CHAPTER ONE:
MAJOR WORLD
DEVELOPMENTS
IN 1980
1. General Characteristics
(1) The most salient feature of the international situation in 1980 was that U.S.-Soviet relations became severely strained and East-West relations became more unstable following the Soviet military intervention in Afghanistan at the end of 1979. The Soviet action had a major impact not only on the bilateral relations between the United States and the Soviet Union but also on many other aspects of international relations. Thus, throughout 1980, the Afghan incident characterized subsequent developments in the international situation. This trend was strengthened by the rise of tension over Poland beginning in the summer of the same year.
(2) Following the development of the Afghan problem, the United States shelved its congressional deliberations for the ratification of the SALT II Agreement and took a series of other measures towards the Soviet Union in cooperation with its Western allies. At the same time, the United States further stiffened its attitude toward the Soviet Union. In response to these strong reactions from Western countries, Moscow made a series of "peace offensives," but these Soviet moves did not bring about any basic change in the international situation. Early in 1981, Ronald Reagan, an advocate of tough policy toward the Soviets, assumed the presidency of the United States.
(3) Another important feature of the international situation in 1980 is an increased awareness of the security of the Middle East, especially the Gulf region. This recognition was heightened by such developments as the Soviet military intervention in Afghanistan, the outbreak of full-scale fighting between Iran and Iraq, and the continued chaos in the international situation of Iran. Following the Afghan incident, the United States formulated various countermeasures, including the establishment of the Rapid Deployment Force and the use of military facilities in such countries as Egypt, Somalia, Kenya and Oman. Thus the United States has expressed strong determination to ensure the security of the Gulf region.
Meanwhile, in parallel to the increase of tension in the region, the nations in the area stepped up moves to promote intra-regional cooperation. In one of these moves six nations-Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman-decided to establish a Gulf Cooperation Council at the beginning of 1981.
(4) While the Cambodian and Afghan problems remained unresolved, other destabilizing factors threatened to seriously affect the international political and economic situation. Among these factors were the intensified and protracted Iran-Iraq conflict and the deterioration of the Polish situation. None of these problems were settled during 1980.
(5) As for the international economy, the economies of advanced industrial nations which had been in a phase of expansion in the preceding year once again faced the triple problems of rising inflation, increasing unemployment and current account deficit, with the U.S. economy also falling into a recession, following the various European nations. Non-oil-producing developing countries, too, found it still more difficult to manage their economies as their terms of trade worsened and their current account deficits increased. These difficulties stemmed mainly from the second oil crisis of 1979 and after.
2. Major Trends in the International Situation
(1) Relationships Among Major Countries
(a) As a result of the Soviet military intervention in Afghanistan, which occurred toward the end of 1979, U.S.-Soviet relations, which seemed to be developing smoothly through the Carter-Brezhnev talks held in June 1979 and the signing of the SALT II Agreement, showed no signs of improvement all through 1980.
(b) Early in 1980 the United States announced a series of measures towards the Soviet Union. President Jimmy Carter said in his State of the Union Address of the same year that the Soviet invasion of Afghanistan posed a grave threat to the security of the Middle East, and revealed a strong diplomatic posture which was called the Carter Doctrine, against the Soviet Union. At the same time, the United States made efforts to act in concert with its Western allies with respect to measures against the Soviets.
In response to these moves by the United States and other Western nations, the Soviet Union, throughout 1980, played up the summit talks which General Secretary Leonid Brezhnev held separately with French President Valery Giscard d'Estaing and West German Chancellor Helmut Schmidt. The Soviet Union announced a partial withdrawal of the Soviet forces stationed in Afghanistan immediately before the sixth summit conference of major non-Communist industrial nations (the Venice Summit). Furthermore, during a visit to India in December, Brezhnev made a proposal to the United States, Japan and West European nations for non-intervention in the Persian Gulf. Thus the Soviet Union strengthened its "peace offensives" against Western nations in an attempt to alienate them from the United States. At the same time, it moved to make a fait accompli the continued stationing of Soviet troops and its intervention in Afghanistan.
