Europe: Trouble in the Pipeline

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Despite their attempts to moderate the public spat with Washington, Thatcher and Schmidt still hoped to change U.S. policy. The British Prime Minister instructed Secretary for Trade Lord Cockfield to give notice that Britain is prepared to defy the Reagan sanctions in order to enable British companies to complete $200 million worth of Soviet orders for the huge natural-gas project. Said Thatcher to the Commons: "The question is whether one very powerful nation can prevent existing contracts being fulfilled. I think it is wrong to do that." In the same spirit, Schmidt announced that "like our European partners, we shall stick to the natural-gas pipeline deal because it serves the necessary diversification of our energy supply."

It will also save thousands of jobs at a time when unemployment in the Community has reached a postwar record of an estimated 9.5%. Both Mitterrand and Schmidt have repeatedly explained to Washington that Western Europe's defense capability is inextricably linked to its economic well-being and social stability. That view so far has failed to sway the White House, where aides blamed Haig for having misled the Western Europeans into thinking that Reagan had agreed to soften his opposition to the pipeline. In fact, when Reagan left Versailles, unhap py over the soft European stand on credit to the Soviet bloc, he still had not made up his mind whether to toughen the anti-pipeline sanctions.

What triggered Reagan's hard-line decision, according to White House aides, was a postsummit statement in an interview in which France's Mitterrand echoed European-wide opposition to waging any kind of "economic war" against the Soviets. To an irritated Reagan, it suddenly seemed that any semblance of an understanding at Versailles had been downgraded. Moreover, the Polish government has not lifted martial law, which was the original cause for the sanctions. The U.S. has never clearly spelled out what had to happen in Poland before the sanctions could be lifted. Said one State Department official:

"The discussion never even got that far." With Haig out of the picture, the Administration was beginning to believe that the pipeIine could even be stopped. Said Lawrence Brady, Assistant Secretary of Commerce: "Certainly we can delay the pipeline, and we may bring the Europeans round to stopping it altogether."