United States Department of State From the desk of George Bush Bag V7 MEMORANDUM OF COHVERS Date Friday May 1' ti-Law bk 031 51 0 Time 11 00 am - 4 607 47 Place Kremlin 0V1- i A RABILCIEAHI53 ELSL 1 E ic 0vvk 4Au0 but VVOV9 533 Mikhail Gorbacnev Eduard Shevardnadze A Chernayeb Rotetaker Interpreter Qggbaghg_ I am glad to see you again in Moscow Our meetings provide a chance to build on the capital in our relationship You know that capital likes to be expanded and I think given the fact our meeting is happening in a certain context we can see that there is a certain potential for expansion Our relations are characterized by a greater dynamism more than they were in the past What happened in the past is that we inserted actual problems as they occurred and were not as a result in a position to deal with those problems After all we would see certain problems and as a result of the problems there'd be a slow down or a contraction in our relationship The problem if anything would make dialogue more difficult Today because of our new relations and dynamism we have the potential to increase our dialogue when there are problems At the same time I have to tell you that as I watch your country it seems to me that the process about deciding about the Soviet Union is a process that is not fully complete yet One looks at a time like this a time of great change and you cannot afford to look at it from the standpoint of one or two Presidential terms If you do you will not really understand what's going on What we're talking about now is about developing a long term foundation for the whole world We developing an architecture for the whole world And that's not just for the life of one President's term or two terms it has a much longer term significance new DECLASSIFIED 0MB PER E O 13526 Jon-0%7- MR 5 9 3135 13 United States Department of State 5 31 in no 20520 HEHORAHDUH 0P CONVERSATION Date Friday May 18 1990 Time 11 00 am 4 00 pm Place Kremlin Secretary Baker Dennis B Ross Rotetaker Interpreter page Mikhail Gorbachev Eduard Shevardnadze A Chernayeb Notetaker Interpreter Gorgacnez I am glad to see you again in Moscow Our meetings provide a chance to build on the capital in our relationship You know that capital likes to be expanded and I think given the fact our meeting is happening in a certain context we can see that there is a certain potential for expansion Our relations are characterized by a greater dynamism more than they were in the past What happened in the past is that we inserted actual problems as they occurred and were not as a result in a position to deal with those problems After all we would see certain problems and as a result of the problems there'd be a slow down or a contraction in our relationship The problem if anything would make dialogue more difficult Today because of our new relations and dynamism we have the potential to increase our dialogue when there are problems At the same time I have to tell you that as I watch your country it seems to me that the process about deciding about the Soviet Union is a process that is not fully complete yet One looks at a time like this a time of great change and you cannot afford to look at it from the standpoint of one or two Presidential terms If you do you will not really understand what s going on What we re talking about now is about developing a long-term foundation for the whole world We deveIOping an architecture for the whole world And that s not just for the life of one President s term or two terms it has a much longer term significance saga- DECLASSIFIED OADR PER E O 13526 301 - 0657- NZ 21 25 15 2 You're probably bothered it seems to me by two problems One you're being very closely involved and identified with Gorbachev and you may ask yourself if it is worth it We see the public debates in your country and I know there are many advisers who want to advise you on how to deal with this how to deal with me Let me tell you that for the time being I believe that you and the President are showing amazing restraint in terms of sticking to your position The second problem is that I have the impression that we have been formulating a mutual understanding in terms of how to build our relations at this stage of world development I believe that one of the central understandings that we have agreed upon is that we both have a very strong interest in a strong and confident United States politically economically and militarily -- and we both have a strong interest in a strong and confident Soviet Union politically economically and militarily You know we began predicting two or three years ago maybe even eighteen months ago that we were on the verge of a major regrouping of forces in the world We even saw that our interaction was not only useful fact useful for the world My feeling now is that sometimes we still see a philOSOphy that suggests maybe there can be a repeat of the past Maybe some of the political actions that dominated the past have not totally been put behind us As I watch the critical points of our relations sometimes I have a sense that you want an edge you may seek an advantage In the past I would note this and I would watch this Now I think our relations are such that I have an obligation to share my view with you That our relations have brought us to the point where that kind of candid discussionis very possible What do I have in mind when I say this First I say this because I think that you are a man of very clear ideas and understanding and that's why I feel I can talk this way to you and that you'll take note and understand what I am saying Well for example let's take Eastern EurOpe Everything that's happening there we have discussed'with you and we are acting in accord with what I said we would do But I have information that a part of your policy is driven by trying to disassociate Eastern EurOpe from the Soviet Union You know attitude is if these countries seek to disassociate themselves if that's what they want let them do so That's okay But it's not okay if they are being pushed in this regard Let s take another example on the question of a united Germany Your position on this I believe is contradictory I don't know what the origin of that is maybe you fear a united Europe But I think that both in Europe and here in the Soviet Union we recognize the need for US presence It's very clear to us it is very clear to Europeans that there has to be a US l' presence It doe nece ry presence but 0 re ence in all European processes That's the way I view things a 's the only way to view things I believe 3 You've said to us that both Germanies want peace they both want democracy and therefore they pose no dangerthey pose no danger if this is so and I have said it to President Bush when I talked with him on the phone then why not let the Germans go and become a member of the Warsaw Pact I believe when I said this President Bush was