(c) In the face of these Soviet "peace offensives" the United States maintained a strong posture against the Soviet Union. As for the SALT II Agreement, the Senate debate for its ratification had been shelved, so that the prospect of its being ratified was not realized in 1980. The Reagan Administration, which was inaugurated in January 1981, has adopted a strong posture toward the Soviet Union. The United States also remains cautious toward Brezhnev's proposal to hold a U.S.-Soviet summit conference, made at the 26th Soviet Communist Party Congress in February.
Meanwhile, West European nations made efforts to maintain and strengthen their relationship of alliance with the United States. At the same time, they showed a willingness to hold dialogues with the Soviet Union to maintain the detente, as Giscard d'Estaing and Schmidt indicated in their respective meetings with Brezhnev. West European nations, while harboring anxiety over the Reagan Administration's hardline Soviet policy, tried to maintain cooperative relations with the United States. European leaders such as British Prime Minister Margaret Thatcher, West German Foreign Minister Genscher, and French Foreign Minister Francois-Poncet, visited the United States in succession. These moves to strengthen the unity of the Western nations were prompted largely by the deterioration of Poland's domestic situation and related movements of Soviet and Warsaw Pact forces.
(d) China continued efforts to strengthen its cooperative relations with Japan, the United States and Western Europe. This has been one of the major objectives of China's foreign policy since 1979. It is worth noting, in particular, that exchanges in the military field were started in 1980 between the United States and China, which had normalized diplomatic relations in January 1979, with mutual visits by U.S. Secretary of Defense Harold Brown and Chinese Vice Premier Geng Biao (Chief Secretary of the Communist Party Central Military Committee; Defense Minister at present). However, statements by presidential candidate Reagan hinting at a strengthening of relations with Taiwan-statements made during the U.S. presidential campaign in the second half of 1980-irritated the Chinese. After the inauguration of the Reagan Administration China continued to closely watch the U.S. policy toward Taiwan while resisting that policy.
(e) Between China and Western Europe, efforts were made to strengthen relations in the second half of 1980, following the establishment of a new Chinese leadership under Premier Zhao Ziyang. Italian President Pertini and French President Giscard d'Estaing visited China.
(f) As for Sino-Soviet relations, the 30-year Treaty of Alliance between the two countries expired in April 1980. With the termination of that pact China and Russia entered a no-Treaty state. Negotiations were started in 1979 to improve Sino-Soviet relations, but the talks, scheduled to be resumed in the spring of 1980 in Beijing, were called off by China following the Soviet military intervention in Afghanistan. The aggravation of the Polish situation further clouded the prospects for the resumption of the negotiations.
(2) Afghanistan Problem, Southwest Asia and Neighboring Areas
(a) The Soviet Union's military intervention in Afghanistan had a major impact not only on the relations among the major nations, as stated in the foregoing, but also on various countries in the adjacent areas.
In particular, Pakistan, which directly borders on Afghanistan and has accepted a large number of Afghan refugees into its territory, made efforts for a political settlement of the Afghan problem, such as holding Foreign Ministers' Conferences of the Islamic Conference Organization twice, during 1980. It also tried to improve its relations with Western countries.
Under these circumstances the United States stepped up its diplomacy toward Pakistan, offering $400 million in aid in February 1980. The proposal, however, did not materialize. In October Pakistani President Mohammad Zia-ul Haq visited Washington. In 1981 the United States followed a more positive aid policy under the Reagan Administration.
(b) On the other hand, India, under the leadership of Prime Minister India Gandhi, who had made a political comeback by winning the general election of early 1980, made positive moves in its relations with the Soviet Union. Visits were exchanged by General Secretary Brezhnev and Indian President Reddy and by Foreign Minister Andrei Gromyko and External Affairs Minister P.V. Narasimha Rao. Furthermore, the Soviet Union agreed to supply $1.6 billion worth of weapons to India. On the Afghan problem, however, India did not express any clear-cut support for the Soviet Union and at the Conference of Foreign Ministers of Non-aligned Nations, which was held in New Delhi in February 1981 and which was noted with attention, India, the presiding nation, consistently maintained a neutral position.
