(00:00:09) Good afternoon. Ladies and gentlemen, (00:00:15) my name is Dick McFarland and I'm chairman of inter-regional Financial Group and it is a real pleasure to welcome all of you to Minnesota meeting today. We also extend a welcome to the radio audience throughout the Upper Midwest who are hearing this program on Minnesota public radio's midday program broadcast of Minnesota meeting are made possible by the law firm of Oppenheimer wolf and Donnelly Minnesota meeting is a public affairs Forum which brings National and international speakers to Minnesota members of Minnesota meeting represent the community leaders from corporations government Academia and the professions Minnesota meeting is pleased to present today's speaker Thomas Niles US ambassador to the European Community Ambassador Niles will discuss what the administration sees is Europe's political economic and Military role in world affairs as concern shift from containing communism to the crisis in the Persian Gulf and are elsewhere before accepting the European Community Ambassador ship in July of 1989 Ambassador Niles served four years as ambassador to Canada. His previous assignments were in Moscow Belgium and Yugoslavia following his presentations questions will be addressed from the audience Jane meris epic and Ken darling of Minnesota meeting will move among you to manage the question and answer session. It is now my pleasure to present to you Ambassador Thomas Niles. Thank you very much. Pleased to be back at the Minnesota meeting. I was here talking with Christine to wit trying to remember exactly what it was. I think in 1987 to talk with you about my previous assignment, which is was mentioned was as the United States ambassador to Canada. We were in the process then of negotiating with the Canadians the Free Trade Agreement, (00:02:21) which is now happily in (00:02:24) effect and (00:02:27) building if you will a new kind of a (00:02:29) relationship between the United States and Canada are our (00:02:33) single leading trading partner good neighbor friend security partner (00:02:39) and interestingly enough in my current capacity as United States Ambassador representative to the European community in Brussels. I find myself participating in somewhat (00:02:50) similar event or similar process (00:02:54) the United. (00:02:56) Negotiating with a new institution a relatively new institution the European Community to construct a new kind of a partnership, which will I think be an important part of our efforts to ensure that the post-cold war world is the kind of world that we want it to be a peaceful world in which countries are able to work together to deal with and to resolve some of the great problems that we face in the trade area environmental area and dealing with problems of disease and poverty and hunger around the (00:03:36) world. European Community (00:03:40) as we know is in a process of change. It is developing rapidly moving along the path toward integration exactly how fast and how far the community will move as of course subject to negotiations between the 12 member states, but our assessment the assessment of the Bush Administration is that the process of European integration will continue (00:04:12) And that the (00:04:14) integrated European Community more integrated European Community will in the future be a good partner for the United States in dealing with some of the problems. I mentioned the current crisis in the Persian Gulf is a good example to (00:04:33) discuss a bit today (00:04:35) because it highlights both some of the strengths and some of the weaknesses or if you will unfinished business of the European Community some of the ways in which the community if it is to be the power that its members wanted to be some of the ways in which the European Community will probably have to develop in the years ahead. So let's take a look back at the events. As far as the European Community is concerned since the 2nd of August to see how the community responded and (00:05:05) how it (00:05:06) failed in some respects in the eyes, even of the members of the community to (00:05:10) live up to its responsibilities and what the consequences of that might be for the United States and for the community if we recall the Iraqi Invasion and occupation of Kuwait was met with universal near Universal condemnation including of course from the European Community the European members meeting in the European political cooperation format European foreign ministers condemned the occupation the European country members of the United Nations security Council (00:05:46) France and Britain joined with us in New (00:05:48) York in pushing through the series of resolutions increasingly strong resolutions condemning the rest of the Iraqi Invasion and occupation of Kuwait and establishing this firm (00:06:01) International response to Saddam Hussein's Of that country, (00:06:07) but in terms of the military response to the events the European Community was unable to act as a community because it has no military structure and there is General recognition today in Europe. If you talk to Europeans that had President Bush not acted as he did forcefully and quickly to respond to the Iraqi Invasion that Europe would not have been able to respond and I think that is a cause today in Europe for considerable concern as we recall (00:06:41) after the president announced that he was (00:06:43) sending the 82nd Airborne and important Aviation units to Saudi Arabia at the request of King fahd the European governments led by the United Kingdom subsequently, France Italy other members of the European Community sent military units of their own they consulted among themselves in the Western European. (00:07:06) And (00:07:06) set up informal coordinating structures in the Persian Gulf meeting with us (00:07:12) and in the (00:07:13) country of Bahrain to coordinate our activities in that region, but the European response was somewhat (00:07:22) hesitant at the beginning and (00:07:24) the fact that the European Community was unable to act as a unit as a political body to respond to a crisis which very obviously had tremendous implications for Europe is a matter of great concern to the Europeans. I think one of the consequences of the gulf crisis and the European assessment of the crisis will be more rapid movement toward the creation somehow. Of a new institutional framework in Europe, which will enable the European Community when the next Crisis comes which it probably will to respond in a more expeditious and a more coordinated way as the European Community. I think we'll see that the intergovernmental