 Yes. Mr. Botero. Good evening. I'd like to receive the status of many newspapers and presidents, something for others. Well, thank you very much. Thank you. Mr. Yevgeno. Thank you very much. Mr. Yevgeno. Mr. Harris from the other side. Mr. Gore. Mr. Frank. Thank you, Mr. Easton. Mr. Ambrose. Thank you. And our expert from London. Mr. Greshka. Good evening. I think we all, anybody get wired for sound here for your own... This is our own tea. our own team so that if anyone doesn't get anything that needs it, we can give you a transcript. Thank you very much for having us in this very famous oval office. When our group discussed the framework of this interview, it was very hard to achieve a consensus regarding the priority of questions. We hope there will be no such problem at the summit meeting in Bonn, which is, of course, the main purpose of your visit in Europe. The world is faced with a problem how the economic momentum can be sustained and secured after the US locomotive seems to be slowing. How do you see the economic scenario in America and globally and what would be, in your view, the best outcome in Bonn? What should be done at the summit meeting? Well, I'm not going to attempt to set an agenda for it. I know that we'll be talking about political problems. We'll be talking about this economic situation. And I know that our economy, our economic recovery, did get out ahead of the others. I think one of the things that's of great importance that we want to be talking about, and that is another round of trade talks to resist the protectionism that raises its head every once in a while and to see if we can't come more and more to open trade between ourselves and other industrial countries. That will be, I'm quite sure, prominent on the agenda. I know that in the last two summits, we've also exchanged ideas about what we all can do to help in the recovery. And I'm glad to see recovery beginning to take hold in those other countries that will hopefully equalize the currency values and so forth. And I know that just as one country, our own, can export inflation and economic problems, it can also export prosperity and help to the recovery. And I think we are having a hand in that. Especially for Western Europe, you recommended recently as a New York Stock Exchange, I remember, to follow your recovery program of 81 by cutting taxes, spending, and over-regulation and throwing off that weight of government. What kind of tax cuts did you mean? Lesser income taxes or only incentives for investments and innovations? Well, high tax rates do not necessarily mean high revenues for government. As a matter of fact, this, we think, was responsible for our recent recession is that our government was taking too big a share of the private sector. And I think that other countries, some of our allies and friends, are looking at themselves to see if this is the same situation. When we reduced the rates, there was an increase, a surge, in the overall revenues because of the economic expansion that resulted. Incentive, whether it's for business and industry or for individuals, does result in higher earnings. There was an Arab philosopher about 1,400 years ago by the name of Ibn Khaldun, who said, in the beginning of the empire, the rates were high or the rates were low and the revenues were great. And he said, at the end of the empire, the rates were great and the revenues were low. Mr. President, I wanted to ask you something about the dollar and the international monetary system. The dollar has lost in the past month about 20% of its value. And before then, in a matter of a few weeks, went very, very high, reaching high records against the Dutch market and other currency. The monetary system, it's unstable and volatile. Your secretary of the Treasury said that he was willing to do something about it. And it seems that something should be done. How strong is your commitment for a high-level monetary meeting that should be hosted in Washington? And what concrete steps are you willing to take to improve this shaky system? Well, I'm afraid your question is too specific for the answers that I have available at this time. Two years ago at the Williamsburg Conference or summit, we all agreed upon embarking on a study. The European 10, ourselves, others are trading partners. And that study's been going on for two years. The study will be and the report will come in in June after the summit conference in Bonn. And I think when we get that report and see the recommendations and what has been proposed, then it can be determined whether a meeting of the kind that has been suggested is warranted and what the agenda would be as that meeting would then take up the report of this two-year study. So until then, I can't comment on an agenda. So are you backing off from the statement of Mr. Baker that said that Washington will host the... No, I think this is what he was also trying to say is that we're perfectly willing, but we feel that we should wait and see what's the result of that study? What are we going to be hearing and seeing as a result of that? And of course, to your first part of your, the preface to your question there about the dollar declining, we think that that in part could be attributed to the economic recovery of our trading partners. We think also that some of the fluctuation has to do with speculators. Those people who read all the economic signs and then go running out and either buy or sell other