dismayed Perhaps you would say that we could trust the Germans that they have proved themselves But I would ask you if you trust the Germans why do you feel it's not necessary to include them in So when you are talking about a united Germany and you say that if Germany is not in NATO it would create problems what you are really saying is that you don't believe Germany can be trusted You know I could understand it if you offered a realistic analysis that said if Germany is out of NATO that would seriously undermine the infrastructure of NATO That's an argument I could understand But if you are saying that then there's a problem Because then you're saying you continue to need a bloc even when the other alliance is disappearing We shouldn't have one alliance displace the other What we need is a new security structure in Europe and you're saying that NATO is necessary for now and the future because the Soviet Union still has large military forces But if that's the position you premise NATO on now then I think that's really not consistent I think it's contradictory I just don't see how that is consistent with the principle that we're now trying to build our relationship on and this is a relationship of mutual understanding It shouldn't be one that is driven by a sense of a Soviet military threat In developing this argument perhaps I've spoken too long but I believe it's important A united Germany in NATO that's going to mean a very serious development in the strategic balance it's going to mean a serious shift in the balance I think you have to ask what's going to be the next logical step for us You are a man of logic and I ask you what's the next logic step for us Well one step might be for us to su5pend all talks and to think about how this develOpment is going to affect our doctrine how it's going to affect our forces what effect it should have on our approach to the Vienna talks I say this not because I am playing games not because I want to engage in a level of political squabbling I say it because I really believe this is a serious problem for us Sometimes I have the impression that you are tempted to take advantage of our process of change and renewal Now you know that process is not easy you know it has many difficulties I do know that trying to take advantage would be a great mistake To sum up let me just say that we have shared with you our plans for perestroika for new thinking We have laid out our designs for our country and how it should relate to the world We have talked of our determination to 33235 4 accommodate with the West how we seek to meet the US half way how we seek to integrate our country economically and culturally with the world -- all of this is something that I think will benefit not only us but also you And central to our ability to do so is the new relationship with the United States Is the United States really for this Is the United States really for building this kind of new understanding Do you really favor a mutual understanding of our two countries Let me tell you how I see things from Moscow now I believe I have a good understanding of a number of your positions and the nuances of your position And I must say there are many positive aspects But I also have to say that there are some elements that worry us The important factor that shapes us for the near term is the economy What's it going to be like How are we going to develop our economic basis and how is it going to affect the political life of our country How is it going to affect the mentality of our pe0ple in inter-ethnic affairs And how is it going to affect our country in its relations with the outside world Now we are approaching a time when we have to begin a transition to a regulated market economy It is the most important thing for perestroika to succeed It is a fundamental change in our society It means de-emphasizing state property it means emphasizing anti-monopoly companies It means pushing and develOping private property shareholders it means changing our banking system it means a new tax system it means a new price system and a safety net The sum total of all of this is a radical turn-around This is a critical time there's no mistaking that In fact this is the most critical time for perestroika Nowentitled to expect solidarity and support from our partners Should events in Nagorno-Karabakh or Vilnius really take up more time in our relations then perestroika and change in our colossial country At this time of great change we need not just understanding but mutual action Now what is the United States doing The US said that it welcomes perestroika The Secretary of State says this that he welcomes it He engages in serious nuances and SOphisticated discussions on perestroika I have seen how you've talked about it in detail -- it's very sophisticated you're very knowledgeable At the same time you've also been out there warning everybody against helping the Soviet Union What's worse you say that any help will actually slow down perestroika I don t understand the arguments for this position I really suspect that instead of doing something and sharing in our problems and expressing solidarity this approach is more like saying we'll let them go it alone Let them go it alone with their problems if it becomes worse well maybe that's okay for us I am saying all this before we meet 5 in Washington and at Camp David because I think we need to ask questions Are we going to continue to work together Is there going to be a change in our role in the positions of our two countries We're at an historical juncture Are we going to work closely together I had thought that we had finally made our choices in this direction both you and we I really felt that we had already gotten beyond the question of do we want to go forward or not But as I look at certain events I wonder whether or not that choice on the directions we're going to go is still before us and still to be made That's why I wanted to meet with you alone first I wanted to have this discussion not in front of a larger group but just with you I want to have this discussion with our Ministers and with the President Baker I'm glad you decided to do it in a small session like this and I'm glad you decided you should raise these kinds of concerns with me Because it gives me an opportunity to respond to your questions and they are legitimate questions And it will give the President a chance as well when he reads this transcript to focus on these issues and these are good issues for discussion First there was a period of time at the beginning of the Administration when we were thinking about how to sort out our relations with the Soviet Union There were a lot of questions about what our relationship should be But that ended about a year ago It really ended after my meeting with you here and with Eduard After that the President has made it clear that we would no longer