Meanwhile, the United States attempted to improve relations with India by, for example, resuming the export of enriched uranium and deciding to sell arms. However, the overall relationship between the two nations did not make conspicuous progress, viewed as a whole.
(c) China, whose Foreign Minister Huang Hua visited Pakistan immediately after the arising of the Afghanistan problem, later successfully realized a visit by Pakistani President Haq to China and, by showing the willingness to support Pakistan, applied a check on the Soviet Union.
(a) The hostage problem at the U.S. Embassy in Iran, which erupted in November 1979, did not reach a final settlement in 1980. In January 1981, however, the problem was finally resolved as all of the hostages were released. In Iran, meanwhile, chaos continued throughout 1980 because no system of internal rule was established. The confrontation between the moderate faction, centering on President Abol-Hassan Bani-Sadr, and the fundamentalist group continued. And so did the internal struggle for power, including the conflict between Bani-Sadr and Prime Minister Mohammad Ali Rajaie.
Externally, Iran adopted anti-American policies, as shown by developments in the hostage crisis. At the same time, however, it maintained a cautious attitude toward the Soviet Union.
(b) The relationship between Iran and Iraq, which had been showing skirmishes in the border areas since the Iranian Revolution, developed into large-scale fighting in September 1980 between the neighboring countries against a background of the political turmoil in Iran.
Both the United States and the Soviet Union have maintained a position of neutrality and non-intervention in conflict, with their respective considerations for Iran and Iraq and by the possible consequences of their supporting one or the other party.
However, the Iran-Iraq dispute became protracted, and no clue to its settlement was found in 1980 despite mediation activities by the United Nations, Non-aligned nations and Islamic countries.
As the Iran-Iraq fighting continued, differences in position among Arab nations became apparent, with some of them giving clear support to Iran and others virtually siding with Iraq. At the same time, confrontations among Arab countries came to the surface, as shown by the strained relations between Syria and Jordan and the boycott of the Arab Summit Conference by Syria and other hard-line nations.
(c) On the Middle East peace question, diplomatic relations were established between Egypt and Israel in January 1980. However, no progress was made toward the resolution of the Palestinian autonomy problem, because of differences in the basic positions of the two nations. Thus May 26, the target date for the conclusion of the autonomy talks, passed without any new development. At the end of July the Knesset, the Israeli parliament, passed the Jerusalem Basic Law, making a unified Jerusalem the capital of Israel. Egypt, offended by the Israeli move, announced an indefinite postponement of the autonomy negotiations. In a move to break the impasse, agreement was reached in late 1980 on holding summit talks between the United States and Egypt and between the United States and Israel. These planned talks, however, did not materialize as a new administration came into being in the United States following Ronald Reagan's victory in the presidential election. The Reagan Administration made it clear, among other things, that it would maintain the so-called Camp David Accord. It is believed, however, that Washington's immediate concern is U.S. policy toward the Soviet Union in the Middle East. Although U.S. Secretary of State Alexander Haig visited the region in April, the United States is not expected to formulate new and concrete measures until after the Israeli general election scheduled for June is over.
In these circumstances, member states of the European Community (EC) have made moves to maintain the momentum for Middle East peace. These moves, referred to as "EC initiatives," included issuance of a Middle East declaration at the EC Summit Conference held in Venice in June 1980 and dispatch to the Middle East of several missions headed by the foreign minister of the EC Chairman nation.
(4) Polish Situation
(a) The sudden shift in the domestic situation in Poland, after workers' strikes, touched off by the raising of meat prices in July 1980, and the intensification of the situation surrounding Poland, resulting from Soviet reactions to this development, were watched with close attention, as a situation which could further affect East-West relations already suffered because of the Afghan problem.
