The chancellor’s decision was far from enthusiastic. He said the agreement contained “a very serious disadvantage for us Germans” because it would leave the Soviet Union with a “crushing superiority” in tactical nuclear weapons and a “clear superiority” in conventional forces.14 He gave his assent to the Soviet-American agreement with one important qualification. West Germany’s air force possessed seventy-two Pershing missiles, which carried American nuclear warheads. The agreement Shultz and Gorbachev had worked out covered only the missiles of the United States and the Soviet Union. Kohl said that while going along with the removal of the American Pershings, West Germany intended to keep its own.
Finally, in the summer of 1987, two closely related issues were settled to the Reagan administration’s liking. In July, Gorbachev announced he had decided to support a worldwide ban on Soviet and American intermediate-range missiles, rather than simply the removal of such missiles from Europe. The Soviet Union dropped its insistence on keeping one hundred missiles in Asia—a change that was welcomed in China, Japan, and other Asian countries.
West Germany still had a problem, however, because Soviet officials insisted that any deal should also cover the seventy-two West German missiles with American warheads. Kohl came under further pressure at home to support the movement toward disarmament by the two superpowers. Both the opposition Social Democrats and Foreign Minister Hans-Dietrich Genscher urged him to give up on the West German missiles; but Kohl’s own conservative supporters urged him to stand fast.
In public, Reagan supported Kohl’s position, saying the United States couldn’t presume to speak or negotiate for West Germany. Privately, Reagan appealed to the West German chancellor. “We made it clear to Kohl and Genscher that they weren’t going to queer this agreement,” recalled Matlock. On August 26, the German chancellor yielded. He promised that after the United States and Soviet Union signed their deal and put it into effect, West Germany would dismantle its own Pershing missiles. The objections of the allies had been overcome. The outlines of a deal between Reagan and Gorbachev were complete.15
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SHULTZ’S PITCH
The obvious question is why Mikhail Gorbachev should have been so accommodating. During the first nine months of 1987, Gorbachev made not one but several significant concessions to the Reagan administration. He dropped his insistence that the United States restrict research into strategic missile defense. He laid the groundwork for a far-reaching agreement to ban intermediate-range missiles. In the process of negotiating that agreement, he abandoned two previous Soviet positions: that the deal should apply only to Europe, and that the Soviet Union should be able to retain one hundred intermediate-range missiles in Asia.
What were the underlying causes for Gorbachev’s behavior? To answer that, one must look to the Soviet economy and to the series of suggestions Gorbachev was getting in 1987 from American visitors about how the Soviet Union might transform itself. Secretary of State George Shultz in particular had developed a new set of themes to offer Gorbachev, ones that were well attuned both to the Soviet leader’s interests and to his vulnerabilities at the time.
During Reagan’s second term, Shultz began to weave into his speeches and congressional testimony some material that had little to do with the nitty-gritty of American foreign policy or diplomacy. He would frequently depart from current events for an abstract discussion of the future. He did this so often that reporters who had already heard earlier renditions would roll their eyes.
What Shultz was saying amounted to a version of the set of ideas that eventually became popularized as globalization. What the secretary of state was saying in the late 1980s was strikingly similar to what prominent proponents of globalization—such as, for example, President Bill Clinton or New York Times columnist Thomas Friedman—would assert in the following decade. Shultz spoke regularly about the information revolution, the impact of ever-faster computers and telecommunications, the speed with which money and capital flowed from one country to another, and the ways in which manufacturing could be transferred around the world. “With the advent of ‘real time’ transfers of information, an announcement made in the Rose Garden can be reflected two minutes later in the stock market in Singapore,” Shultz declared in one speech. In another, he said, “The very process of production crosses national boundaries…. It is often difficult to identify what is ‘national’ and what is ‘foreign.’”1
The talk about globalization dated to the late 1970s, when economists noticed that manufacturing companies were beginning to transfer production from one country to another. In 1983, a business school professor named Theodore Levitt wrote an article for the Harvard Business Review in which he argued that changes in technology allowed companies such as McDonald’s and Coca-Cola to operate throughout the world. He pointed out that consumers everywhere were beginning to use the same standardized products and wear the same clothes, such as blue jeans. Levitt’s article was titled “The Globalization of Markets.”2
Shultz, an economist by training, had previously been the dean of the University of Chicago’s business school and U.S. secretary of the treasury. He didn’t use the word globalization, but simply talked about the information revolution and its impact. He got some of his information and ideas from his friend Walter Wriston, the former chairman of Citibank, who had described how easy it had become to move large sums of money around the world almost instantaneously. Wriston had also begun to talk and write about the larger political changes that would result from the advances in communications and information. A global marketplace meant that even democratic countries would have to adjust to “a wholly new definition of sovereignty,” Wriston wrote. For Communist governments and other closed societies, the impact would be even greater: they would no longer be able to control what their own people saw and heard.
Shultz pushed the State Department to explore these ideas. In 1986, Richard D. Kauzlarich, a foreign-service officer and intelligence analyst who specialized in international economics, was assigned to gather materials on the implications of the information revolution for American foreign policy. Kauzlarich prepared charts on the increasing speed and declining costs of personal computers, on the replacement of old-style commodities such as copper by fiber optics. He found examples of how manufacturing was being moved from one country to another. One favorite was a shipping label for an American company that made integrated circuits. The label said: “Made in one or more of the following countries: Korea, Hong Kong, Malasia [sic], Singapore, Taiwan, Mauritius, Thailand, Indonesia, Mexico, Philippines. The exact country of origin is unknown.” The memos that accompanied this research drew stark conclusions: “Increasingly,” Kauzlarich wrote, “countries which cannot or will not compete in the global market place and interact with ideas from other societies will find themselves falling behind the advanced innovators and producers.”3
Shultz introduced these themes into his meetings with several foreign ministers. He had a small audience for which this material was especially targeted: the top leaders of the Soviet Union, above all Gorbachev and his foreign minister, Eduard Shevardnadze. On a visit to Moscow in April 1987, after clearing with Reagan the details of what he would say, Shultz departed from the usual idiom of Soviet-American diplomacy. During a break in a long afternoon meeting about arms control, Shultz set up some of the graphs and charts that Kauzlarich and other aides had prepared. He told Gorbachev that the world’s economy was changing rapidly, that financial markets and manufacturing were becoming international in scope, and that governments would have to learn to adapt to a new world where information was more important than minerals or heavy industry.