be in the position of deciding what our relationship should be with the Soviet Union We know what it should be like I have stated it since Wyoming I said then and I believe now that our relationship is moving from one of competition to one of cooperation and dialogue across the entire range of our relations Now obviously the character of our relations at any given time is going to depend upon the actions of not only the United States but also the Soviet Union Let me assure you that there is no debate in the upper reaches of the U S administration about whether we should be closely involved with the efforts that you're making on perestroika We made that decision last year The President made that decision last year and we're firmly committed to it I said in a Speech in October that we seek opportunities that would be mutually advantageous to both our countries That we need to seek points of mutual advantage that's what I called it There is a lot of debate in the U S about whether you are going to be successful There are indeed some who would prefer that you not succeed I refer to them as old cold warriors their old habits die hard There are some quite a few who criticize the President criticize me for relying too much on our hOpes that you'll succeed and for taking action that assist you in your efforts 5 I thank you for taking note of the fact that the President has not yielded to the pressure particularly in the aftermath of Lithuania I have told Eduard on several occasions that it is not certain that we'll be able to maintain things as we have in the aftermath of Lithuania we have a fundamental disagreement on this You know we have never recognized the forcible incorporation of the Baltics in the Soviet Union and as a result the Baltic flags fly in the State Department today I first raised the Baltics and nationalities as a possible problem on the airplane out to Wyoming This is why we're so anxious to see some sort of discussion develop that could lead to a resolution of this problem But the last thing we're interested in seeing is instability in the Soviet Union We make that clear every time we Speak The President has been extremely clear on this The President has also made it very clear that we don't seek unilateral advantage from changes that have taken place We re not looking for an edge and we're not engaging in political game playing In a moment I would like to Speak more specifically about German unification to give you the benefit of our thinking in that regard I want to do that because it will also give me a chance to outline how we have been sensitive to your problems and have tried to take your concerns into account People have asked me well what is the United States doing to contribute to the success of perestroika And one of the things I say is that we are doing a lot to contribute to the stability of the international environment And a stable international environment as you yourself have often noted is critical to the success of perestroika inside the Soviet Union The last three times that I testified before Congress I spent a lot of time being hammered on Lithuania and I spent a lot of time defending our policy approach in the fact of great criticism The President and I have both been accused of abandoning principles Now I say that our commitment to support the aSpirations of the Baltic people is not inconsistent with the support for perestroika We have major interests at stake with the Soviet Union It's important that there be conventional arms reduction agreement in Eur0pe It's important that we have a strategic arms reduction that reduces the risk of nuclear war It's important that we COOperate on regional conflicts around the world the way we have in the last few years Our policy of moving from competition to cooperation doesn't mean we are going to agree across the board I already mentioned our differences of view on the Baltics That's a fact and also a function of history I know that you are concerned about having the Baltics become a precedent for other republics But from our vantage point these republics are different There is a different juridical basis on which to judge them Another issue on which we don't agree is Cuba Now I know and understand that you say you have obligations there and you've told us about them But it is one on which we disagree It is an issue on which we have a problem and really don't understand your position That doesn't mean that we don t want to move from competition to cooperation overall 7 I am very aware of the difficult issues facing you and the pressures that must exist I look at what you're doing after 70 years of a political economic and social approach that requires a fundamental overhaul It s no easy thing for any leader to do that I really do believe and I know the President does as well that what you're doing is really courageous and we support it And I think we have been able to move public opinion in the United States in the last 15 to 16 months to support you But you need to recoqnize that there is a vocal minority that wants to fight the Cold War and it doesn't trust the Russians And with what's going on in Lithuania and the economic blockade that you have instituted they say that Bush and Baker you are just being naive You don't recognize that the bear is still there Now let me ask a word about your comments about warning peOple not to help the Soviet Union After that I would like close with a comment on Germany I presume you must be talking about the EurOpean DevelOpment Bank Our position is that we could not justify the use of U S taxpayer dollars to provide subsidies for state-owned institutions in the Soviet Union Indeed even with you being in a position that you could only borrow back the capital that you paid in we will still have a major battle with the Congress And this stems from the fact that you continue to allocate at least according to our information up to 14 to 15 billion dollars for support to regimes around the world that are supporting subversion in other countries Like for example Cuba So our Congress says how could you draw on taxpayer dollars when the Soviets continue to use their own resources to support Cuba How can we in effect help subsidize the Soviets when they are subsidizing an aggressive country like Cuba I had this discussion with your Finance Minister when he came and he raised the issue of direct loans from the United States Gorbacheg He told me about that discussion He said the Secretary of State categorically rejects providing direct loans though other Western countries are prepared to support the idea You really put a dam on this effort I recently visited Sverdlovsk and I visited a defense factory there that is in the midst of converting itself to producing civilian products That plant has good workers good designers good technology and research and deve10pment But in order to convert it's