conference on political union and institutional reform, which the European Community will begin in Rome on the 15th of December will lead to some significant moves to strengthen the capacity of the community to respond to Future crises of this kind in talking about the shortcomings, which I think have been well (00:08:31) recognized by the Europeans themselves. I don't want to give the impression that we run dissatisfied in any way with the (00:08:37) way in which the European Community its member states have responded to the crisis in the Gulf. If you look at the military posture that the European member states have taken it is indeed impressive and they are continuing to send units the The French particularly, but other countries as well sending units to the region joining with the United States in supporting the United Nations resolutions and ensuring that in the end Saddam Hussein will have to leave Kuwait and give up his efforts to Annex that country European Community is also responded very actively and very positively to President Bush's request that countries joined together to assist in the economic problems of the Frontline countries, which arise from the events in Kuwait here. We think primarily of Egypt Jordan and turkey countries, which have been called upon because of the UN embargo on trade with Iraq to Bear a very heavy burden economic burden and the European Community countries, and the commission itself will be putting up now 1.5 billion ECU European currency. Approximately two billion dollars in assistance between now and the end of 1991 to those three countries and the community as an institution is also talking about assistance to other countries that have been particularly seriously affected by the crisis here. We talk of the North African countries, particularly Morocco and perhaps Tunisia also the Eastern European countries. And then in the in Asia countries such as Bangladesh Pakistan and Sri Lanka, which had large numbers of their Nationals working in the countries affected in Kuwait and Iraq and which are suffering is a consequence of the occupation by Iraq. So the European Community response both ultimately in terms of the military posture and in terms of the economic assistance to the region has been very encouraging and a very positive one and indicates I believe. That the United States has in the European Community a partner with which we can work (00:10:58) in in the (00:10:59) future which as we are as we are doing today as you may recall in a speech in Berlin in December of 1989 secretary Baker propose that we develop a new relationship with the European community and we have moved very expeditiously during the this year during 1992 put secretary Baker's proposals into effect into action. (00:11:23) We've intensified (00:11:24) the consultative process between the United States and the community so that now President Bush will be meeting on a semi-annual basis with the president of the European Council first six months of this year prime minister Holly of Ireland this six months prime minister andreotti of Italy. He'll also be meeting with President de lure of the European community and in a rather unique meeting, he will be receiving both those And prime minister andreotti and president DeLorean, Washington on the 12th of November. (00:11:56) We hope at that time to be in a (00:11:57) position to sign with the European community and Declaration of intent or common purpose which will put the United States and the European communities common interests down on paper and serve perhaps as the bridge or a stepping stone toward an eventual treaty relationship between the United States and the European Community secretary Baker talked in his Berlin speech about the possibility that at some point as a result of the further integration of Europe United States in the community would be able to sign a treaty perhaps in some respects replacing the existing treaties of friendship Commerce and navigation that we have with 11 of the 12 member states this of course is something for the future and will depend upon the success and the speed with which the European Community moves ahead to complete the process of integration political integration. Perhaps taking on ultimately a It's personality or a defense role economic integration. And here we talk primarily about the proposals to create a single European Central Bank and a single European currency in both these areas suspect that the 90s will see very significant developments. I doubt personally that on the first of January 1993 agreement will be reached to move ahead with a single Central Bank in a single European currency. Although I think there will be progress made toward that objective but I do believe that during the 1990s. We will see the establishment of that singles European Central Bank and the establishment of a single European currency. Now, whether that currency will circulate in parallel with on the the existing European currencies or replace and supersede them is something which will of course have to be negotiated, but it seems to me that all of the countries of Europe and that includes some that have expressed reservations about the proposals for Mike and monetary union now agree that the single Market of Europe which is well on its way to Creation will not be complete without one currency. And of course if we think about our own single Market here in North America the United States Market, I (00:14:14) think how difficult it would be to do (00:14:15) business if there were a (00:14:17) Minnesota dollar and a North Dakota (00:14:20) Frank and another 48 currencies around the United States in which we have to change our own money when we did business across state borders the existence of a single currency in the United States the dollar and the existence or the non-existence. I should say of non-tariff barriers to the movement of goods service people and capital throughout. The United States has been the essential element of the creation of our federal union in the strength of our economy and our European Partners in a sense are looking for the same type of an arrangement in Europe. They are if you want to look back at u.s. Constitutional experience, they're looking for their version of the interstate commerce clause and if you think about the (00:15:05) chaos that reigned in the United States or the infant country from (00:15:10) 1783 to 1789 During the period of the Articles of Confederation when each state the original 13 colonies erected tariff and other non and non-tariff barriers against goods from the other states. You can imagine the what the lack of