 Mr. President, as a group of correspondents from the countries represented at the London summit, we thank you for sharing this time with us. I'm Martin Bell of the BBC and with me are Craig Oliver of CTV of Canada, Edouard Loeuf of Entenda from France, Dieter Kronziker of ZDF from Germany, Giuseppe Lugato of Rye, Italian television and Yushiki Hidaka of NHK, Japanese television. Mr. President, it seems so often that these economic summits tend to get caught up in the crisis of the moment, which at this time is clearly the situation in the Gulf. I wonder if I could ask first, what sort of commitment are you looking for from your allies and friends on the Gulf, and how far are you willing to go if diplomacy fails to keep the oil flowing? Well, I made a statement once that I didn't believe that the Western world could see that area closed to traffic and a shutoff of the oil supply. It is far more important to the countries that some of you represent than it is to us because the bulk of our import now is coming from sources here in this hemisphere. But at the same time, now, we're staying in close consultation with representatives of your governments, and at the same time we are all staying in touch with the Gulf states. Now, the Gulf states have taken a position very firmly that they want to deal with the problem themselves. They do not want it to enlarge as it might and expand into more of a war if everyone else got involved. They've made it plain, however, as evident in the media right now that there is some help they need in the line of materiel weapons, and we have sent, we've answered their request with some, but I think that we have to stay, say, in that consultation and watching in the event that there should be a complete shutdown. However, if you look at the last few days, it appears that rather than getting worse, the situation has quieted somewhat. I don't believe there have been any attacks to speak of in the last several days, so maybe it's going to turn out all right. Mr. President, at the beginning of the Second World War in the Middle East, United States Admiral sent home a now-famous telegram. He was confused and said, please advise, who is the enemy? And I think that a lot of people here in Washington are asking the same things at this moment. Who is the enemy in the Gulf, Iran or Iraq? Well, let's look at it this way. Iraq did confine its raids, its attacks, on shipping that was vital to Iran's economy. And Iran, when it responded, however, did not respond against Iraq. It attacked ships that belonged to neutral nations that were getting oil and doing business with countries like Saudi Arabia and Kuwait and so forth. And you had to say, what was on Iran's mind? I think we've always recognized that in a time of war, the enemy's commerce and trade is a fair target if you can hurt them economically. So in that sense, Iraq had not gone beyond bounds as Iran had done. And now, even though Iraq, we must admit, is the one who started the war four years ago, Iraq now has made overtures to have a negotiated settlement and end the war, and Iran has refused to do this. So Iran is in more or less the position of demanding unconditional victory. If there was any way that any of the rest of us could by appeal bring an end to that fighting, I'm sure we would all do it because it's a tremendous and horrible bloodletting that is going on. And Iran, as I say, is the one now who seems to resist any effort short of a total victory ending that war. Mr. President, last month, George Schulz said that France is your best ally in Europe. Do you think so before the London summit? Well, I think there's a little language difficulty there in that what the Secretary of State actually said was, we have no better ally than France, meaning that the other allies are equally good. But there is no one that we would think of as a greater ally and certainly no one longer as an ally than France. And as I say, I think it was a language difficulty that made it come out best. And that would be rather unfair of us. Mr. President, many Europeans consider the American attitude versus the Soviet Union is too uncompromising. They fear that the smaller communist satellite states in Eastern Europe might lose the little amount of leeway and liberties they have, especially we West Germans fear damage to the relationship to Eastern Germany. Could you elaborate on that? Yes, I can. And I don't know why it is that it's always the other fellow, never the Soviet Union. Now, we offered a treaty to the Soviet Union to totally eliminate intermediate-range nuclear weapons in Europe. At that time, they had about 800 warheads targeted on Europe, not on the United States. And in 1979, NATO allies asked us to provide the weapons which we could, the Pershing IIs and so forth, and cruise missiles, a combination as a deterrent to the SS20s of the Soviet Union, each with its three warheads. And my predecessor, the government at that time in this country, agreed. So I inherited this program that was underway with us building and testing the weapons to go there, and we came to deployment. Well, the Soviet Union, when I said, zero, zero, there'll be no deployment of these weapons if you will agree to eliminate yours. And they refused. So we said, all right, if you won't go for zero, zero now, we'll hope that in the future you will see the wisdom of it. But if not, we're willing to sit down and negotiate a reduction in numbers that would be fair to both sides. And they walked away from the table on the basis of our deployment. At first, they did make an answer. They would reduce the number of their missiles, but we would have to have zero. In other words, they bought half my proposal of zero, zero. We'd be zero, and they'd have, well, as it stands now, about 1,350 warheads targeted on Europe. They continued adding those warheads, those missiles, all the time we were talking at the negotiating table about reductions. They were continuing to increase. Well, now the Economist magazine has an article called May Hibernation, and it suggests that the Soviet Union right now maybe doesn't have any answers, so the bear has just decided to hibernate, hunker down in the cave and not say anything. But we don't feel that we're at fault in