going to need two to three years Right now their financial situation is awful Previously because of a lot of defense orders it used to be a thriving plant Now they have found a partner for themselves -- the Phillips Corporation Phillips has an interest in the scientific develOpment of this plant But they weren't sure they should invest in this plant Because as you know the Germans are rather cautious But when they actually saw the plant they apologized for their hesitancy and signed an agreement to participate In two years time the products from that plant are going to be competitive with any in the world So the Germans are saying to us that you know there's some interesting research and develoPment possibilities -- let's get together And I've been thinking all the time that you can't really build a good U S -Soviet relationship if it is not underpinned by a good economic relationship Baker I agree with that ggbachgy But while you seem now to want to mark a little time that's going to impose a cost Our existing cooperative ties will be reduced as a result of that A process like that can be dangerous The Supreme Soviets and our deputies want and are insisting on new economic relations with all countries And they feel that should be based upon our new economic principles That's not going to happen over night We certainly don't want to see the ups and downs in our economic ties we don't want to have to go through another grain embargo with you Baker That was a big mistake Let's just keep things in perSpective Six months ago President Bush suggested a much broader range of U S -Soviet economic ties We don't disagree with the need for broader economic ties That's just also an existing political fact of life Given the history between us we aren't likely to grant loans or use taxpayer dollars to in effect help subsidize the Soviet Union if at the same time the Soviet Union is continuing to subsidize countries around the world that jeoPardize U S interests But the fact is we do want to support you Look at what we did yesterday Yesterday the U S voted for your observer status in the GATT Gorbachez Yes but you hesitated for a long time and everyone else agreed Baker Well the Japanese hesitated and in fact they only came around because we did The fact is there is a distinct division of Opinion in the U S as whether getting you more into the international economic system is the right course to follow There are lot of people that don't agree with that There is a debate We have to deal with that debate Gorbachez We have a similar situation For example we are told that we are abandoning or betraying the entire develOping world We're turning the whole Third World over to the capitalists putting them in a position where they are going to be bought by the capitalist Well I ask peOple who say this what are we a welfare state for the Third World Now I'm told I betray the Arabs that we are helping the Israelis That in effect we are allowing Soviet citizens to go to Israel and settle in Palestinian territory That's a real provocation There are others who say that the Soviet Union is 9 conceding everything unilaterally There's a lot of resistance but we are moving forward and we expect you to move forward as well and not just wait for the applies to fall into the barrel sher We aren't Ggrhagney First we have to produce a few apples don t we Baker Well if there aren t apples at the end of the road we're both going to be in trouble Just yesterday I proposed to Eduard that the Soviet Union should consider joining the Gn24 efforts to assist Central America and the Caribbean much like the 6 24 has assisted Eastern Europe Now we have produced 14 billion dollars in that effort when we got together In Wyoming in September I suggested a process of economic and technical cooperation That's something that is happening and I think it will be of benefit to both of us That s something I can defend in the Congress because it doesn't require you to talk about taking U S taxpayer dollars I said yesterday that you've embarked in a new effort and anything that we can do to be helpful any advice we can give as you go through this transition period any information or expertise we can provide we are prepared to do and we want to do it Gorbachgz Well I will discuss that with the President You know there is a radical turnabout as we try to move to a market era And it is very important to us to have temporary support I will emphasize this to him especially because we are going to need some allocation from the West to help us get through this transition period A transition to a market economy is as you know very difficult In our country there is a very serious clash I think the best way to put it is that we need some oxygen We are not asking for a gift We are asking for a loan we are asking for specifically targetted loans for specific purposes For example there are some defense-oriented ministries that have their own factories and I if they have 100 to 200 million dollars to invest they could '5 produce goods worth one to two billion dollars within one to 0 two years Of course the problem is what will we do in the interim during that one to two year period We don't have the money As we try to move to the market it creates a very tense situation and it puts us in a position where we need credit We need credit to provide commodities We also need credit and loans to invest in the factories that we want to convert What I will say to the President is that we're going to need 15 to 20 billion dollars to tide us over The truth is that is peanuts for a country like ours but we will pay it back in seven years Circumstances demand it We have already dismantled the command economy Unfortunately 10 there is nothing there to replace it right now so we really don't have much choice but to move faster Because of this we haven't been able to accumulate enough resources to maneuver We just don't have it now Please tell the President about this request of ours We want an understanding in Europe that I think exists and we want an understanding in the United States What is at stake is a great deal really too much On May 25th in the Supreme Soviet we will announce a move to a market sher The President is familiar with your interest in direct loans because I told him of the substance of my conversation with your Finance Minister when he was here But of course I will tell him of the conversation that you and I are having right now After the Finance Minister returned from your country we sounded out German attitudes We also sounded out the attitude of others in Europe And it was good it was positive but we need more understanding on your part If we are to reach agreement on arms reductions we will both save a substantial amount of resources and moneyspecial situation I oppose very much our being a debtor country but we have a special situation and we need help from