATY: Well, clearly enough, they are substantially upset. First of all, let me point out that this is not only a collision between the United States and France. It is in fact a collision between the United States and the four dominant countries of Western Europe -- Britain, Germany, Italy and France -- which are more united on this issue than on any other issue in recent memory. Now, they are upset in a sense, those countries, because they do not understand American fears -- fears, for example, of an excessive European dependence on Soviet gas. In part, they do not understand American objectives. If indeed the objective is to deny the Soviet Union $10 billion or so worth of hard currencies, then why link this particular policy to relaxation of tensions in Poland? And, finally, they do not understand American inconsistencies as they see them.

HUNTER-GAULT: I'm sorry, I didn't hear what you just said.

Mr. SERFATY: Inconsistencies. Inconsistencies tied to the decision over the sale of wheat, for example.

HUNTER-GAULT: Do you think that they regard these sanctions as an invasion of their internal affairs, and so on?

Mr. SERFATY: Naturally enough, they do look upon it as an attempt to maintain from Washington a basic control, not only over the activities of a number of French corporations, their subsidiaries set up within French territories, but also on the overall management of the French economy, for some of those decisions -- whether in France, in Germany, or in Italy -- are, of course, tied to the very negative economic circumstances that prevail within those countries.

HUNTER-GAULT: Mr. Copulos just said that the Europeans were undermining their security in this whole thing. I mean, how do you see that?

Mr. SERFATY: From a European standpoint, I think, of this thing, the point is quite debatable. The Europeans argue, in fact, the reverse. They argue, for example, that Soviet gas imports introduce a new level of diversification away from their past dependence on Middle East fuels, and the Middle East has not been known of late as an especially stable region, and on that basis -- as one among others -- stabilizes further the European security rather than harms it.

HUNTER-GAULT: Would you agree, or what would be your reaction to his characterization of the European attitude toward the Soviets as one of neutrality?

Mr. SERFATY: The unwillingness on the part of the European states to agree with all facets of American policies, whether set by this administration or earlier administrations, need not be related or equalized with a trend toward neutrality. The objective of our policy after the war was to bring about the recovery of those European states. They have now recovered. With recovery has come a set of new interests, which they will be prone on defending, with, without, or in spite of, U.S. policies, and we can expect such differences in the near future of a range of other issues as well.

HUNTER-GAULT: So do you feel that this confrontation was unavoidable, inevitable?

Mr. SERFATY: Over the gas pipeline, it was avoidable. In fact, it was avoided up to June 18th, and the assumption was that the issue had been put aside.

HUNTER-GAULT: But, excuse me, but is the confrontation from this point on unavoidable?

Mr. SERFATY: Oh, unavoidable? The Europeans will not give on that issue much, and indeed the confrontation now is on, and the question is the extent to which there will be a measure of damage limitation, as Mr. Oberdorfer was pointing out.

HUNTER-GAULT: Was it inevitable aside from the whole issue of the pipeline?

Mr. SERFATY: Right, yes, because U.S.-European relations, it is well-known, have been fading now for many years.They are not the result of the policies pursued by this particular administration, but they are -- this is the result of the trend that goes back 15 to 20 years, that relates to the decline of the American image, to the devaluation of American power, and to the divergence of U.S.-European interests, not only vis-a-vis the countries of the East, but also, and perhaps above all, vis-a-vis the countries of the Third World.

HUNTER-GAULT: All right, thank you. Jim?

LEHRER: Don Oberdorfer, what's your reading of that broad question of the overall deterioration of the relationship between the United States and Europe?

Mr. OBERDORFER: Well, I think there has been, clearly, some deterioration, but you have to remember that we started from an extremely unusual situation following World War II where the United States was tremendously dominant, and the Europeans, who had been the leaders of the world for most of the past centuries, were laid waste by the war. Their economies were shattered; they looked to the United States completely for leadership. The balance has changed a lot since then, and in the last several years we've seen a number of disputes. Up to now, up to this one, they could be kept somehow in check, but I think this one has the potential for really getting out of control if the two sides get into a pushing-shoving match over the pipeline.

