Interview With Foreign Journalists

May 31, 1984

International Debt Situation

Q. Mr. President, as representative from the host country, it's been left to me to bowl the first ball.

The London Economic Summit is taking place under a number of clouds. One is the international debt crisis. So far, Western creditor nations have dealt with this problem on a case-by-case basis. However, I'd like to ask you, in light of the growing hostility of debtor nations, first of all whether a coordinated long-term solution is now essential; and second, what the U.S. can do to guarantee confidence of its banking system?

The President. Well, first of all, let me answer that by saying that I believe the five-point system -- or program that we all agreed to at the summit meeting last year at Williamsburg has been working. And I'm sure there is unhappiness here and there with some. But I believe that since it is working, and it's working on a case-by-case basis, that we should continue that, and that the greatest thing we can contribute now to helping them in their problems is to do everything we can to ensure and increase, if possible, the economic recovery that is presently taking place.

Q. What about the U.S. banks? We've had two banks recently to run into trouble as a result of problems with these debtor countries.

The President. Well now, we had the Continental of Illinois -- are you referring to the -- --

Q. Manufacturers Hanover.

The President. Well, that turned out to be quite a rumor that seemed to be believed only on Wall Street and the stock market for 24 hours and caused quite a panic, but developed that there was not the same kind of crisis involved there.

Nuclear Arms

Q. Mr. President, in the last few days you've said that the world feels a little bit more secure because of the strengthening in the American strategic and conventional posture. As paradoxical as it may seem in considering the reported widespread violations of SALT II by the Soviet Union, do you feel that the world can continue to feel a little bit more secure for an extended period of time in the absence of an agreement with the Soviet Union limiting nuclear arms?

The President. Well, I think the ultimate of what we want, of course, is for them to come back to the table and join us in not a limitation, as SALT was, that was simply legalizing an arms race in that the limitation was only a limit on how many more you could continue to build -- as a matter of fact, it's interesting to note that from the time of the signing by both parties to the SALT treaty, the Soviet Union added 3,950 more warheads.

When I say more secure, I believe that the United States, basically, in recent decades, went all out in various efforts at detente and in which we unilaterally disarmed with the idea that maybe if we did this and showed our good faith, they would reciprocate by reducing their own. Well, they didn't. They've engaged in the most massive military buildup the world has ever seen. And therefore, the reason I believe that there is more security today is the redressing that we've done of our own military strength, the strength of the alliance, and the unity that we have.

And the alliance resisted all that propaganda of the Soviets with regard to the intermediate-range placement, and their efforts to divide us failed. So I think -- there's an article that I could call to your attention in The Economist, called ``May Hibernation.'' It was an idea that hadn't occurred to me, but I think it makes a great deal of sense: that they are not deviously planning something or having a great plan going forward. The author of this article said that they don't have any answers right now, so they've just hunkered down and they're hibernating, waiting until they have an answer.

Sure, they're unhappy. And all this talk about great strain in the relations -- well, the unhappiness is because they're not having their way freely, as they did a short time ago.

Persian Gulf Conflict

Q. Mr. President, in the connection of this problem of the United States-Soviet relations, East-West relations, which my Italian colleague just mentioned, I'd like to ask this question. Many observers suggest that the United States and the Soviet Union have a common national interest in calming down the present gulf crisis -- Persian Gulf crisis, the U.S. and the Soviet Union have a common interest. Do you agree with this view? If so, would you consider taking this crisis as an opportunity to reopen the U.S.-Soviet dialog, which so many people are anxious to have -- --

The President. Well, I don't see that particular issue as one lending itself to that. We are not out of touch with the Soviet Union. We have continued to negotiate with them on other matters -- other than the arms treaties -- that were of concern to them. And there's been some progress made on those. So, we've made it very plain that the door is open for negotiations.

On the gulf, I think the idea -- none of us want to see this spread into a major conflict. And I think the fact that the gulf nations themselves have not asked for help other than wanting more weaponry for their own defense here and there, and which we've provided, and I believe that that is the course to follow. If it ever goes beyond that, then I think that the major nations -- it would begin with us and our allies getting together, because basically our allies, including your own country, have a greater stake in -- if that energy supply was cut off.

But, no, I don't believe that that really offers a kind of opening we're talking about.

Q. Yes, but you have direct talk with the Soviet Union on this?

The President. Oh, yes, yes.

Q. So then -- this is a followup question -- what initiative, if any, do you plan to take at the London summit on this gulf crisis, on this subject?