currencies or our own, and that this can on a simple buy and sell market result in changes. Frankly, we were very pleased with the decline in value. Let me ask a question with regard to trade, Mr. President. How are you going to deal with the trade conflicts between Japan and the United States? And do you think that you have to brave Mr. Nakasone for his inability even as a meeting of one summit? Well, we think we've been making great progress in the bilateral meetings that we've been having. I can tell you that Prime Minister Nakasone, I think himself is committed to a belief in more open and free trade between nations. I realize that just as all heads of state do, he has some political problems too in opposition to some things that some moves he might want to make. The same would be true of me here in our own country. But we have made great progress and I think we'll continue to make progress in opening up markets to open trade between allies and I have a great admiration for what he is doing and what he has set out to do. Mr. President, in recent years, your trade policy officials have made much of their efforts to promote the multilateral trade system. At the same time, they've used the possibility of bilateral deals with individual countries as something of a lever to bring other trading partners to the bargaining table. There are experts who suggest that subjecting a fifth or a quarter of your trade of the United States external trade to a deal perhaps with Canada could weaken the multilateral trading system. I'm wondering, A, how you feel about that? But secondly, what happens if there is a new gap round? What happens to the bilateral deals at that point? Well, because the direction that the bilateral is taking between us and Canada, we've been, for each other, we've been the greatest trading partners. Here we are with a very unique border that extends for several thousand miles with no guards or forts along that border. We have a pretty common heritage in this country. It's been reflected in trade and sometimes there have been efforts here and there in particular areas to curb trade. But no, we, just as we're meeting with Prime Minister Nakasone, we have been meeting with Canada to eliminate some of the problems that in reality are peculiar to our two countries. And I don't think that that in any way does anything but even strengthen or add to our multilateral efforts. It just demonstrates that countries can mutually benefit from free and open trade. Mr. President, I imagine that there'll be a number of leaders in Bonn who would like to discuss with you your strategic defense initiative during your visit there. The question I wanted to ask was that the British foreign secretary recently raised some concerns about your initiative. He warned that there would be no advantage in creating a new Maginot line which could be outflanked by simpler countermeasures. And he also suggested that the huge research program might acquire an unstoppable momentum of its own. I wonder what your reaction would be to those two points. Well, I think that's in a sense borrowing trouble. We are embarked on a research program. We don't have something ready for deployment. We're not talking about deploying. What we're researching to see is if there is an answer to the nuclear threat to all the world. We have a situation now between the major powers where we have a deterrent based totally on offensive weapons. And in our own country, it's called the mad policy. And what it stands for is mutual assured destruction. Meaning that, and to me, there's always been something little immoral about that, that our deterrent is if you try to blow our people up we'll blow yours up. Now, if there is a, in the whole history of the world, every offensive weapon has always led to a defensive weapon. We're doing a research. If we could come up with a defense that would in effect make nuclear weapons obsolete, I think it would aid in what we're doing in Geneva with our arms reduction talks. An effort to reduce greatly the number of such weapons in the world to the point that we don't leave as a heritage to our children. This threat of destruction literally of the world if some mad man comes along some day in one country or the other and decides to take that action. And I've made it perfectly plain that if our research, while I have any claim to it is successful in any way before there would ever be deployment, I would want to sit down with our allies and discuss this totally as to and share. And I haven't even ruled out sharing with our potential adversaries. If we could substitute for simply an exchange of offensive threats, either totally defense or a combination of the two so that we weren't just living under this total threat. The threat is even the rest of the world who might not even be participants except in the destruction. Still on this subject, Mr. President. President Mitterrand of France have invited other European countries to join efforts to create a European technological cooperation. I was wondering what you think of this initiative and if you don't think that SDI has set the stage for a technological confrontation between Europe and United States? I don't know that I can answer that. I imagine that I'll be hearing about that at the summit and I'll be looking forward to the discussion of it. The only restriction we've ever wanted to place on technology is letting or giving that technology to a potential adversary