ABROAD

ZURICH Whirligig Not so long ago, European bankers, and their governments, were blaming their countries’ economic troubles on the unbridled rise of the dollar in the world’s money markets. If only, they argued, the dollar could be curbed by a firm hand in Washington, could be brought into a saner relation to other currencies, then European inflation would decline, industrial production would right itself, and the flight of capital toward high American interest rates would abate and finally cease. This was the position repeatedly advanced by the Europeans, most notably at the economic summit at Williamsburg last year. Now the tide has turned and the dollar is falling—not yet very far or very fast, but it has retreated, for instance, from the “threshold” exchange level of 2.60 West German marks and seems to be set for a steady downhill course. [See “Taxation, Inflation, and Money,” by Tom Bethell, p. 23.] This is at any rate the opinion of the financial markets, which see in the fall of the dollar the same presages they attached to its rise, especially inflationary pressures and high interest rates. The decline of the dollar, in short, is being greeted here with the same dismay that accompanied its unchecked upward march over the past three years. All this is another way of saying that the economic health of the United States remains the absolute measure of everyone else’s well-being. In their anxiety, however, Europeans sometimes stretch their logic too far. They are given to speculating freely on the political consequences of particular developments on the American economic scene, and are even saying now, for instance, that a collapse of the dollar would catapult a Democrat (just at present, Senator Hart) into the White House with unforeseeable consequences for American foreign policy. For if American economics are often a mystery to the European observer, at least in the short term, the same is true, a fortiori, for American politics.

NEW DELHI A Few for the Seesaw Marshal Dmitri Ustinov, Soviet defense minister and one of the most powerful men in the Kremlin, has just spent a week in the Indian capital to underline the importance Moscow attaches to its role in the Asian subcontinent. In case there was any doubt about this importance, Ustinov was accompanied by an entourage of sixty officials including Admiral Sergei Gorshkov, chief of the Soviet navy; it was the first such visit abroad by Soviet figures of this rank since Konstantin Chernenko assumed power. As usual, Mrs. Indira Gandhi, the Indian prime minister, used the occasion to ride her own particular seesaw between East and West. Although the Indian armed forces are firmly committed to Soviet equipment across the board, Mrs. Gandhi has shown interest in acquiring some sophisticated components from Western Europe for the construction of a new Indian fighter aircraft. This point was brought to Marshal Ustinov’s attention, as well as a recent rapprochement between India and Pakistan over the Soviet position in Afghanistan. Another point that could not very well be avoided was the fact that the United States has now replaced the Soviet Union as India’s principal trading partner, leaving aside the rather considerable area of defense supply.

Featured Tags

ZURICH Whirligig Not so long ago, European bankers, and their governments, were blaming their countries’ economic troubles on the unbridled rise of the dollar in the world’s money markets. If only, they argued, the dollar could be curbed by a firm hand in Washington, could be brought into a saner relation to other currencies, then European inflation would decline, industrial production would right itself, and the flight of capital toward high American interest rates would abate and finally cease. This was the position repeatedly advanced by the Europeans, most notably at the economic summit at Williamsburg last year. Now the tide has turned and the dollar is falling—not yet very far or very fast, but it has retreated, for instance, from the “threshold” exchange level of 2.60 West German marks and seems to be set for a steady downhill course. [See “Taxation, Inflation, and Money,” by Tom Bethell, p. 23.] This is at any rate the opinion of the financial markets, which see in the fall of the dollar the same presages they attached to its rise, especially inflationary pressures and high interest rates. The decline of the dollar, in short, is being greeted here with the same dismay that accompanied its unchecked upward march over the past three years. All this is another way of saying that the economic health of the United States remains the absolute measure of everyone else’s well-being. In their anxiety, however, Europeans sometimes stretch their logic too far. They are given to speculating freely on the political consequences of particular developments on the American economic scene, and are even saying now, for instance, that a collapse of the dollar would catapult a Democrat (just at present, Senator Hart) into the White House with unforeseeable consequences for American foreign policy. For if American economics are often a mystery to the European observer, at least in the short term, the same is true, a fortiori, for American politics.

NEW DELHI A Few for the Seesaw Marshal Dmitri Ustinov, Soviet defense minister and one of the most powerful men in the Kremlin, has just spent a week in the Indian capital to underline the importance Moscow attaches to its role in the Asian subcontinent. In case there was any doubt about this importance, Ustinov was accompanied by an entourage of sixty officials including Admiral Sergei Gorshkov, chief of the Soviet navy; it was the first such visit abroad by Soviet figures of this rank since Konstantin Chernenko assumed power. As usual, Mrs. Indira Gandhi, the Indian prime minister, used the occasion to ride her own particular seesaw between East and West. Although the Indian armed forces are firmly committed to Soviet equipment across the board, Mrs. Gandhi has shown interest in acquiring some sophisticated components from Western Europe for the construction of a new Indian fighter aircraft. This point was brought to Marshal Ustinov’s attention, as well as a recent rapprochement between India and Pakistan over the Soviet position in Afghanistan. Another point that could not very well be avoided was the fact that the United States has now replaced the Soviet Union as India’s principal trading partner, leaving aside the rather considerable area of defense supply.