the interstate commerce clause would have met or meant for the United States at that time and the importance of that clause in creating our federal union. So our European friends are well along the way to establishing their version of that Clause the economic and monetary Union in a way should be the final act in the establishment of this sort of same sort of economic structure in in Western Europe. We will have their for a partner in Europe with the existing Membership of 12 countries 342 million strong gross domestic product in the range of four point five four point seven trillion dollars roughly equivalent with our own partner with which we if we're successful in our negotiations bilaterally and multilaterally will be able to work very effectively together and maintaining and strengthening the international trading payment system here. I referring particularly to the Uruguay round negotiations in which the United States and the European Community are indeed the largest most important participants. And where if we are successful in these negotiations concluding the 7th of December in Brussels, we will lay the foundation for a I think a period of great Prosperity during the 1990s conversely. Of course, if we fail in this great Venture, we will not only give up the advantages we would have otherwise gain, but we will create great deal of Doubt around the world regarding the sanctity of the system or the in A greedy if you will of the trading system probably accelerate the growth of somewhat antagonistic blocks of Trading Group trading nations around the world here in North America Western Europe, Japan as being the centers of trading blocks, which would not have the benefit of the GATT system perhaps at least as strong against system as we need to take care of the problems which inevitably arise between them. So we have a lot of very very important issues at stake as we look at our relationship with the European Community today. We have a economic relationship which is of crucial importance to the United States western Europe is our largest trading partner taking roughly 25 percent of our exports. It is 11 of the 12 members of the community are Partners in NATO and as I suggested earlier, we have a Expectation that in time the European Community will and establish its own defense structure as part of the Atlantic Alliance within the NATO alliance and will thereby become a more effective partner with the United States and dealing with the regional crises that we see around the world or will likely see around the world. It's true as was suggested in the introduction that the focal points of US security concerns are changing. We are no longer concerned as we were for many years with the threat from the Soviet Union and the Warsaw Pact Soviet Union is going through a period of extraordinary change in the Warsaw Pact appears to be in the process of disillusion. The member states from Eastern Europe are all hastening to leave the Warsaw Pact structure. Some of them have even expressed an interest in joining NATO quite an extraordinary State of Affairs. Of course, the most extraordinary event, perhaps at the post-war era occurred on the 3rd of October when the two German states came together thus in a way Very real way signifying the end of the division of Europe. We have an extraordinarily positive situation developing between the United States and the Soviet Union the cooperation in the Persian Gulf crisis is but one example of the things we believe will be able to accomplish in this new atmosphere. We see that talks that took place in New York on Tuesday and Wednesday this week between secretary Baker and foreign minister shevardnadze opening the way toward really extraordinary reductions in military forces in Europe at no loss of security for any of the partners creating a new spirit. If you will of cooperation within the within the European continent all of this to be Sanctified and to be put down and pave on paper when President Bush Meats with the other 34 heads of state and (00:19:39) government from the (00:19:40) conference on European security and cooperation in Paris on the 19th of November, so we have an extraordinary Set of developments here centering on Europe opening up the prospect that the United States with particularly our European allies. And with the Soviet Union will be able to work effectively to manage and to maintain Security in the world. But of course much depends as we all know upon the outcome of the current crisis in the Persian Gulf and personally optimistic that when the dust settles we will be able to look back on that first. Great test of the post-cold War era as a success for the policy that the president has embarked upon and success not only for the United States, but for our partners in Western Europe and our Soviet Partners as well. Let me stop there and I'll be delighted to respond to questions comments (00:20:38) criticism. Thank you Ambassador Niles. We can start here with a question from Andy Lindblom. Lindbergh, thanks. Ambassador I'm sure you need a lot of questions on Iraq. The single Market Soviet Union was wondering if you could give me a little post-mortem on the US Canada Free Trade Agreement in which you're very involved in setting out. Is it is it a success? Is it causing an up people in Canada? And what we see Mexico is a part of that in few years down the line. (00:21:13) Well, I was (00:21:14) I left Ottawa on the third at 29th of June last year in the free trade agreement was that time six months old and it seemed to me that it was functioning. Well, although there were still there are still those in Canada the new NDP government in Ontario. For example, who continue to pose the Free Trade Agreement. I think it is being generally accepted by Canadians as good for Canada not without its problems but a positive positive factor in in in in Canada now. Certainly in the United States as far as I can tell the United States business community and labor of welcome. The Free Trade Agreement are taking advantage of these. I hope they are and ran. I don't think I know the Free Trade Agreement was never a (00:22:05) controversial in the United States certainly not to the (00:22:08) extent. It was was in perhaps remains in Canada, but that's quite understandable. If you think about the sensitivity that (00:22:15) Canadians feel next door to a much larger (00:22:18) country. I never found it odd that Canadians considered the Free Trade Agreement some Canadians considered the Free Trade Agreement to be a not a threat but but something that they looked at with a certain amount of skepticism because of the history of