(b) In Poland itself, a government-labor agreement was reached in late August as a first step toward an internal settlement. The agreement called for, among other things, the recognition of the independent Solidarity union and of the right to strike, and the easing of censorship. It was the first accord of its kind in the Soviet-East European bloc. However, the government-labor confrontation continued over ways of implementing the agreement. Meanwhile, the prestige of the party leadership declined as a result of the concessions made by the party and the government. In September, First Secretary Edward Gierek was replaced by Stanislaw Kania. The economic situation further deteriorated. For these reasons the internal turmoil in Poland increased.
(c) The repeated concessions which the Polish party and government made to labor elicited strong dissatisfaction from the Soviet Union and neighboring East European nations, such as East Germany and Czechoslovakia. In the early part of December the Soviet Union was reportedly increasing its forces along the Polish border and strengthening its surveillance setup. On December 5, a summit conference of the Warsaw Pact nations was held suddenly. The tension mounted over a possible Soviet military intervention in Poland.
(d) The mounting tension over Poland caused strong anxiety in the United States and other Western countries. The United States issued stern warnings to the Soviet Union against intervention in Poland, on several occasions. The NATO nations also made it clear in a statement issued by their Ministerial Conference held in the middle of December that Soviet intervention in Poland would have a serious effect on East-West relations and on the detente.
(5) Asian Situation
(a) The first point to be noted with respect to the Asian situation in 1980 is the way in which the Cambodian situation developed. In Cambodia, Vietnamese forces continued mopping-up operations against the Pol Pot forces. In June, Vietnamese troops crossed the Thai border at several points and mounted attacks on Thailand. At one time, tensions along the Thai-Cambodian border reached a new height. However, the military situation in Cambodia has reached a stalemate.
In the light of the protracted Cambodian problem, ASEAN nations strengthened their political unity. They made active moves at the ASEAN Foreign Ministers' Conference, the United Nations General Assembly and other forums to seek international support for a package political settlement of the Cambodian problem. ASEAN nations also held bilateral foreign ministers' talks with Vietnam, but no agreement was reached as both sides remained wide apart. Thus no clue has yet been found to the settlement of the Cambodian problem.
Relations between China and Vietnam remained tense throughout 1980, following the advance of Chinese forces into Vietnamese territory in 1979. On the other hand, the Soviet Union, under its basic policy of maintaining and strengthening friendly ties with Vietnam, continued its economic and military assistance to this country. The Soviet Union also tried to expand its presence in Indochina.
(b) The year 1980 witnessed a sharp turn of the situation in the Republic of Korea, our country's neighbor. Martial law was declared across the country following the intensification of student demonstrations. At the same time, a series of measures aimed at political and social reforms was implemented. Thus efforts were launched for the reestablishment of internal order. In August President Choi Kyu Hah resigned, and Chun Doo Hwan took office. In October a new Constitution was promulgated. President Chun was reelected in the presidential election held under the new Constitution in February 1981.
In response to these rapid developments in the situation of the ROK, North Korea suspended, on unilateral notice, the preparatory talks that began in February 1980 for a meeting of the prime ministers of the North and the South. In its relations with China and the Soviet Union, North Korea firmly maintained its policy of not leaning excessively to either of the two nations.
On the other hand, partly in reaction to the rapid succession of events in the ROK, Washington made cautious responses toward Seoul throughout 1980. However, on the occasion of the U.S.-ROK summit talks held during a visit to Washington by President Chun in February 1981, the United States confirmed its defense commitments to the ROK.
(c) China pushed ahead with domestic economic development to attain "four modernizations" in agriculture, industry, science and technology, and national defense. The country also made ideological preparations to create favorable political and social conditions for modernizations. The Cultural Revolution was negated, and the teachings of former party chairman, Mao Zedong, were critically reviewed. At the same time, efforts were made to revamp and strengthen the organization and personnel lineup, both within the party and the government, to overcome bureaucratism, and to establish a legal system.
In addition, at the Third Session of the Fifth National People's Congress held from the end of August to early September, the resignation of Premier Hua Guofeng and the assumption of the premiership by Vice Premier Zhao Ziyang were announced. Two key confidants of Deng Xiaoping joined the new leadership. One is Zhao, who is in charge of administrative affairs. The other is Hu Yaobang in command of party affairs. China is to push ahead with its modernization program under the new leadership.