these relations. They left the table. They left the start talks, which were based on the overall nuclear. We have repeatedly told them how flexible we're willing to be. We have recognized some of the points they made that they thought our first proposal did not meet some of their problems, and we said, all right, that's what those problems are and we'll meet. But I have to believe that, first of all, there is no great risk in this silence on their part. I think they're unhappy because we have refurbished our military after unilaterally disarming over the years, hoping that they would then follow suit, and they didn't. They continued the biggest build-up possible. We're ready, and as a matter of fact, we are having negotiations with them very quietly and on a number of subjects that are of interest to them. We have told them that we're willing to talk on those particular matters and those talks are going forward, and there's some productivity in them. But when I'm accused every once in a while of being guilty of harsh rhetoric, the other day we had a very moving ceremony in the burial of our unknown soldier, and I thought it was going a little far when the Soviet Union publicly referred to that as a militaristic orgy that we were engaged in. I don't know just how you could get that out of a ceremony for a young man whose name will forever be known only to God, but who gave his life in the service of his country, and we decided to bury him at Arlington Cemetery. So I think it's time for the world to begin asking the Soviet Union, when are they going to move? When are they going to make some proposal? Now, we're dealing with them at Stockholm in those meetings. We're dealing with them and with our NATO allies in the Vienna talks on the conventional forces and they just stubbornly refused to talk the nuclear weapons. That shouldn't surprise us. Our effort to get them engaged in nuclear talks, weapon talks, is I think the 20th since World War II ended, and the closest they ever came to a successful agreement. Well, there was the anti-ballistic missile treaty, but remember the significance of that. We were trying to get such a treaty for some time and they refused, and then one day our Congress voted an appropriation of money for us to research and build an anti-ballistic missile, and the Soviet Union suddenly volunteered to sit down and discuss a treaty banning the weapon. I think it's their move, but we'll be ready if there's anything we can do. We're not going to offer them some great concession as a reward for walking away from the tables. Mr. President, the uneasy alliance is something that we have been hearing for several years. It's a sort of complaint, if you want, of the European, of American complaint of the European ally. Now there is a concern in Europe about the so-called shift between the Atlantic to the Pacific. What's your reaction, sir, out of your comment? Oh, that's very easy. Let me just say that last night in this same room we're in, we had a very enjoyable dinner with the 16 foreign ministers of the 16 alliance nations. I don't believe that relationship has ever been closer or better or stronger than it is right now. No concern about that. At the same time, the United States, placed here as we are on the Western Hemisphere, we have always been a Pacific nation in that we're on the rim of the Pacific basin. And we see no diminution in our closeness to the European alliance, but at the same time we recognize that we have friends and allies on the other side of the Pacific and we're just as concerned about pardon me, about keeping that relationship and enhancing it to keep peace and friendly bonds in that part of the world. So Japan is one of our close friends and allies and certainly is a close friend and ally of the alliance in Europe. And I think the trip that we made to the People's Republic was a very fruitful one. The ASEAN nations to the south in Southeast Asia who are concerned there about maintaining peace and having an alliance among themselves and getting obtaining a settlement to the Kampuchea problem. No, I think that we fought a war two-handed in the east and the west and certainly we can we could be peaceful neighbors and friends in the same way. In Japan also the shift of strategy is quite well well-count and the people like it. Here I'd like to ask you about the trade matter. I think you are surrounded by a very strong protectionism in the Congress and the Japanese realize that and try the best effort to open the market. I'd like to have your assessment on Japanese effort to open the market and in connection with that do you want Japan should continue self-imposed restriction of automobile import in this country after next year? I'm glad that you said what it was because here in the treatment of our own press they've without really deliberately misstating they've given an impression to the people of this country that this was something we imposed on you that we asked for the quota on automobile imports and it's a good opportunity for me to reiterate what you said that this was Japan's voluntary move when our automobile industry was as hard hit with the great recession as it was and you were selling a product that we could not match price-wise. It was Japan that voluntarily agreed to limit the number of automobiles they would sell in this market. Now the renewal of that or if there is to be a renewal isn't due for some months yet and that is strictly up to Japan and what they decide to do but on the general trade matters. I have to say that Prime Minister Nakasone has just been a tower of strength in his belief in trade relations between our two countries improving them making them more fair wherever there is an unfairness and great progress has been made just previous to this last trip as you know I was in Japan and met with him and since then our other or our cabinet ministers Secretary Regan and others have and he and the cabinet in Japan have worked with our people to bring about correction of some things that were unfair and we've made greater progress I believe than has been made in the last quarter of a century as trading partners and we're most appreciative of that fact. Mr. President that would seem to lead naturally into a question