US Canada relations in the history of free trade in that relationship. One thing I like to keep point out to audiences in the United States actually audiences in Canada to because most of them were not aware of this was that the free trade agreement that President Reagan and prime minister Mulroney assigned into action or into being on the first of January 1989 was the fifth such agreement that we concluded with Canada over our have concluded with Canada over the period from 1854 onward. So it's been a long time in coming as far as Mexico is concerned. Obviously. We hope to be able to negotiate a similar agreement with Mexico. And Canada is obviously showing quite a bit of interest in that negotiation and I guess Ambassador Hills and Minister Crosby will be meeting with their Mexican counterpart at some point and early in 1991 decision will be reached as to whether we'll be talking about a tripartite negotiation or whether the United States and Mexico will negotiate an agreement and then Canada might come along and do a separate agreement with Mexico. Trade with Mexico of course is much less important as a relative in an absolute thing for Canada than it is for the United States and the Canadian interest in the u.s. Mexico relationship is in part (00:23:56) a function of the importance of the automobile industry and the (00:24:00) Canadians are understandably interested in what (00:24:03) happens to the maquiladora (00:24:06) facilities on the Mexican (00:24:08) US Border in terms of the automobile (00:24:10) industry in North America. (00:24:13) Thank you Ambassador Niles. We have a question from Louis Gibson. Yes. Thank you. I'd like to ask you clarification of something. I'm not sure I understood if I did it scares me to death you suggested that the eec would develop an integrated organized military that Germany just became United Country and your that's very scary Prospect to me. (00:24:43) Well, you know in (00:24:44) 1954 the (00:24:47) European not community at that time, but the six original members of the European Community signed an agreement 1953 actually on the establishment of the European Defence Community EDC. And at European Defence Community was ultimately defeated it was accepted in five countries and defeated in France in the summer of 1954 and a vote in the National Assembly. So and we have to recognize that the question of European Defence cooperation is not something that just came on the screen as a result of the events in the Persian Gulf the EDC of 1954 envisaged a full integration of the Defense Forces of the six countries. And that I think was the major reason why the that time that the French National Assembly was prepared to was not prepared to go along with it. What I see happening in Europe are in within the European Community is not the In of the Defense Forces what I see happening in Europe is ultimately the establishment of some sort of a mechanism where the 12 members States the European Community can consult among themselves as a group on security defense issues. Now, I don't know when that's going to happen, but I think it should happen sometime during this decade. There's a great deal of discussion about it. I think that that will happen and I we certainly hope that that will happen or be realized in the context or in the framework of the NATO alliance what the Europeans are talking about is some way in which the European Community could become what has been called the European pillar of the NATO alliance and I don't find that particular Prospect frightening at all. I find that a very encouraging prospect that our European allies are prepared now particularly with the significant drawdown in the United States military presence in Europe, which we anticipate over the next couple of three years from a force level of now 317,000 to vary significantly. (00:26:42) Less than that (00:26:43) European community members are prepared to work among themselves to maintain with us the North Atlantic Alliance and to maintain Security in Europe. I will say that no one in Europe and that includes the Soviet Union is advocating the withdrawal total withdrawal of the United States military presence from Western Europe and at the end of the CFE negotiations, which the president hopes to sign the agreement in Paris on the 19th of November at the end of that process. So there will be a United States military presence in Europe, which will contribute to the stability of Europe and will be welcomed by our NATO allies and by the Central and Eastern European countries and Soviet Union alike, so I don't find this a frightening Prospect at all. I don't see the likelihood that the unified German state which will be reducing its own military forces. Very substantially would pose any sort of threat To stability in Europe or or or more widely. So I think we can look forward to the development of very Cooperative defense relationship towards the continuation really of a very Cooperative defense relationship with our European allies the format or the framework may change somewhat but the NATO alliance will remain (00:28:05) thank you Ambassador Niles, you're listening to the Minnesota meeting live on the station's of Minnesota Public Radio. We have a question here from Jack Borman. (00:28:14) With regards to the current level of our deficit with regards to the congress's (00:28:20) current reaction to the current plan for that deficit. Obviously the European Community must have an interest in how healthy we are as a trading partner and could you respond to their reaction to our current issues on the deficit in Congress? Well, I think the European Community recognizes that (00:28:43) the political process in the United States (00:28:45) will work its way through the deficit problem. (00:28:49) I don't think (00:28:50) they question the fact that President the Congress will work out this (00:28:56) current issue. I think (00:28:59) they have quite a bit of confidence in the United States as a (00:29:03) partner trading partner and is a defense partner. (00:29:06) They share the president's preoccupation with the budget deficit and certainly wish him well (00:29:11) in his efforts to to reduce it, but some of the European countries have (00:29:16) significant budget deficit problems themselves Italy has a budget deficit equal to 11 percent of its GDP. So no, I think the Italian government would (00:29:25) probably sympathize with some of the problems that we have in bringing our own deficit (00:29:28) down, but it's not the existence of the deficit and the fact that politics goes on in the United States as usual is not something that can. (00:29:35) Turns