who then could use it to an advantage over us militarily. And that's been the result of COCOM, which we have with our allies in our restraint on providing such technology under the other country. I know that we, on SDI, we have invited all of our allies to come in and compete for contracts on the research and to participate in the research on that weapon. I think on that previous question, I left out something rather there that I should have said in addition. And that is that on SDI also, that in the meantime, no, we feel that we support France and England in going forward on their own nuclear weapons. I think it's been made necessary. We are, as you know, going forward with ours, with the Mx, with the B-1 bomber, and even a bomber beyond that with the Trident submarine because that, to use one of our own expressions, that's the only game in town. Now, did I finish with yours? Well, no, we could go on just to make a question. President Nato is today much stronger than it were 81 when you assumed the presidency thanks to the United States. Well, thank you. But is Nato in these days strong enough? Is it strong enough? I think basically the, for a deterrent, yes. There is no question we do not match the Soviet Union in its military buildup either in the strategic or in the conventional. But I think in the sense of a deterrent that a war trying to take advantage of their superior forces, they would face more damage than they would want to accept. So I think that from a deterrent standpoint, yes. Who stopped the stationing of the Pershing-2 in Germany? Is that only for technical reasons? Or has it something to do with the Geneva... Yeah, we have not stopped that on a basis of changing a policy. No, we're going forward with that plan. Those countries requested those weapons of us and the Soviets have continued to augment their intermediate-range weapons that are targeted on European targets. No, we would like in the talks going on at Geneva, we would like something that would indicate that they were willing to reduce those. You know, our original proposal on the intermediate-range weapons was total elimination, zero, zero. Well, we gained half our point. Soviets agreed to zero for us, but not zero for them. But we're going to continue. Incidentally, I want you to know also that SDI and the research that's going forward is not just aimed at strategic weapons such as a protection for ourselves. It is, would be very definitely a factor with regard to those SS-20s, those Soviet intermediate-range weapons for protection of the Allies. Yes, Mr. President, we are going to have very soon in Italy local elections. And the Communist Party has said that if it should win those local election, it would give them a political national meaning, and they would want to be in charge of the government, to put the crisis on the Cragsie government and had a new government headed by communists. How would you feel about that? We were talking about NATO and all of this. How would you feel about the communists taking the leadership in Italy? Well, if you look at any country in the world that is run by a communist government, you see that the people are denied all the democratic rights that we and our societies have come to believe our democracy and all the rights of the people. I can't quite believe that the Italian people with their love of independence and freedom would settle for what the communist government would mean to them and would take away from them. So I hope it doesn't happen. But if it does, from what I know of your people, I would think the communists might get a rude surprise when they started to implement their ideology. And just one second about Europe, Mr. President. It seems that Europe is the balance. You have asked Europe to take responsibility on the economic side and it's also a quite balanced point of equilibrium from the political side. How strong do you feel that Europe should be united politically and how do you feel about a unified European monetary system to balance the general equilibrium? Oh, I don't know the way. I want to get into things that are purely... But just your opinion. Yes, between those countries. But it seems to me that, as you so graciously said about the alliance and its closeness now, it seems to me that there is a greater bond, certainly in Western Europe, which is all we can talk about, a bond between the countries that I can remember in my rather long lifetime, a friendship, and now with the Congress that I will be addressing there that represents all the countries of Europe, elected directly by all the people of Europe and the European community, all of these things I think are great, represent great progress. And the monetary system? Now, you're suggesting a single monetary... European monetary system. European... I don't... I just don't feel that I could comment on that. I haven't done any study on my own of what that could mean or what the problems might be. I just hesitate to comment. Well, let me follow up my question on trade. Do you think that Bonsamit would be able to set early 1986 as a target for starting new rounds of multilateral trade talks? Well, that's what we're going to ask for, is that the trade round begin early in 1986. And I have a feeling that we're not going to be alone in that. I think there are others that want to see another trade round. So I'm hopeful that'll be an outcome of this summit. Are you really optimistic about this outcome? Well, so