the outside nger I anticipate that you will have very little problem of securing loans from the West as a whole particularly if you are prepared to secure the loan you are seeking with some of your collateral Gorbacheg We are willing to collateralize baker I'll make certain the President understands this and make certain that he understands that you are willing to collateralize your loans as well Qgghaghey Yes indeed See our position is really one of being able to use the external resources to buy consumer goods and invest in industries that are converting to producing consumer goods baker I'll also make sure the President understands the political significance you put on the participation of the United States in this effort grbachev Absolutely It will be difficult to explain to our people why we are pushing and promoting U S -Soviet relations and then find that in this situation of a need there's no response from the United States Recently I saw a 133235 11 documentary here that looked at U S -Soviet relations over the last century Last Saturday Raisa and I watched it and as I watched the faces and I saw the developments and the vacillations in our relations I couldn't help but feel there were a lot of opportunities that had been missed I almost had the sense that frequently we were passing each other and I wonder whether we will miss another opportunity I'm afraid that if we're not able to implement what's going on now and help develop what's happening in this country that once again we will miss an opportunity Baker I will make the point to the President Please understand there is a political problem of our diverting loans to the Soviet Union or loans to the European Development Bank if it takes place in a negative context For example if Lithuania is being squeezed economically or if your subsidies to Cuba are unchanged it will be very difficult There are still many voices in our society who will say why now why loan dollars to the Soviet Union when it continues to supply MIG-29 aircraft to Cuba And why provide money to the Soviet Union when it is engaging in economic coercion in the Baltics I know you will ask how can Vilnius or a couple of MIG-29's be more important than success of perestroika in the Soviet Union That's a valid question But I'm trying to point out to you that the atmosphere that prevails is going to have a big impact on the body politic of the United States The Senate has already voted three to one to suspend economic relations with the Soviet Union pending a resolution in the Baltics And I am sure you know what kinds of passion Cuba arouses in the United States Now if I might let me try to response to some of your comments on Germany First we don't seek to divide East European countries from the Soviet Union That is something we might have tried to do in the past we're not trying to do that any more What we seek is an integrated and stable Europe That's what we want to see built and we are prepared to participate with you in this exercise Now you ask if you trust Germany why does Germany need to be in And I might reverse that question and say if you trust Germany why can't you let them choose We're not forcing Germany into NATO But we do think it's important that Germany be a part of NATO not out of any fear of the Soviet Union but because we think unless we find a way to truly anchor Germany to European institutions we will sow the seeds for history to repeat itself You remember the League of Nations It's great to talk about a Pan European security structure and CSCE but CSCE today and that 135355 12 structure are a wonderful dream but today they are only a dream NATO on the other hand exists And NATO will mean that Germany will rely upon NATO for security Gorbachez Why Eager Well I'm talking about the existing institutions of the West -- NATO the EC Gorbache_ That organization existed in one situation only and the situation is now changing sher If you don't have Germany anchored to the existing institution then what you are going to have is a powerful new entity concerned about developing its security measures First it is going to think about developing its own nuclear measures In NATO it relies upon the U S nuclear umbrella It is far easier for the Germans to renounce the development of nuclear biological and chemical weapons as long as it is a part of NATO I know this presents difficult and political problems for the Soviet Union Gorbaghe What about militarily isn t that a problem What we have now is the Warsaw Pact simply deteriorating as a military alliance and becoming purely a political alliance And at the same time what's going to happen to NATO It's going to be strengthened because it's going to be adding a unified Germany baker Maybe so in the near term but we are talking about adapting NATO making it more of a political alliance We recognize the importance of limits on Bundeswehr to you The difference between us that we disagree on how and where to get at such limits We have thought a lot about your concerns and we've been developing approaches and ideas with those concerns in mind As I have said before we have no desire and haven't sought any unilateral advantage We want stability in Europe and we want perestroika to succeed We have fought two wars as a consequence of instability in Europe we're not looking to recreate it What I'd like to do is to give you some examples of how we have moved in a very practical way to try to take account of your concerns I have nine such examples in mind First we suggested that there should be limits on Bundeswehr and that they should be addressed in CFE II negotiations What I'm saying is that we should lock up CFE I agreement quickly We ought to get it behind us and then we can immediately go to CFE II and in those circumstances in that context you will see reductions in Bundeswehr as well as other forces I've talked with the Germans about this and I know that they are agreeable 13 A second step that we've taken is that the President announced and proposed that we should move up the time for SNF negotiations Here again we are taking a step that will change the military climate and security environment in Europe and it will lead to very different kind of nuclear posture on our part in Europe Third we proposed and the Germans have agreed that they should recommit themselves to not develop possess or acquire nuclear biological or chemical weapons Fourth we proposed that there should be no NATO forces in the GDR for some agreed transition period Fifth we have the Germans believe that there ought to be a similar transition period for Soviet forces in the GDR Sixth we have made it clear that NATO has to adapt politically and militarily When we say that it has to adapt militarily what we re saying is that it needs to adapt both its conventional and military postures to conform to the new reality And we know that NATO's strategy is