our allies in terms of the long-term role of (00:29:39) the United States as either a (00:29:40) security partner or as a trading partner. (00:29:45) Thank you very much Ambassador Niles. We have a question from dr. My mood Sadie from the University of Minnesota. Mr. Ambassador. I tend to agree with you your analysis that there has to be a central bank and be any currency given that there is now unified Germany and it needs a lot of internal energy is devoted to its own problems and given that there is some difficulty whether it should be Bank of England or the bun - by be responsible or the new bank the model either one or the other how optimistic are you that even in 93 you are likely to see not in January, but sometime in 93 there is likely to be Central Bank and a common currency if EC is going to be and truly economic integrated Community like the United States. (00:30:45) My own guess and it's nothing more than a guess. Is that on the first of January 19 1993. We will not see a single European Central Bank and a single currency at least not as it's currently been proposed what I think we will see before even before then is agreement to move step by step in that direction the real question in Europe today is not whether to have a single Central Bank and a single currency really, but when how fast do we move under what conditions do the Europeans move in that direction? They are now the European Community is now in what is called stage 1 of Economic and monetary Union stage 2 and stage 3 must ensue. The question is when to stage one end. And when do you move to stage two? And then when you move into stage three, how long will the transition periods be? And some questions have been raised you raised the question about Germany. The Germans obviously are a key participant in this process and the president of the bundesbank a carlotto pearl recently commented that he wouldn't be prepared to move ahead with a some single European Central Bank and a single currency unless he were convinced that this would be better for Germany than the existing system. So he's expressing a few reservations, but the commitment of Germany in principle to move ahead expressed by Chancellor Kohl and foreign minister against you and other members of the government, I think is solid. I think they will will move ahead the the question is how quickly how long will the transition period be from stage 1 to Stage 2 to stage 3 when it is finally set up I think the single European Central Bank will resemble the German bundesbank a much more than it resembles would resemble the bank the bank of England and this is particularly in the case of the And then so the bank from what would be considered political pressures and I think one of the recognized strengths if you will of the German bundesbank has been its independence from political pressures and the success of the bundesbank and managing the the German currency and in maintaining relatively low rates of inflation and high rates of economic or consistent rates of economic growth is seen in a way as being a Vindication or a support for the kind of structure that the bundesbank is and the kind of relationship that the bundesbank has to the political authorities in Germany. So my feeling is that when the single bank is set up it will be we will resemble the bundesbank much more than it would resemble any other existing possible pattern for a Central Bank in Europe. Now when that happens sometime later in the decade than perhaps 93 (00:33:42) Thank you. We have a question here from John wrap. (00:33:47) Do you think it's possible that the now strong United Germany (00:33:52) might eventually? (00:33:55) Become the dominant (00:33:56) factor in the European Community just as a strong Prussia became the dominant factor in the German tariff Union or sold for in the 19th century. And if so, do you think it's possible that that strong Germany might have sorb you European Community just as the strong Prussia absorbed the German states in 1870 (00:34:22) 71 (00:34:26) I don't think the historical analogy holds frankly. There was a several events that enabled Prussia to absorb the other German states notably the war against Austria in 1866 in the war against France and 1870. Of course the war against Denmark in 1864. So (00:34:50) I don't see that type of situation arising in Europe. The Federal Republic of Germany is today a very important perhaps the single most important force in the European Community certainly economically and the unified German State freed from the vestiges. If you will of the second war occupation status and division of the country will come to play a perhaps (00:35:18) equally important political role (00:35:20) in the European Community gradually, not immediately, but this will not be a dominant role in the sense of German control of the European Community. You will have situation I think in which there will be a good many. Three or four principal countries, but other countries which are very proud of their sovereignty and proud of their role in the community such as the Dutch and the belgians and so forth who will continue to (00:35:45) play important (00:35:45) roles in managing the Affairs of the European community. So I the idea of a Europe dominated by Germany, I see the word of course conjures up all sorts of negative images. I don't see that happening. I see for one thing. I see a different German the the Germany of 1990 is a different Germany than the Germany of the 1930s. Not just because the territories different it's part of (00:36:13) the German national experience. And Germany is so (00:36:16) integrated into Europe economically, politically and militarily that the possibility for Germany acting in a hostile (00:36:25) manner toward its (00:36:26) European partners and in domineering way I think is is really just not there. (00:36:31) So I think we can be pretty (00:36:32) optimistic. most extraordinary event really of the post-war era the unification of Germany the end of the division of Europe was achieved with not a shot being fired and And in conditions of stability and security for all concerned, it's a remarkable event and in a way a testament to the maturity of the German people and and the leaders of the Federal Republic of Germany Chancellor Kohl president of invite second primary and foreign minister denture. (00:37:04) Thank you very much Ambassador Niles. We have a question now from Georgia Pillsbury. Thank you. Mr. Ambassador. Do you see the European country adding other countries expanding into other countries on the continent and in addition if so, what countries would you see as