far, everything has shown progress. There haven't been very many setbacks in the sense of countries adopting more protectionist measures. My own feeling is that protectionism just leads to a restraint in trade and a lowering of prosperity for everyone involved. And I know in our own great depression back in the early 30s, I believe that depression was worsened and was maintained over a longer period of time than need be because our country turned to a thing called the smooth holly tariff. And I think that was a great factor in our decline. So I just know I think that all the signs, maybe the progress hasn't been as fast as we'd all like, but it has been progress. Just on that same point, Mr. President, if there is no agreement for a 1986 start to the GATT round, is it your feeling that another smooth holly can service quickly and it will be beyond your control? Is that what you're saying to the world? No, really, because I know that there are factions in our own country as there are in every country who want protectionism. But I think the progress we've made so far and the economic recovery we're having, I believe we can defeat those protectionist factions. Now what could happen if others suddenly adopted protectionism and strengthened the hand thereby of those people in our own country? I don't know, but I don't see any threat of that right now. The less developed countries, of course, aren't at the table in bond. They have a special interest in what takes place. Of course, there are debt problems we all know about. Will you be pushing your fellow summiteers to perhaps drop their own protectionist policies with regard to the Third World? Textiles comes to mind, sugar quotas? I think it could help those countries. We've all expressed a desire to help the lesser developed countries and too much at the time that has taken the form of just economic aid, handouts. I think that we should be directing ourselves more to helping them help themselves. And in that connection, I have to say our own country, this country, has purchased more of the production, particularly manufactured goods, of the lesser developed countries than all the rest of the world put together. And I don't think it's hurt us. Our recovery continues. But your Caribbean initiative, for example, explicitly excludes textiles. Why not include it? We have had a set up on textiles with regard to growth because, and this I think every country agrees on, that here and there, when an industry is faced with a crisis, a temporary situation to help rather than let them go down to destruction, yes, we've all done that and we have done it. We have a steel program in our country that is only invoked in the event of unfair competition first, but also if it is leading to a disaster and then we have temporarily invoked some regulations to help them get on their feet again. Mr. President, when Mr. Gorbachev took over as Soviet leader, Mr. Shultz greeted the event as a moment of opportunity for an across-the-board improvement in relations. Do you think that the killing of the U.S. major in East Germany and Mr. Gorbachev's latest accusations about the Geneva negotiations mean that we're now in for another rough period of East-West relations? Well, I think it was in keeping with what has been the Soviet attitude and other things of that kind, including the shooting down of the Korean airliner. We certainly, out in the Western world, I don't think can quite understand that kind of attitude. I think they missed a great opportunity to achieve some stature in the world by not admitting that this was a most regrettable thing, a tragic thing and extending an apology to the widow and child of the major and, yes, offering some compensation. Mr. President, this has been announced from Moscow that Mr. Gorbachev will come to New York for the United Nations session next September. Could you tell us today if you would meet him at the time? I'd be very willing to. I've expressed the belief that we should have a meeting and his letter to me acknowledged that and said that he felt the same way. Now, I don't know what his schedule he will be coming here for the United Nations, whatever it is. If that should be the time, I certainly could arrange mine to accommodate and have that meeting. And one of the reasons why I think such a meeting should take place is I've always believed that people get in trouble when they're talking about each other to each other. What? What will you tell him when he comes? Well, I think, I think that when we meet there should be some open discussion about some of these differences, some of the things that cause us all to be suspicious of each other and see if we can't get some things out in the open on the table so that we understand each other better. Thank you very much, Mr. President, granting us this interview. Please allow me this last question. With Germans' hope, your heart is not too heavy after all these misunderstandings regarding your visit. Forty years after the Second World War, what message would you have for the people of the Federal Republic? The message that I would have for them, and particularly in this anniversary situation that is coming up, is one of recognition that for 40 years we have been friends. The summit meeting consists of the heads of state of countries that were 40 years ago bitter enemies. We're friends. We have been at peace. I would extend my own admiration for the democracy that the people of Germany...