The President. That what?

Q. On the gulf -- this Persian Gulf crisis in the summit meeting?

Q. Do you plan to take any -- --

The President. Oh, I'm quite sure we -- --

Q. What kind of initiative -- --

The President. Oh, I'm quite sure we'll be discussing that. The summit meetings, I'm proud and happy to say, since Williamsburg, are kind of planned at a more informal basis. They used to be very programmed and with subjects in advance determined on and so forth. And we didn't think, when we had the Williamsburg summit, we didn't think that that really opened the door to what everyone would like to talk about. So it's more or less an informal get-together, and whatever subject is on anyone's mind, they can bring up, that they think is of interest to it. And I'm quite sure that we'll be discussing that.

Q. Central America?

Trade, Deficits, and Interest Rates

Q. Well, if I can come back to the economic problem, Mr. President, the latest figures on the U.S. export performance -- they paint a rather grim picture. It is understood that the U.S. trade deficit -- trade imbalance will reach a staggering $126 billion this year, compounding, it seems, the deficit problem that already exists. How can interest rates really come down under such auspices? And what will you tell your partners at London, who are worried stiff already about interest rates and about the high dollar that it's created and the capital that comes out of their economies into banks in this country? What are you going to tell your partners about this?

The President. Well, the trade imbalance -- I don't think it has anything to do with the interest rates. The trade imbalance that you've mentioned there, as a matter of fact, is due to the value of the dollar in comparison to other currencies, and this is part of the worldwide recession that's been going on. But our imports are actually responsible for about a third of the recovery of our trading partners now. And there is another element that we don't consider in the balance of trade, but that is capital investment from outside the United States in our country. And yet, that is a kind of balance to this imbalance.

We'd like very much to be exporting more than we are, but we realize that our recovery started earlier and has been faster than it has in the other countries. And so the result is they have been less able to buy. And the very fact, as I say, that we're continuing to import is helping that recovery. And I think that this will move to change that.

Now, we get to the deficit, which is -- every country has one right now -- the spending over and above revenues in government functions. We have a program right now that is in conference committee before the House and Senate to work out the differences in their two versions of what I have called a downpayment. And that is a 3-year program to -- certain, some revenue increases -- but both domestic spending and some reductions in defense spending that will not set us back too much in our program. But this downpayment will amount to about $140 or $150 billion over the 3-year period in the reduction of our deficit.

But that's only part of it. We recognize that we have a long way to go in reducing the share of the gross national product that the Government is taking in taxes and is spending. And we had a commission from the private sector -- I asked a man named Peter Grace, a businessman, to form task forces and go into every agency and department of our government. I had done this in California when I was Governor, for the State, and it worked. And some 2,000 American leaders from the private sector spent several months doing this. And they have left us with 2,000 -- I think it's 478 specific recommendations as to how government can be made more efficient and more economical by simply implementing modern-day business practices.

For example, when they could find that in one area of our government, it was costing us $4 and something every time we wrote a paycheck for an employee, and out in the business world that process takes less than a dollar -- well, there's no reason why government shouldn't take less than a dollar in processing a paycheck -- well, this kind of thing. And we now have a task force that is working on those recommendations. Many of them will require legislation by the Congress; some of them only require Executive order by me. And we have already in our planning, right now, and in this downpayment, we have already included some of their recommendations and are going forward with them.

So, we think that actually the interest rates, however, that -- I'm dealing with the deficit part now -- are not that closely linked to the deficit. As a matter of fact, the deficit of some of our allies as a proportion of gross national product is not too out of line as a percentage of GNP any more than ours is.

But what I stand on as evidence that it isn't the deficit that is causing the interest rates, the high interest rates, is the fact that we brought those high interest rates down from 21\1/2\ percent down to a little more than half that at the same time that our deficit was increasing vastly over what it had been. Now, how could that be? -- that interest rates were coming down while the deficit was going up, and now the deficit is responsible for interest rates not coming down any farther, or maybe, as they have, gone up a point or so recently?

We think that out there in the money market in our own country, after nearly half a century of deficit spending in this country and a growing inflation that has been worldwide for a longer period than ever in the world's history, that the money market is not yet convinced that we have control of inflation. And every move by the Federal Reserve System -- they always look to see, well, does this mean that suddenly inflation is going to start?

Remember that in '79 and '80, before we came here, inflation in this country went up to double digits, and for 2 years in a row it was at double digits. One time, it was running at 17 percent. And since we've been here, it has come down to where for the last 2 years inflation has been less than 4 percent.