3. Developments in the International Economy
(1) The second oil crisis that occurred in 1979 forced the world economy into another difficult process of adjustment in 1980, thus interrupting the recovery process that followed the first oil crisis.
European nations fell into a recession in 1979 under the impact of oil price increases (the government selling price of light-grade Saudi Arabian crude rose from $12.70 per barrel at the end of 1978 to $32 per barrel in June 1980) and of a tighter monetary policy. Then the United States also entered a period of economic recession.
The rate of inflation remained at two-digit levels in many industrial nations, for both internal and external reasons. Unemployment, particularly among younger people, became a political problem (the number of unemployed reached about 8 million in the EC, or about 7.1 percent of the labor force, at the end of 1980).
The current account balance deteriorated again, at a time when difficult problems such as slower productivity growth and fiscal deficit remained unresolved. These problems stemmed from the decline of investment, social rigidities and other difficulties in the post-oil crisis period.
In the non-oil-producing developing countries, various difficult problems also presented themselves. Economic management in these countries was made still more difficult by a combination of factors, such as the economic stagnation in industrial nations, the worsening of trade terms, the expansion of current account deficits and the increase in external debts. It is feared, moreover, that the recycling of oil dollars may not progress as smoothly as it did after the first oil crisis. The last time around, such petrodollars were recycled with relative ease through the international capital market.
(2) At the Venice Summit, held in June under these economic circumstances, the highest priority was assigned to the control of inflation. At the same time, agreement was reached on a comprehensive strategy for the 1980s incorporating the policy objective of reducing dependence on oil by breaking the link between economic growth and oil consumption and thereby strengthening the economic foundations of oil-consuming countries. Based on this agreement, governments made efforts to maintain stringent fiscal and monetary policies, promote energy policies, and implement the accords of the Tokyo Round.
(3) However, the rate of growth in world trade remained low, mainly because of the drop in the volume of oil trade and the stagnation of business activity. In addition, protectionist pressures mounted against the background of economic difficulties in some industrial nations. In particular, moves to seek voluntary export restraint by Japan came out into the open in certain industrial sectors. Meanwhile, the international monetary situation as a whole remained stable, as it did in the preceding year, although it experienced temporary changes. However, the high interest rates in the United States resulting from the Reagan Administration's policy for curbing inflation are gradually affecting commodity prices and employment in other countries. The high American interest rates have also affected the external debt position of non-oil-producing developing countries since the start of 1981.
(4) In the energy field, the international oil situation followed a softening trend in the first half of 1980. However, with the escalation of the Iran-Iraq conflict in September, oil exports from the two countries stopped completely. With winter approaching, it was feared that shortfalls might develop in the oil supplies. As a result, prices on the spot oil market rose sharply at one time. Since the turn of the year, however, the situation has stabilized thanks to increased production by some oil-producing countries, the decrease in oil consumption caused in part by economic stagnation, and the calm response of consuming countries, particularly those which belong to the International Energy Agency (IEA).
In the field of nuclear energy, the International Nuclear Fuel Cycle Evaluation (INFCE) completed its work in February, and in the future consultations and negotiations are to be continued both bilaterally and multilaterally. It was also decided at the United Nations General Assembly that a U.N. conference on the peaceful utilization of nuclear energy would be held in 1983.
(5) As regards the North-South problem, the formulation of a new International Development Strategy (new IDS) for the Third United Nations Development Decade and the start of preparations for global negotiations (GN) were two central developments in 1980. Another noteworthy development is that moves were initiated to hold a North-South summit conference attended by leaders of the North and the South. The idea was suggested in a report published by the so-called Brandt Commission in February. Another fact worth noting is that an agreement on a common fund for primary commodities was reached in June. The agreement was regarded as a significant fruit of the North-South dialogue. As for the proposed North-South summit, which is being promoted chiefly by Mexico and Austria, consultations at the foreign minister level were held in November 1980 and in March 1981. Preparations are now under way with a view to bolding the summit meeting in Mexico in October 1981.