the joining the community? (00:37:25) Well, that's a good question. The I think one of the marks of a successful organization or institution is that lots of people want to join or lots of others want to join up and that's certainly true of the European Community today. There's a long queue of countries that have applied for membership in the community (00:37:44) turkey Cyprus Malta and Austria and there are lots of others that are (00:37:50) considering it a Norway Sweden Finland and possibly even Switzerland at some point though. That's further down the road. And of (00:38:00) course the Eastern European (00:38:01) countries the Prime Minister. I heard the prime minister of Hungary prime minister Anne Tolley and Brussels say that they better get ready. Because in 1995 he was going to submit the application for Hungarian membership and the Polish government has said similar things. So there is a as I suggested a (00:38:18) certain pressure on the European Community to expand its ranks beyond the current 12. The (00:38:24) position of the community is that the question of enlargement has to be postponed until after the completion of the single (00:38:31) market. So on the 1st (00:38:33) of January 1993 presumably the issue of enlargement will be on the agenda again in a (00:38:39) direct and (00:38:42) pertinent way and the various applications will have to be taken up presumably seriatim if I had to guess and it's nothing more than a guess I'd say that the First new member (00:38:54) would be either Norway or Austria (00:38:58) Norway is not applied Norway was admitted to the community in 1972 and had a national referendum (00:39:04) and shock themselves. And I think shocked the World (00:39:06) by deciding not to join the European. Community by so I recall a (00:39:10) vote of 52 to 48 (00:39:13) membership in the community is still controversial in Norway in the opinion polls are mixed as to how the Norwegians feel but my own supposition is that between now and 1993 the Norwegians will decide once again to apply for membership and having already been accepted. Although they turned it down. I think they would be considered in a slightly different category. But Austria is also a very logical member Austria has most of its foreign trade with the European community and is linked culturally and otherwise with the member states Austria is also if you look at the map and important bridge between 2 and major community members Germany and Italy and in terms of the transportation links that bind the the Germans with their Italian Partners Austrian Corps Switzerland to (00:40:01) play a very important (00:40:02) role, I believe if I'm not mistaken that at the narrowest point Austria is 35 miles. Between Italy and and in southern Germany, it's a very important Communications (00:40:14) link. So there are all sorts of reasons (00:40:15) why Austrian membership in the European Community would make sense, logistically and of course economically culturally looking Beyond I think in the 1990s, you're likely to see other countries Sweden Finland as I mentioned possibly Switzerland put forward applications the efta countries the six members are seven members of the European Free Trade Agreement. Iceland Norway Sweden Finland, Austria and Switzerland (00:40:46) have (00:40:47) over the years conformed many of their domestic economic (00:40:52) regulations rules laws (00:40:54) except in the area of Agriculture to (00:40:57) the rules regulations and laws of the European community. So (00:41:00) Austrian membership, for example or Swedish Swedish membership the (00:41:05) exception of Agriculture, which is a very tough area (00:41:08) would not represent a major enlargement negotiation. Now agriculture is a tough issue to handle one hopes that in the wake of a successful Uruguay round negotiation both the European community and the efta countries, which have even worse agricultural policies than the European community that they will all begin to space out subsidy. So maybe agriculture would not represent such a big obstacle. If you will toward bringing other countries into the European community. So I would say that if we meet 10 years from (00:41:40) now, Talk about the European Community. We would probably be talking about a community with membership somewhere in the range of 18 to 20 (00:41:49) with Association agreements with the other countries of Eastern Europe and some sort of a Association agreement. Also with the Soviet (00:41:57) Union. This is my concept of the way and it's not the concept necessarily of everyone in the European Community. But I do believe that the pressures for expanding enlarging the community will prove irresistible after 1993. (00:42:14) Thank you Ambassador Niles, you're listening to the Minnesota meeting live on the station's of Minnesota Public Radio. I wanted to take just a quick second to acknowledge. We've got four special guest here today. And I think you should look out in front of you and bask your Niles. We have four students from an wotton junior high school. They're here is part of the business school partnership program and are being hosted by dick McFarland who's on the Minnesota meeting board of directors and the chairman of inter-regional Finance Banks, and I promise I won't come up and ask you to ask a question. We have a question here from Roger Parkinson. (00:42:45) Mr. Ambassador you speculated on the future of Germany in the next five years or so and also on the common market in the next five or ten years. I wonder if you'd speculate on the state of the Soviet Union and five years, its economy the relationship among the Soviet republics and its leadership. (00:43:06) well Dangerous Waters I I think what I'd prefer to do rather than speculate on see what happens you I think I'd like just (00:43:25) to pose a few of the questions that the Soviet leadership is going to have to deal with and then you can make your own judgments. (00:43:32) Obviously the new Union statute (00:43:35) that President Gorbachev has put forward as for negotiation with the Union Republic's is going to be a (00:43:43) crucially important document. I mean the success or failure that negotiations going to be very important for the (00:43:49) maintenance of the of the (00:43:52) Soviet Union in terms of its current territorial stat structure the (00:43:59) several member several of the Union Republic's notably those on the Baltic coast of indicated that they're not interested in having any part of this. But it was announced I think a couple of days ago by the present lunch marriages and prime minister Risha cough that the Soviet Union and Lithuania