about the London summit with your bound we would expect the Americans to come under some pressure there on account of rising interest rates and budget deficits is there a message that you're carrying to London? Yes I'd like to point out to them when I get there that if you go by deficits as a percentage of gross national product we're not too out of line with our deficits with the deficits of our allies there in the summit they too have deficits not all of them but well I think possibly all of them do but not to the same extent the deficit and we're working hard the message I will bring is that we now have the House and the Senate in a conference committee working out their differences on what I had asked for earlier a down payment on the deficit of $150 billion or so over the next three years I think we're going to have that and it's just various details that have to be worked out they would agree to then I will also be able to convey that I want a balanced budget I'm trying to get a balanced budget amendment to our Constitution I'm trying to get also the right of line item veto this old political custom of attaching a spending bill of some kind that is lacking in merit to a good piece of legislation and then because you want the good legislation you pass the bad also as governor of California I had line item veto I could intercept and veto out of that good bill that amendment then the congress or the legislature if it had the power by a two-thirds majority could override my veto well in eight years I vetoed 943 times without ever being overridden because once they have to vote for that bad bill all by itself without it being hidden by this other legislation they decide not to do that along with the same thing here but also once we get the down payment beginning next year all we will begin implementing some 2400 and I believe it's 78 recommendations that were made to us by a citizens group more than 2000 of the business leaders of our country voluntarily came together and at our invitation went into every area of government and came back with these thousands of recommendations as to how modern business practices could be put to work to make government more efficient more effective and the and the savings are astronomical if this is done now some of those we've managed to put into operation by my executive order most of them would undoubtedly result in changes that would require legislation the congress but we're pursuing that we have a study group right now combing those and framing legislation to bring those so we're going to go to work in the deficits but the other part of my message will be I don't believe the deficits have anything to do with our high interest rates because at the very time that we were bringing the interest rates that we inherited from the previous administration down from 21 and a half percent and bringing them down to half that level at the same time the deficit was going up now how could there be how could that be and now there'd be a connection with the lower interest rates we've already achieved that somehow the deficit is responsible for those the responsibility for those is one and one only the money market out there is not yet convinced that we have control of inflation we've had about eight recessions since world war two and every time they've seen government kind of turn to a quick fix and inflation go up some more the world has been in the longest period of sustained worldwide inflation in the world's history well for the last two years from inflation being 12.4 percent we have had inflation that is less than four percent and in the first quarter of this year it is less than four percent we believe we have inflation under control we're determined to keep it under control i think once the congress passes this other legislation on about the deficit and so forth and they see that we're not going to turn to flooding the market with money and the quick fix idea i think the marketplace will be more reasonable and we will see a decline in interest rates there may be a little flurry of a point or something here and there while this is going on but i think that's based on an economic lesson i learned when i was getting my own degree in economics there is nothing so timid as a million dollars mr president your ambassador in Ottawa is a pretty outspoken fellow mr paul robinson and he's been outspoken lately saying criticizing canada's level of defense spending saying canada's not living up to its nato responsibilities and also saying that the departing truto government has treated us investors very badly are these mr robinson's own views or are they the views of your administration and you well i've just heard these for the first time so they must be his own views i know it is true that recently your country has done what a number of members of our congress would do to us if they could get away with it and that is reduce deficit spending if there's any opportunity to reduce spending they'll reduce deficit spending rather than anything else i mean defense spending sir or deficit do what i say you say deficit oh i've been saying deficit so much defense spending i'm sorry defense spending yes and uh well we've we've had discussions and in the summit and probably we'll see more about uh some of the differences in our approach to outside investment but we'll deal with them at the summit so you don't think the truto government has treated investment badly from the us uh well you don't want me to get get me into a fight with our ambassador do you let me just say that uh there are some differences uh different views about uh international investment between our two countries but uh with all of that you still remain uh our primary trading partner and you still remain i think as a friend as a nation can have mr president i see that regretfully our time is up they're making signals at me but uh i want to thank you for covering so much ground well i'm very pleased and sorry that we couldn't go around again here i'm i i've been running behind all day here and with tomorrow being getaway day i i guess i better listen to those who are trying to shut us off let us at least wish you a safe and successful journey to europe well thank you thank you very much thank you