going to have to change because the Warsaw Pact has changed and because there have been big changes in your forces as well Seventh we have also worked with the Germans to emphasize the importance of getting an agreement on borders Borders of a new Germany that would only involve only the ERG the GDR and Berlin This is something that is important not only to the Poles but we know also to you Eighth we have emphasized the importance of developing CSCE CSCE can be a new institution in Europe It can be developed into an institution It can create a sense of inclusion not exclusion in Europe It could create a role for both the Soviet Union and the Eastern Europeans We know that if you are going to develop a unified Europe based on common values there has to be a vehicle to get us there Institutionalizing CSCE is one possible vehicle and I see it as being a cornerstone over time in the development of a new Europe And ninth we know that you are very concerned about GDR economic obligations to you and one of the things that we see and proposed is that Germans need to work out a whole course and range of economic relations with you Quite frankly we can see how that arrangement the new economic arrangements with Germany can be extremely beneficial for perestroika 14 All of this is not to say that we don't recognize the problem that you face with a unified Germany in NATO On the contrary the very reasons that we are developing ideas to try to deal with your concerns is precisely because we do recognize the problems a unified Germany in NATO presents you But again I come back to the point that the best way to ensure long term stability in Europe is to be sure that Germany is anchored in the existing security institution and the other institutions in the West In anchoring Germany in this way we will in Genscher's words see a new Eur0pean Germany I want to add one other point maybe a couple other points on Germany I know you have certain concerns about NATO but the reality is that a unified Germany in NATO is not only going to be a different Germany but there is also going to be a different NATO And that again is very much a function of the changes that have taken place in Eastern and Central Europe Let me add one final point If Germany doesn t want to be in NATO it's not going to be in NATO It's not a question of trust The issue here is what's going to afford the greatest stability in Europe I'm not thinking of the East-West dimension Much of the instability in Europe is not the result of the East-West issue The fact is that Poland Czecholosvakia and Hungary all support the unified Germany NATO not because of U S diplomacy but because they see that it has a value in and of itself They understand the importance of a unified Germany with longwterm stability in NATO So in short I just wanted you to know that we have been very sensitive to your concerns We believe that your concerns are legitimate and I have taken some time to lay out our thinking as a way of explaining how we have attempted to take some of your concerns into account Gorbacheg You know you may be prophetic What if one day a unified Germany says they want to be out of NATO What will we do then baker Well that's a little bit like my asking you if you don't want Germany in NATO what do you want Gorbachey Well that's why I said we really need to talk more about this we need to think about these things We have negotiations underway and we really ought to approach this question sooner and not later What you're arguing for is based on just one premise and that's it Though you are saying that it is going to happen what if it doesn't happen There's a real possibility that the premise that you're adopting is wrong Mr Secretary let's assume at this moment that one day Germany decides to withdraw from NATO If that happens we would have lost our ability to affect events We won't have 133233 15 done anything in the interim period to try shape the new system Currently we have the Four Power rights the unification process these give us a means to do something These give us a means to help develop a new system a new structure Maybe a system based on de-militarization Maybe you can document all the points you've mentioned to me in a final settlement Maybe you can formalize that and other issues If that happens we'll have a better situation Still the Germans are still going to be closer to you but there would be better balance akes Well in this document that you talk about would that document have to say that Germany would not have the right to remain in NATO Gorbaghg_ Yes It is outside and it should be outside a military grouping Eager Are you talking about a neutral Germany Gorbaghgg I don't know if I'd call it that Maybe I'd call it non aligned There are lots of different kinds of non-aligned Look at status of France for example Let me just try to wind this up in a conceptual way I will think very carefully about everything you just said and I will also ask you to please consider what I've said and I'd like very much to continue our discussion with the President Let me just add that if in the end we aren't able to persuade you of our argument then I will say to the President that we want enter NATO After all you said that NATO wasn't directed against us you said it was a new Europe so why shouldn't we apply Eater I got that question in the news conference in Bonn Gorbachev Well it's not such a hypothetical question It's also not so far-fetched Baker Let me offer a couple of comments First there are a number of countries that are neutral and non aligned but they are neutral and non-aligned by choice not because it's been forced upon them Gorbacheg Well maybe Germany would want this I think we have to reserve this option and not just assume they want to be in NATO sher Well I assume they want to be in NATO because they say they want to be in NATO Neutrality or non alignment cannot be forced upon a nation You shouldn't contemplate that as a condition for releasing our Four Power rights and 135555 15 responsibilities It runs counter to the very principles of Helsinki Helsinki makes it very clear that every country will have the right to participate and to chose its own alliance Now if you are going to say that Germany doesn' have that right then you are singularizing Germany in a way that I think is going to be a source of instability for the future That's the very result we don't want Gorbache Well why would there be that resentment if Germany were not a part of either Western or Eastern military organization The resentment would arise out of singling Germany out for special treatment or requirements The resentment would arise in having someone else impose their will on the Germans If they want to join the Warsaw Pact it might be a different situation Gorbachev But what if they do Can I note from your statement that you say it would be okay if they join the Warsaw