LEHRER: Mr. Copulos, I would take it that that wouldn't concern you at all if it did get out of control, right?

Mr. COPULOS: Well, I don't know if "out of control" is a way to phrase it, or whether it reaches the inevitable conclusion that's coming sooner or later, you know, there --

LEHRER: Well, how do you read the inevitable conclusion, way down the line?

Mr. COPULOS: Well, I think the interests of Europe and those of the U.S., as the Doctor pointed out, are not necessarily consistent in all areas, and that we are going to travel down paths that are somewhat different from what they've been in the postwar period that we've experienced up to now. They will become increasingly disinvolved in confrontations with the Soviets. I see a rapprochement occurring there, which really will be tantamount to a finlandization of them. And at some point I think we're going to have to re-examine our defense commitments. You know, for example, we're spending $5 billion a year for a rapid deployment force that is guarding the Mideast oil fields, and yet the overwhelming majority of that oil is for Europe. The Europeans can say what they want about their attitudes towards the Soviet Union, but the simple fact is they have continued to look to us to defend them. And if their attitudes are changing, they cannot expect us to continue to make the massive outlays necessary to maintain a true presence and do the other things that they've expected.

LEHRER: Mr. Serfaty, do you see the scenario going the same way, that we could continue down this line -- the pipeline is a symptom of it -- that could eventually lead to the kind of thing that Mr. Copulos is saying? We're going to re-examine our military commitments in Europe, even?

Mr. SERFATY: Well, down the line I think we are indeed moving in the direction of a reassessment of U.S.-European relations, possibly even the renegotiation of the alliance.Keep in mind that the alliance evolved in the '50s and in the '60s in a way that was not fully compatible with what had been designed when it was first signed. When it was first signed, it was expected to be primarily and exclusively a guarantee pact. The Korean War changed that. Circumstances have changed. In changed and changing circumstances, we cannot keep the alliance unchanged and the same. So the year of Europe in 1973 was in a sense a call on the Europeans to renegotiate the nature of the relationship between the two sides of the Atlantic.

LEHRER: Well, let me follow that by this question. If it does follow this inevitable road to further deterioration or further change -- whichever way you want to look at it -- is that necessarily a bad thing for the United States?

Mr. SERFATY: It's a question of timing: that I would be unhappy today will not lead me, hopefully, to self-destruction. There will be better days. I think that the relationship will go through ups and downs, as it has been going, in fact, over the past 30 years. Every time, however, with every new crisis, accommodation is all the more difficult, as the Europeans are more assertive, and we are, in a sense, less capable of imposing our views upon them.

LEHRER: But, yes, Mr. Serfaty, you wanted to add something to that?

Mr. MARCUSS: Well, the tragedy, despite the fact that change is inevitable --

LEHRER: Mr. Marcuss. I'm sorry.

Mr. MARCUSS: That's all right. Despite the fact that change is inevitable, the key question for the United States is whether it will lead that change. And the tragedy of this episode is that it has demonstrated that Europe is not willing to follow U.S. leadership. They must be rejoicing in Moscow these hours at the specter of Germany and France, Italy and Great Britain saying they will not follow American lead on an important matter of East-West relations.

LEHRER: Is that a concern. Don Oberdorfer? Your newspaper editorialized today and said, in fact, on its editorial page that here was something that was designed to punish the Soviet Union, and actually it's the United States and Western Europe that are punishing themselves. That must be a concern.

Mr. OBERDORFER: Well, I don't write the editorials, but I can tell you that is a big concern in Washington. It's certainly a concern in the State Department. And, if you remember, there was a big meeting at Versailles. They were supposed to all get together, the leaders. They didn't talk about the pipeline hardly at all, as I understand it, because they were talking more general things. Then a few weeks after Versailles, the United States takes its action without consulting the Europeans, and The Europeans are not following. So we have the possibility for a long-term, a kind of running sore, as one State Department says, that doesn't heal, which could leave us in a lot of trouble.

LEHRER: On that pleasant note, gentlemen, we leave it. Thank you all four very much. Good night, Charlayne.

HUNTER-GAULT: Good night, Jim.

LEHRER: And we'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.