But I believe we're sound in thinking that it is just the lack of confidence. Now, if we pass -- if the Senate and the House come together and this downpayment is made, and then, as we begin to put together the 1985 budget, which we will shortly be doing, and we begin to show in that budget the effect of the Grace commission reports and so forth, I think we will see a little more confidence out there in the business community, and I think we'll see interest rates come down a little further.

Q. Mr. President, first of all, let me say I'm disappointed you haven't offered us any of those jellybeans. But anyway -- --

The President. Oh, pass them around. Help yourselves. [Laughter]

Q. Good.

The President. They always sit there.

Prime Minister Trudeau's Peace Initiative

Q. My question: Our Prime Minister, Mr. Trudeau, set out on a personal disarmament quest last year, based on the assumption that the superpowers were deadlocked, that the world was becoming more dangerous, and that smaller powers might help to break that deadlock -- and got the support and endorsement of the Commonwealth.

Now, we came to see you in December. You cooled them out with a noncommittal good will. You thanked them for suggestions, you wished them Godspeed, as I recall -- --

The President. Yes.

Q. -- -- and, in effect, you trivialized his whole undertaking. So, my question is, why did you not pick up on this initiative and give it momentum as a new run for arms control?

The President. Well, I suppose because we were convinced that it has to be the Warsaw Pact and the NATO -- I won't just say the United States and the Soviet Union. Here is where the issue lies, here's where the threat, if there is one to the world, comes from. And we were busily trying to show the Soviet Union that we hadn't made any demands in which we said, ``It's this or nothing.'' We tried to show them our flexibility.

For example, my first proposal about the intermediate-range weapons was why not 0 - 0? Why not leave that European area free of any intermediate-range weapons? Well, the Soviets refused to discuss that. So we said: ``All right, then, whatever figure you have in mind, or whatever we have in mind, let's sit down then and see how much we can reduce the numbers of weapons.'' And we told them, frankly, we would always keep in mind that someday we'd still like to have 0 - 0, but we were willing to talk a lesser number.

Now, they walked away on the -- the line that it was the -- that when deployment started. Well, the request for the NATO -- --

Q. [Inaudible] -- peace initiative?

The President. What?

Q. Peace initiative. You're reviewing disarmament, but this is not -- as far as I can tell -- nothing to do with the peace initiative.

The President. Oh. Maybe I misunderstood.

Q. Well, I was asking about Prime Minister Trudeau's peace initiative to try and break the deadlock that the two superpowers were in.

The President. Oh. Listen -- well, no. We encouraged him and gave him our blessing to go forward with that. I think that it's awfully easy for us in our relations with the Soviet Union to be the kiss of death, sometimes, to these things. No. The Prime Minister came here -- I'm sorry, I misunderstood what you are asking.

I think the world pretty generally, with just a few exceptions, is ready for world peace. And this is our primary goal. But I don't believe that you can really -- that it is really on a sound basis unless it is accompanied by a reduction, particularly in the strategic nuclear weapons. This is the threat that we cannot -- the world cannot go on living under that threat. And one day, if there's any common sense left in the world, one day there will be no nuclear weapons.

Our country presented that at a time when we were the only ones who had them -- 1946. And we suggested an international commission to be given total control over all nuclear material. And the Soviets refused. Now, we knew they were trying to have such a weapon, and eventually did, but at that time they -- all they had to do was give in, and there wouldn't be any.

El Salvador

Q. Mr. President, during his visit to Washington, President Duarte of Salvador declared that he would never ask American troops to fight in his country. And last week you have stated yourself that you had never had any thought of sending American soldiers to Central America. And what would be your reaction if next fall, for example, the Government of Salvador was seriously threatened? I mean, with collapse, by guerrilla offensive?

The President. The -- and again, I have problems with those of you who are further out there. This domed room has terrible acoustics here. [Laughter] I think you're asking about El Salvador and Nicaragua, our Central American -- --

Q. Not especially about Nicaragua, but about Salvador.

The President. Yes.

Q. If there is, next fall, for example, a guerrilla offensive -- --

The President. Yes.

Q. -- -- threatening, and threatening with collapse the Government of Salvador, what would be your reaction?

The President. What would be -- --

Q. Your reaction?

The President. -- -- our reaction?

Q. Military -- will you send military forces there?

The President. Well, it would not be military forces because El Salvador has not only not asked for them, but President Duarte on his visit here recently said, no, they were not wanted or needed. They will do this with their own forces but frankly admit they must have our help with regard to equipment and supplies and the help that we've been to them in training.

