The Economy: The High Stakes Of International Poker

The most arresting figures in President Nixon's address to Congress last week were his figures of speech—notably those touching on the relationship between America and its world trading partners. Alluding to the billions that the U.S. has sent to foreign countries in aid and investment since World War II, the President said: "We have generously passed out the chips. Now others can play on an equal basis." And in what has already become a famous declaration of intent, he added: "The time is past for the U.S. to compete with one hand tied behind its back."

Such rhetoric, with its unsettling overtones of economic nationalism, reflects the stiff new American attitude toward world trade. Part of the rationale is the feeling in the Administration among many businessmen that postwar American aid gives the U.S. a claim to special treatment in global competition. But gratitude, especially for those services rendered more than two decades ago, is the slenderest of reeds on which to build a foreign policy, particularly in the pragmatic realm of economics. An even more pervasive notion behind the increasingly tough U.S. trading stance is that American spending abroad has been largely an altruistic gesture that has almost exclusively benefited the recipients.

Self-interested Generosity. Certainly, the U.S. has been generous. As Nixon stressed, it has dispensed $150 billion in economic and military grants and loans since World War II.

The military outlays alone, largely to fight the now-waning cold war, total $41 billion. But, notes James Grant, a former State Department high official and now president of the private Overseas Development Council, "every President, including Nixon, has made it clear that if we had not shored up NATO and our allies, it would have cost a lot more to adequately maintain our own defense establishment."

All together $109 billion has been spent in economic aid, mostly by the Agency for International Development and its predecessors. Of this, about $43 billion has been in the form of loans, of which $19 billion has already been repaid. Recipients of this aid are in effect required to spend practically all of it on American goods, thus boosting the nation's experts.

In addition, one of the biggest single outflows has been direct U.S. investment abroad—$75 billion worth. That is just the book value of U.S.-owned factories and equipment and holdings in foreign companies. The true resale value of those properties today is probably twice as much. IBM dominates the foreign computer field; Ford, General Motors and Chrysler ride high in the foreign auto industry; one-third of Italy's oil-refining business is U.S.-controlled; ITT's phone-making subsidiary has a monopoly in Belgium. From 1950 to 1970, American companies brought home from abroad $84 billion in profits.

How valid is the charge that the U.S. is unfairly treated in world markets? Administration officials contend that while America has freely opened its markets to outside competition, its trading partners have thrown up import quotas and other barriers.