Pact Eager Helsinki says that any country can choose its own alliance Gnrhachez Well am I Specifically to conclude that if a unified Germany wanted to be a member of the Warsaw Pact the U S would say okay sher Our position is that the best prescription for stability is that a unified Germany ought to be a part of NATO But in the end that's a matter of choice for the Germans Gorbaghgy In principle you're for free choice for the Germans a right that is fundamental in international relations So if Germany wants this you will treat it with understanding Baker Well again I say that from our standpoint the best prescription for stability is for Germany to be a part of NATO We don't see any other approach that is likely to produce stability But you have to respect the Helsinki principles Gorbachg_ Well pleased by this argument for I think it strengthens my position We say for example from our standpoint that a unified Germany in NATO will threaten the stability that has existed for the last 45 years Baker Well we have a fundamental disagreement 335323 17 We have got to find a way to match our positions We have to find compatible Whether or not we can find a solution on a basis that reflects a balance of interests Let's see if we can act together maybe we won't be able to akes Well let me ask you a question Will you accept Germagx haging free a member of As I have said to you frankly we cannot accept a unified Germany as a member of just NATO or the Warsaw Pact because that s going to have a basic effect on the strategic balance in Europe and the world You really should not leave us isolated at this crucial moment We may have unusual move to make Shegardnadze Let me add two points First when you say Germany will be in NATO you forget all about the Potsdam agreement And in Potsdam there were a number of things that were agreed not only that there should be de-Nazification and de-militarization but a number of other things that were agreed that give us the right to sort of see how things unfold with Germany You say that all we should do is simply divest ourselves of these rights Well that's very one-sided and it doesn't take account of our rights You're right to note public opinion in your country But if there is a unified Ff Germany in NATO it going to mean the end of perestroika And people will say that we are the losers we're not the victors I also don't share your assessment of CSCE CSCE is not just a dream We don't need to have military blocs all over Europe we should do without them If we are to achieve a new Europe without blocs then it is not such a fantasy to think that the Soviet Union might apply to NATO Garbaghey Why not have a grand coalition of states We did before during the war Why couldn't we do that again baker I understand what you are saying on not being isolated And that s why we made the suggestion that we have made -- to develop the process -- I mentioned this earlier That s the reason we came up with the Two-Plus-Four mechanism We recognize that you have a need to be seen as managing with us the process of German unification Gorbachez Absolutely that's absolutely correct Where we are a little concerned is that the process will become one plus four sher Why did we come up with the Two Plus-Four process We did so because we knew that everybody had to be at the table 13 equally And also we did so because we understood very well your domestic needs Gorbachez Bear in mind that it is increasingly one versus four Eager When I say CSCE is a dream I mean it is a dream right now But I ve made specific suggestions on how to build it into something more than just a dream But for the interim it is important to have Germany anchored to the existing institutions so that they don't feel a need to seek security on their own You know we have an anchor in the EC and we support that even though we are not a member of the EC We support German association with other institutions in Europe precisely because we saw what happened in the past when there was an independent neutral Germany Shegardnadge Well we would like to see the Two-Plus-Four decide Bundeswehr limits and then have those limits inscribed in CFE First we could have agreement among the six Why do we need it Well isn't the military capability of Germany a legitimate question for the external unification of Germany Doesn't that come up as part of the external unification of Germany Gorbachey Let me sum up We bandied about our thoughts And you see in me someone who just had to read-out a report to the country on the 45th anniversary of the war Now let's just think about what we have lost I didn't even mention that before now We lost 27 million people on the front lines and as POWs They were the best part of our nation the most active the most dynamic We had 18 million people injured The health of millions of our people was affected because they were hungry ill-clothed ill fed This was a shock to the entire nation So you can not have a simplistic approach to the situation we face today Not just us but you too have a stake in this Our people say that the United States can't be trusted if they can't understand this So let me support the key point you made -- we should manage this process today and tomorrow Beyond this let me just say you should tell anyone who tries to suggest that the Soviet Union is seeking to push the U S out of Europe that they're just wrong don't believe them Without the U S in Europe nothing good could happen Then we really will see some of the conflicts of the past repeat themselves Well let's now get go on to other subjects and invite our other colleagues in 19 There followed an one and one-half hour discussion on At its conclusion the Secretary met with Gorbachev and Shevardnadze again without the delegations sher Thank you very very much for taking so much time and spending it with me You know I have had a number of conversations with Eduard on Lithuania We have worked hard to get the Lithuanians to moderate their position We have taken the same position with our allies and urged them also to urge the Lithuanians to move in the right direction We had indirect contact with Landsbergis when I was talking to Eduard and we know that we should be the last ones to try to mediate especially in this situation But we are trying to understand your situation and we are hoping that neither you nor the Lithuanians will get locked into difficult positions that are hard to back away from And we know this a very difficult problem That's one of the reasons that we are very pleased that the Lithuanians said that they were prepared to suspend some of their actions and to come to Moscow Now I'm going to see Prunskiene while she is here in Moscow The President saw her and I'm going to see her If I were to tell her that if Lithuania suspends its declaration by announcing it's prepared to come to Moscow and begin a dialogue would I be able