will begin negotiation. So (00:44:22) the future (00:44:23) relations between the Baltic states the incorporation of which we do not recognize into the Soviet Union have not since 1940 will not today do not today that relationship is yet to be negotiated. And of course the other republics I suppose by now each one of them have declared their sovereignty or Independence or versions there (00:44:46) of of the of the Soviet Union, (00:44:49) so it's going to be a difficult negotiation. But if you think about the development of the country that has taken place since 1917, (00:45:02) there will be considerations (00:45:05) economic in particular that will cause Union Republic's to want to maintain some sort of relationship as a group and the question is whether those interests will be sufficient to over way the centrifugal pressures of nationalism that we see and then it's obvious and in the Soviet Union today. So that's one one very important set of issues. The other issue are set of issues is the question of whether the Soviet economy. (00:45:35) We've heard a lot of discussion (00:45:38) about the various plans. They shuttling plan the Argonne began plan the Balkan risk of plan. (00:45:45) We've heard that they're all (00:45:47) going to be Amalgamated together. Although professor shuttling says that can't happen because his plan wouldn't work wouldn't fit with that of balking Andre scoff the Soviet Union obviously has some very very important decisions to make on the direction of the economy. The current economic system is not functioning. We see it for example in the A true tragedy of the fact that the best Harvest are the second best Harvest on the history in the history of the country (00:46:15) probably is not (00:46:17) going to be brought in satisfactorily because of (00:46:19) the breakdown and operations on the farm and (00:46:23) transportation Communications Links. At least that's what the papers say. Maybe this is all exaggerated but the economy is not functioning well and that's recognized and I think it's also recognize that some fundamental reforms have to be made there's obviously an interrelationship between the question of the Union statute the relationship between the central authorities in the 16 Union Republic's and economic reform. And one of the key elements of the shuttling plan is that it involves a very significant Devolution of political and economic Authority away from the center and Central planning is more or less wiped away to the union republics and perhaps even beyond the union Republic's to individual economic units. So that's another another question. The third question is well. (00:47:08) Third question is what about the political structure? (00:47:11) What kind of I mean we see a kind of an incipient Democratic structure developing in the Soviet Union elections that seem to be meaningful a parliament that begins to function. Is that process going to continue? Well, obviously, that's what we (00:47:26) hope very much hope will happen (00:47:29) and that for perhaps the second time in its history that (00:47:32) particular (00:47:33) unit whether we call it Russia or the Soviet Union for the second time in history will have (00:47:38) a genuine or begin to have a genuine democratic system that these are questions that are certainly (00:47:44) beyond my capacity (00:47:45) to answer and (00:47:47) think probably be on a capacity of anyone to answer today. (00:47:52) Thank you Ambassador Niles. We have another question from Matthew little Ambassador what do you see is the future relationships of the integrated European community and the emerging countries of Africa many of whom were former colonies of the countries in the European Community. (00:48:15) Well, the European Community is formed very close economic and political ties and particularly economic ties with the countries of Africa through the so-called low make invention and under the new law May Convention, which was signed in December of last year by the 67 member states of the conveyed the ACP African Caribbean and Pacific countries and the European Community a largest amount of assistance will be provided by the community to those countries. I think around sixteen billion dollars over the five-year period of the agreement now, The community also has very close trade relations with the the countries of Africa and the other ACP countries, which reflect as you suggest the former Colonial links that existed between the member states and many of those African African Caribbean Pacific countries. There is dissatisfaction among the ACP countries the African countries with the fact that the European community and the United States for that matter is are paying more attention, for example, or the nerve you more attention to the needs of Eastern Europe than they are to the needs of Africa and there's no question that the African economies off dependent upon one export coffee sugar such as where prices are very low those economies are in very serious shape very bad condition. So although Europe maintains a close and in some ways Cooperative relationship. With Africa there is on the part of the African countries a sense of unease as to whether the European Community will continue to dedicate sufficient resources to maintain Economic Development or least to maintain the existing level of economic activity in the African country. So it's a it's not an it's not an untroubled relationship today between between Europe and Africa. There's also a sense of fear in Europe over the population pressures not so much from black Africa, but from North Africa near as part of Africa, these are areas than the maghreb states where you have very very heavy population growth and great population, press movements in into Western Europe and you begin to sense some rather heavy elements of racism in some of the European countries attacks on immigrant communities. So it's a again it's a somewhat uneasy relationship today. (00:50:54) Thank you Ambassador, and I also have a question here from Angus (00:50:56) McDonald. He wants to texted my speech. (00:51:00) I know and you wouldn't give it to me. I'd be like to speak to the question of why we don't send some of our Armed Forces presently in Europe to the Middle East 1 & 2. I'm unclear in my thinking as to why after a certain period of time we should have any armed forces from the United States and Europe. It shouldn't they stand on their own (00:51:28) feet? Well, answer your question. Mr. McDonald. In fact, we have sent some military forces from Europe to the Middle East they are not all but some have come from the United States. It's a question