' 5736 BEGRE TTHE WHITE HOUSE WASHINGTON MEMORANDUM OF TELEPHONE CONVERSATION DECLASSIFIED PER E O 12958 AS AMENDED aoe o - o'- a''''F i 1 1 1 r SUBJECT Telcon with President Mikhail Gorbachev of the Soviet Union U PARTICIPANTS The President President Mikhail Gorbachev Notetaker Nicholas Burns NSC July 17 1990 9 26-10 06 a m The Oval Office DATE TIME AND PLACE The President Hello President Gorbachev taff U Hello Good afternoon Mr President U The President Good afternoon or good morning from here Congratulations on the success of the Kohl visit U President Gorbachev Thank you U The President As a matter of fact I just talked to Chancellor Kohl and he is pleased He thinks the agreements you reached are good not just for Soviet-German relations but for U S -Soviet relations too Needless to say we are pleased with your comments that a unified Germany has the right to choose its alliance membership This showed great statesmanship on your part and we feel good about it I hope we can make similar progress on CFE and on START in the months ahead J'l But the main purpose of my call as Chair of the Houston G-7 Summit is to give you a brief report on that meeting I will follow-up in writing also know tpat Kohl discussed this issue wi th you too 'If President Gorbachev Thank you U The President I hope you noticed from our communique that we all stressed our willingness to help the Soviet Union but that perestroika will depend on the success of your reforms So we tried to include positive language on that and hope you noted it We made the point that western technical assistance should be provided now which is something you mentioned in your letter eo me I think the U S can play an important role here I hope we can get our people together so that we can intensify this technical cooperation yn oEffiCRlih r Declassify on OADR zw 1 J 2 We have in mind focussing on one particular area where we could work together--on transportation and food distribution We could perhaps work together in that area As you know we have legal obstacles in providing credits but we did agree that some of the western countries could provide credits now to the Soviet Union fj The communique called for asking the IMF to convene a study with the World Bank the OECD and the EBRD on the Soviet economy if that would be welcomed by you and to make recommendations on how our assistance could be most helpful to your reforms All the Houston participants agreed we wanted the Summit to give momentum to assistance to the USSR and to you own reform efforts Vi So it is our collective view that the Houston and London summits should make clear to public opinion everywhere that the U S Soviet confrontation is over and that working together we'll make a peaceful post-war world Now if you have a minute more I would like to tie this in to the NATO Summit President Gorbachev y -'- agree U The President I know you already received my message I was gratified by your and Shevardnadze's comments on the actions taken in London I remember your telling me when you were here in Washington that you would be watching the outcome of the NATO Summit I hope you have seen the transformation of the NATO Alliance and hope that is the way it was read in the Soviet Union 1 So what we tried to do was to take account of your concerns expressed to me and others and we did it in the following ways by our joint declaration on non-aggression in our invitation to you to come to NATO in our agreement to open NATO to regular diplomatic contact with your government and those of the Eastern European countries and our offer on assurances on the future size of the armed forces of a united Germany--an issue I know you discussed with Helmut Kohl We alsq fundamentally changed our military approach on conventional and nuclear forces We conveyed the idea of an expanded stronger CSCE with new institutions in which the USSR can share and be part of the new Europe 7J We tried to shift the emphasis in the document to envisioning a Europe in which no power feels isolated You know my view that NATO is a stabilizing force especially with a unified Germany not isolated but as a full member So what I tried to do there and in our talks and in my previous talks with Akhromeyev was to show an Alliance adapting to new realities and not a threat to anyone I should also mention that the paper from which NATO worked was a U S paper and I am proud of my colleagues for this U S role I hope that you can study it and that we can discuss it ECRET- 3 So may I make two points in conclusion As a politician I watched with awe and respect the way you concluded and handled the party Congress In Houston we were supposed to be working on economic matters but all of us watched with fascination your efforts to move on political and economic reform with perestroika It is fair to say that all of us want you to succeed And a last point on economic matters To coin a phrase I don't want the Soviet people licking sugar through a glass We have some constraints but we do want to help I really mean that I want you to get the benefit of the reform process I think you know what I mean about licking sugar through a glass That's my report Thank you Mr President I thank you for President Gorbachev I will give a short response U what you have said I would start with an issue you mentioned in the latter part of your talk-- the results of the party Congress I believe that through reasons you under LallJ that the Communist Party remains a powerful political organization Its position and actions will largely determine the course of events in our country And it is only natural given the new situation and the period we are going through that the Communist Party has renounced its monopoly on power New parties will emerge and new political public organizations will be created 7 And my task and that of my close colleagues on perestroika was that this position taken by the Communist Party be more in line with the aims we have set in these reforms At the moment we have reached a stage when we are about to embark on major reforms on the economy and on a new federation between the republics I have in mind new relations with the republics on economics and other matters $' I have to say all-in-all it was not an easy period for me They were not easy days and nights It was perhaps the most difficult and important period in my political life but we have now achieved the tasks we set for ourselves And as a result of this we now have a profound understanding in the party and in society of the need to have new major changes The most important aspect is that we create a social environment to undertake these reforms And I am also relating this to the results of the Houston meeting and the things you have just said That is to say we have to have ready by the end of the summer and early fall a broadly defined program for transition to a market economy which could be begun as early as January 1 1991 We'll have to make great efforts and perhaps in this sense we count on your cooperation 6ECRE'f 4 ef El - There are two schools of thought The one more current in the U S is that the less help given the Soviets the better they will be able to carry out reforms The other to which we subscribe is that if we have enough resources including financial resources at this important stage in the development of a market economy -- enough resources then we could move to a market economy If we find we do not have enough resources and financial reserves we will have to rely more on state-regulated measures But I believe the second school of thought is more reasonable and substantiated In this respect I greet the positive tone of Houston under your Chairmanship Let me also say some words on the Kohl visit We managed to bring our points of view closer together And in fact the results take into consideration our common interests--of Germany yours and ours I believe that without the meeting in Washington and at Camp David without the results of the NATO Summit and the London Declaration without the major work in my conversation with Kohl and your talks with Kohl without the activities of our foreign economic agencies without this real political action it would have been difficult to arGBP v at the proximity in our points of view We achieved all this because we understood each other's position We tried to take into account each other's views I consider the results of my conversation with Kohl to be quite positive I hope that Foreign Minister Shevardnadze and Secretary Baker will discuss specifically this particular subject I believe they will discuss these specific points which are best not discussed in this phone conversation If these a9reements are respected we could acnieve positive results r That is all I wanted to add I agree with you that the development of this process make us hopeful that positive results will be achieved in Vienna and on the CSCE process and that there are good prospects for the CSCE meeting we have discussed And in conclusion let me say I am lad to hear the voice of George Bush over the phone Our conversation makes me hopeful for the future The President Let's stay in touch Congratulations with your agreement I'll tell the press we had a constructive discussion about the Houston and NATO Summits President Gorbachev Yes way--these two topics U The President speak to you All right sir SECRiiS'l'r Let's do it and it is nice to U President Gorbachev U I think we can do this in a short All the best Mr President Good-bye 43ECRE f The President 5 My best to Raisa President Gorbachev The President U Also my best to Barbara Good-bye U -- End of Conversation -- eECRE'f- Good-bye U                     National Security Archive    Suite 701  Gelman Library  The George Washington University    2130 H Street  NW  Washington  D C  20037    Phone  202 994‐7000  Fax  202 994‐7005  nsarchiv@gwu edu