to say that a dialogue would begin I can tell you that if you are talking to them when you are in the United States it will make for a much more productive Summit I'm only stating this as a political fact of life Gorbacheg Well I met her yesterday I'd say that our room for maneuver is quite limited The situation takes a lot of very deft handling and it takes deft handling in very narrow context -- very little ability to be flexible or to maneuver I'm not going to go into detail of our arguments The point is that we favor a political solution Yesterday she agreed with me that she would go back to Vilnius and try in the Supreme Soviet to get some formula for suspension of the laws and the declaration sher Did she agree to that Gorbache_ She did agree to try to persuade the Supreme Soviet The fact is the situation is pushing both them and us to try to do something Now we had decisions made by the Congress of Peoples Deputies that it validates her decision her declaration As President I have to approach the independence declaration as something that is null and non existent But I will make an effort to prove that the freeze will mean going back to March 11 and we can therefore go ahead and start a dialogue I will be overuruling the -20- majority of our people who want me to invoke direct Presidential rule And I told her that she too would have to make a big effort much the way I would be if we were going to get out of this impasse Now I know if they are forced to revoke or cancel their declaration that that's going to look as if Moscow brought them to their knees and that's too much for them to have to accept That's why I'm saying that I am prepared to accept the suspension that's a compromise In any case she told me she would try to go and persuade the Lithuanian Supreme Soviet if the decision is taken by the Lithuanian Supreme Soviet to suspend the declaration then we would have an immediate dialogue and the committee would begin meeting to discuss all the issues that will come up We will engage in a normal process and all of the sanctions would be cancelled immediately Sager What if they were to say that the declaration stands but it's a declaration of intent -- as the declaration of their aspirations to have independence Qg baghg_ Well that is somewhat different If they freeze the declaration then we can begin the discussion with the Center and we can begin the discussion on the entire spectrum of problems associated with implementing their right to self-determination It's possible to negotiate an acceptable outcome from a number of different points of view From the Center's standpoint I think there ought to be a referendum If they decide that they want to leave so be it But let's have the decision by referendum and then if they decide they want to leave we have to get together we'll have to work it our we have to decide how people are going to live and work There are 800 000 non Lithuanians who live in Lithuania Several days ago ethnic Poles who want their part of Lithuania to become a member of the Russian Federated Republic came and saw me They want to withdraw from Lithuania Others like the Belorussians believe that they should also get territory back that had been taken from them and given to Lithuania You know I hear frequently that if the US is so determined to rescue even one of its citizens that has been taken hostage that I too as the President has to be more active in protecting Russians especially Russians that are living in a places like Lithuania Let's look at independence it took France ten years to give Caledonia The process of divorce is not easy Our economies are intertwined We must work out new economic arrangements We have missiles there The problems go on and on We want a normal and constitutional process We have no irreconciliable differences with them If they want to leave do it the right way Be real people about it 21 You know it was new for me to find out that when Stalin incorporated the Baltics into the Soviet Union he also gave Lithuania several districts from Belorussia Baker In my testimony I mentioned that there were several districts that had formerly been part of Belorussia and are now part of Lithuania grbacheg I know I know that I saw that you said that in your testimony Stalin gave them the port You know all of this is in the air The Belorussians have come to us as a result of Chernobyl where they've had to evacuate certain areas around Gomel and they have said they need to be compensated for the land we've lost And they have passed a resolution now saying they want the land these five districts back that were given to Lithuania I told Lithuania that this is a mess that you have created What we propose to them was real economic autonomy a special status for Lithuania as a state Maybe they could have a confederal relationship with us In any case all the issues related to human rights territories security all of these would have to be removed and we are going to do our best to untie this knot baker Do you think that Prunskiene will be successful in getting the Lithuanian Supreme Soviet to go along with what you have offered grbacnez I think so there is already a Split aker Is she with Brazaukis g baghe_ Yes We appreciate your position because we know that you are trying to find a way out of the situation Please understand that we are not blood-thirsty in this situation and we want a constitutional way to resolve it In Lithuanian villages I might add they are really for staying with the Soviet Union for staying with Moscow It's in the cities where the attitude is somewhat different but in the they understand there is a certain value in staying in the Union For one thing all the villagers get their feedgrain at a very favorable price In any case I think the current Lithuanian leadership fears referendum Baker We are hopeful to see that this situation will be resolved It really does have an effect on our ability to move our relationship forward Gorbachev We understand that And we also know that we've committed ourselves to pursuing democracy and moving things forward If we were it committed in that way we would have done things differently in Lithuania I can tell you that -22- I'm under very heavy pressure in this country to act -- I am under a lot of pressure because many are saying look you have become president and you're not acting why not I've gotten all these telegrams I've got telegrams from all over the country maybe I'll show them to President Bush Because what they do is protest and say American Presidents act very quickly to protect American citizens why don't you as the Soviet President act quickly to protect Russian citizens in Lithuania So I am under a lot of pressure but I want to resolve this peacefully and I'm determined to do that End of conversation This document is from the holdings of The 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