of which units would perform best under the conditions in Saudi Arabia. Obviously the president and wanting to move quickly had to think about which units could be moved first and fastest and that was the 82nd Airborne hundred and first Airborne division's that's what we that's what the rapid deployment force is based on in some of the Marine units which are not stationed in Europe. It's not coincidental that the rapid deployment force is headquartered in Florida and I think MacDill Air Force Base because the units that are earmarked for deployment to events such as the Iraqi invasion of Kuwait are stationed here in the United States that notwithstanding we have sent some military units from Europe from the federal public. Germany to the Persian Gulf region, we have also taken some of the f-15s that were stationed in Germany and transferred them directly to the Royal Saudi Air Force. They were buying buying these aircraft. I think 24f 15 aircraft from some of the air bases in one in Germany and one in the Netherlands. So there have been some fairly significant transfers out of the European theater into into the Persian Gulf. Now your second question is why we would maintain forces in Europe after the conclusion of Arms Control agreements. I think there are two reasons for that one history experiences of the 20th century suggest that us has very important security interests in Europe. We've demonstrated that twice this this century and in the post-war period by maintaining large forces there and think we've we've expressed in doing that the view that our security Ready for perimeter for many many years didn't run along the Atlantic coast, but we ran along the elbe river and that Europe should Europe's security and our security were indivisible. We feel that even in a post CFE conference on forces in Europe agreement, which will result in significant reductions in the level of station forces in Europe u.s. Soviet others that we need to find some way in which this (00:54:00) security (00:54:02) partnership between the United States and Western Europe can be expressed in the presence of a u.s. Force although much smaller than the current force in Europe is one way to do (00:54:11) that. And so I and (00:54:13) the other the other consideration which is not shouldn't be decisive but I think is important is that our European allies the Eastern European countries and the Soviet Union are all anxious to see the United States remain militarily committed in Europe. So I think there are good reasons in terms of Three terms of present situation in terms of the situation. We see developing in Europe why the United States will want to maintain a significant but significantly smaller military force in Europe for was far out as I can see. (00:54:47) Thank you Ambassador Niles we have time for one more question Jack Schulman from the University of Minnesota. Mr. Ambassador given the present adverse competitive position of United States Visa Vita Pacific Rim countries and some European countries. And also given the inevitable increased economic strength of the European community. What do you think are going to be the major challenges facing the United States in adjusting and dealing with this new realities? (00:55:22) Well, I think the United States is in the process of redefining what constitutes Security National Security and recognizing something that we perhaps should have recognized a while back which is that economic strength is at least as great as important as military strength (00:55:38) and the technological leadership is a key element in our national security and I think we're going to have (00:55:44) to put that if you will that recognition into into action and into effect in our policies and I think one of the things that we're going to have to do personally I think is to (00:55:55) forge a much more (00:55:56) effective partnership than we've ever been able to do before between government and the private sector in our Foreign (00:56:04) Relations (00:56:05) economic relations in particular trade relations trade negotiations. Now, we've done a lot of that during the Reagan Bush administration's bringing business bringing trade groups more (00:56:17) directly into say for example, the Uruguay round. (00:56:20) Negotiations are into the economic activity of the activities of the mission that I had working very closely with private sector groups the American Chamber and Brussels and other organizations, but that's that's something we're going to have to do better. I think we have to recognize that under current budgetary realities. We're not going to come up with a lot of additional trade promotion money to get into a very prosaic area because we're going to have to find ways in which we can get more. If you will export promotion out of the funds that we have through cooperation with the state government's state of Minnesota, for example, business groups (00:56:57) trade associations, and so forth so (00:56:59) that we can compete effectively on increasingly competitive World Markets. I think the United States has to recognize as a country the point that you make that we're in a very competitive International economic environment and that in this environment, we're going to have to the government and business are going to have to work much more more effectively together, but I don't I don't despair. I don't consider. I don't for one thing consider ourselves in a in an adversarial relationship with our partners in Western Europe or for that matter with our partners in Japan. Although there are significant strange in the u.s. Japanese economic relationship. The fact of the matter is that weird. We are condemned to cooperate and we have to find ways in which we can do that. The Uruguay round is one of the best examples of this where everybody's going to have to be prepared at the end of the day on the 7th of December and Brussels to make some tough choices about cooperation with with the the trading partners with the other members of the trading Community, but I'm not I don't I'm known don't look upon it as pessimistically I think if we can get her act together here at home and Forge it what I consider to be a better partnership between government and business in our foreign economic relations will be will be able to hold our own and do quite well (00:58:18) internationally. Thank you, Ambassador Niles. (00:58:32) On behalf of Minnesota meeting. We do want to thank you Ambassador for a superb presentation and you have outlined the challenges facing all of us. I think the question that Roger Parkinson asked we could bring you (00:58:43) back for a foolproof.