You know, a great many of the Central American countries, their militaries over the years have been kind of garrison troops -- more concerned with internal problems than in fighting a war. And so they have been most open in their request of training.

And before we got here -- the previous, under the previous administration -- some of their training consisted of bringing El Salvadoran troops up here and training them at our own bases with our own men. Well, then, as the war heated up, they couldn't afford to have the men gone for that long a time. So we have 55 trainers working with their entire army.

And the guerrillas, of course, are being supplied by way of Nicaragua -- through Nicaragua by Cuba and the Soviet Union -- not only with weapons, but with replacements, with personnel. And now the guerrillas are resorting to kidnapping. They're rounding up -- going into villages and rounding up even just youngsters off the streets and simply taking them, forcing them to be guerrillas. And as would happen -- the law of averages -- every once in a while some of those youngsters escape and get away, and so we know that this is the practice and what they're doing.

But, no, if this fall offensive comes, I believe we have confidence in the El Salvadoran Army. We think that the guerrillas could make things very unpleasant, and we think that they are building up the possibility of such a thing.

But now the election has taken place, the election of the President, and Duarte is very definitely dedicated to continuing to move toward democracy in El Salvador; certainly has the support of the people. And I am optimistic that we're on the right path. And our Congress has voted now to give us the appropriation we asked for further aid to El Salvador.

Irish Unity

Q. Mr. President, I want to ask a specifically Irish question, as you're going to be -- the first country you're going to touch down in. And I'm familiar with what you said about Irish unity and the question -- your not becoming involved, as between Ireland and England. But are there any circumstances which might change that? If, for instance, Ireland were to join NATO or such a question were muted, would that make it more attractive, for instance, for America to support the idea of Irish unity?

The President. I really believe that that is an internal problem to be worked out, first of all because there are two governments involved, and the other government is already a member of NATO. I have been impressed with the Forum and some of its recommendations, and the -- as Prime Minister, your Prime Minister said, the recent finding of the Forum of recommendations certainly provided an agenda for serious thinking. If there's any way in which, without being an interferer in things going on there, but in which the people of Ireland felt that we could in any way be helpful with anything that we might do, we'd be very pleased to do it.

Irish Immigration to the U.S.

Q. I believe I'm in order in asking a supplementary. On the question of these unprecedented protests, which are unheard of in terms of an American President visiting Ireland, one of the factors in this is that there is a certain alienation between the Irish at home and the Irish here, because the quota of immigration has cut down the numbers of Irish with a day-to-day knowledge of America. Do you think that there is any likelihood that the Irish immigration quota might be increased?

The President. Well, now, the truth is -- and I only just recently heard about any problem of that -- the truth is that Ireland's quota is 20,000 and, based on the worldwide quotas, it is certainly equal to and proportionate to all the others. But also, the quota has not been fully used, so there isn't a waiting line there that says there's no more room for us. They haven't used the quota -- --

Q. I would suspect that there is a waiting line in Ireland. It mightn't have the right qualifications or so on.

The President. It might be that or it might just be the slow turning of bureaucratic wheels. But it's my understanding that the quota has not yet been filled.

Nuclear Arms

Q. Mr. President, you said the other day at your press conference you didn't expect any real progress to take place on nuclear arms talks this year. Do you think if you're reelected in November and the Soviet Union sees they're going to have to deal with you for another 4 years that we could expect a fairly early return to the negotiating table, either on INF, or START, or both?

The President. Well, I know many people who are students of Soviet history and Soviet methods feel that there's a better chance of them deciding to join us in negotiations and things after the election is over. But they're not going to do anything in the meantime to help me get reelected. Now, I hope I am reelected and look forward to dealing with them.

We have to live in the world together, and we have to seek peace together. But right now, if the Soviet Union and the men running the Soviet Union truly want peace, then there can be peace tomorrow, because none of the rest of us want war.

Q. Thank you, Mr. President. Thank you very much.

Note: The interview began at 1:22 p.m. in the Oval Office at the White House. Participants in the interview included Nicholas Ashford, the London Times; Thomas Kielinger, Die Welt, Bonn; Marino de Medici, II Tempo, Italy; Fumio Matsuo, Kyodo News Service, Japan; William Johnson, Toronto Globe and Mail; Bernard Guetta, Le Monde, France; and Tim Pat Coogan, the Irish Press.

The transcript of the interview was released by the Office of the Press Secretary on June 2.