America’s recession and Russian nuclear security - 20 December 1991

Good morning. When you're writing a letter home say, it's always a bad sign if you have to fish around for a funny story or a pleasant bit of gossip to ease the pain of the bad news to come. Sitting down with the determination to pass on a little Christmas cheer, I found myself in this quandary. But lo, on Thursday morning, what do I read in a piece by a distinguished economist, making a point which I don't think has occurred to most of us, that among the industrialised nations the worst economic showing of the year has been performed by Germany and after Germany wait for it, Japan.

Where have we been all this time while Mr Kaletsky was totting up the end of term marks? Most of us who are native English speakers – that's an acceptable form to multicultural dictators – have been batting our eyelids enviously in the direction of the two giants and apologising for our own wretched recessions. Promising Mr Kohl the new headmaster of the EC comprehensive school that we mean to do better next year. But, Mr Kaletsky says almost airily in passing, that, America and Britain are recovering from recessions that clearly ended in the middle of this year.

Mr Major, Mr Bush are you listening there below? Our recessions ended last mid-summer. Mr Bush, for one, will be thrilled to hear this, he's been saying it since September but could get nobody except his own budget director to agree with him and finally this past week he agreed grumpily with the rest of us, that things were pretty awful and he allowed his press secretary to say that, quote, "The people of this country know that the economy is in trouble and it doesn't make any sense to play games". The games presumably are the ones the White House has been playing since, since last spring. The favourite being called, let's pretend in five rounds:1, there is no recession; 2, if there is a recession we shan't know when it started until several months after it ended; 3, yes there was a recession that ended last August; 4, no, it didn't end but it will soon; 5, go back to square one, there is a recession and we don't know when it will end.

Well, I was considerably bucked up by Mr Kaletsky, and his clearly ended in the middle of the year, but next morning the big story carried a shocking headline: General Motors to cut 74,000 jobs in North America. Twenty-one factories to shut over five years. I ought to say that General Motors says nothing about any cutbacks in its plants in Europe, where it has substantial operations and has regularly made a profit on its motorcars. Not so in the United States. Profitable computer and electronics services cannot offset the huge loss of $2.2 billion in motorcars in the first nine months of 1991.

Almost in the same breath, actually in the same piece, we read almost casually the similarly desperate remedies being applied by three of America's most formidable and, most of us I'm sure have always thought most triumphant industries. IBM – I did a goggle-eyed talk on their first great computer over 40 years ago. IBM, International Business Machines, says, it will lay off by the new year 20,000 workers which will make 85,000 in the past five years. Eastman Kodak – was there every such a jolly giant of industry as Kodak – will eliminate 6,000 of 80,000 employees who mean to take early retirement. And Xerox, mighty Xerox is trimming its workforce by 2,500.

The day that these melancholy figures came out the appointed grand wizard of the economy the chairman of the Federal Reserve Board, Mr Alan Greenspan who even in the worst of times wriggles his way out of plain speaking through marvellously tangled undergrowths of jargon. Mr Greenspan on Wednesday said that, consumer confidence had collapsed and that the chance of a rebound in the economy early in the year had been checked by the financial excesses of the 1980s. Now he's telling us, it's something when the chairman of the government's central bank deserts his usual incomprehensible double talk and joins the rest of us in blaming the wild times of the 1980s which at the time we looked on just as Herbert Hoover looked on the 1920s as quote, "the final triumph of the capitalist system over poverty".

Mr Greenspan made one final remark that you'd expect more from a psychologist than a banker: "the economy," he said, "had been stalled by a fundamental fear among Americans". And what was that? "Whether," he said, "the current generation will live as well as previous ones". I wonder if that's the fear of the current generation? The only glimmer of light I can see in this never-ending tunnel is the recognition by president Bush that things do look as bad as everybody outside the administration has been saying for months on end. Now maybe he will channel into domestic affairs the remarkable energies he's shown in the part of his job he loves and excels in, foreign affairs.

Maybe he'd better bend his energies inward because, it could be that America's commanding influence in European and Middle Eastern affairs is over. Mr Bush has said as much in refusing to play anything but a kibitzer's part in the Arab-Israeli talks or in influencing the political outcome of the break up of the Soviet Union and the other Communist regimes.

I believe that even Mr Bush's domestic political enemies think he's wise not to act like a retiring colonial power, in the cracking up of the European Communist empire. And by political enemies, of course, I mean mainly the Democrats but it is ironical that the enemies who will applaud most noisily and sincerely any non-interference policy are men of his own party, but the ones way over on the right who have discovered a new or rather, rediscovered an old American policy that is becoming loveable to many Americans who want to recapture the flag-waving fervour of the old isolationists or America First-ers who were very belligerently for American neutrality in the Second World War and held some of them to the end, that Roosevelt had betrayed them, probably by arranging the Japanese attack on Pearl Harbor, by taking the country into battle.

These new America First-ers – and I'm thinking of Mr Pat Buchanan and Mr David Duke – are certainly something I'd never expected to see again alive and kicking. However, if they think that George Bush has had a change of heart and mind and means to keep out of Europe and the Middle East and Asia on new- found principle, they have an early shock coming this week. He saw how beguiling the new isolationism might be to Americans who are hard pinched and he said very firmly that the United States has no intention of retiring into fortress America, even if that were possible in the nuclear age. "It will," he said, "champion democratic regimes wherever they are genuinely inspired." I think that means keeping a weather eye out for, what you might call democratic pretenders like Fidel Castro who 30 years ago came to power on the promise of an immediate democratic election which has not yet been called.

The United States still regards Western Europe as the frontline of the allies' defence, and so far as the break-up of the Communist countries, the US –while saying that the emerging political forms are their business – the US will do everything by way of humanitarian help to prevent the anarchy and civil war, which Secretary Baker has talked about this week as a prevailing fear, especially in what's left of the Soviet Union.

Mention of Mr Baker, brings up one other fear which it requires no banker, psychologist or politician to isolate and define. It is I should guess on the minds of more Americans today than any other foreign topic or rather, at the back of their minds – they're frightened to bring it up front. And it is the fear of nuclear weapons on the loose.

I believe Secretary Baker was the first Western statesman to bring this up months ago, since when it's been a preoccupation of a job that takes in so many issues as practically to forbid preoccupations. However, he went off first to Korea to see and to be alarmed by the nuclear potential of North Korea and this came on the heels of the discovery by that dogged United Nations team, of the still shockingly promising nuclear resources of Saddam Hussein. Now we have 27,000 nuclear warheads scattered through three new nations, Russia, Ukraine, Kazakhstan. The control of these forces is, we are told, at present in the hands of Russians which must have led Mr Yeltsin to give Mr Baker such a warm reassurance that a central control will be maintained, will it. Who says his government is the new permanent Russian government?

The really chilling thought, which I don't recommend at bedtime, is not only that some powerful leaders in each new republic may demand control of their own nuclear forces, but that any one of them, or disaffected Russian and other high military officers, might take over or at least trade these widespread nuclear resources by way of mines, artillery, missiles, bombs, for large and necessary cash to ambitious dictators in the Middle East to go no farther.

Well this is one heck of a Christmas letter isn't it. But, just now I cannot pretend looking out from America to have warm and cheerful feelings about the world of politics. They, the feelings must be reserved for friends and such members of the family you like, this week would be a good time to be grateful for them, for the friends and likeable relations that is, enjoy them, and have a happy time without straining for it.

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