BUSH IN EUROPE : Economic Summit Likely to Focus on Environment

It is billed as the 15th annual economic summit of the leaders of the seven largest industrial democracies, but this year’s session, on Saturday and Sunday, is likely to focus more on environmental issues than the economy.

Although there are plenty of international economic problems for the leaders to grapple with, President Bush and the leaders of the six other nations lack both the money and the political will to do much about them. So for the record, they are saying the global economy is doing well and does not need any tinkering.

“The truth of the matter is that economic conditions around the world are very, very good, taking the broad view over time,” U.S. Treasury Secretary Nicholas F. Brady asserted last week. “You don’t want to change the throttle settings right now.”

Instead, this will be the Year of the Environment--or, at least the year of talking about environmental issues--according to the advance billing that officials of the seven participating countries have provided over the last few weeks.

William K. Reilly, administrator of the Environmental Protection Agency, told reporters last week that “there is even something of a race . . . by some of the economic summit participants to be . . . the greenest of all.”

An advance draft of the communique that the leaders are expected to issue at the summit’s end Sunday declares that “decisive action is urgently needed to understand and protect the Earth’s ecological balance.”

With Bush eager to be seen as the “environmental President,” U.S. officials say they want the Paris summit to “lay the groundwork” for further action at next year’s economic summit, which will be held in the United States.

“It is time that a summit address our natural heritage, and let Paris then be known as the summit which accepted the environmental challenge,” Bush said in a news conference before he left Washington for Poland and Hungary late last week.

“This is basically an agenda-setting summit,” said Robert D. Hormats, a former State Department economic strategist and now vice chairman of Goldman Sachs International, a New York investment banking house.

France’s Third

The summit rotates every year, with each country--the United States, Japan, West Germany, Britain, France, Italy and Canada--taking its turn as host. The current session will be the third in France, and it is timed to coincide with today’s celebration of the 200th anniversary of the French Revolution.

As a result, Paris is under a double strain: the tight security imposed to help protect the seven heads of government, which has closed off much of the center of the city, and today’s anniversary gala, which is attracting throngs.

The summit sessions will be held at the top of a stark, arch-shaped modern building called the Arche de la Defense, a pet project of President Francois Mitterrand, situated about two miles northwest of the Arc de Triomphe. Still not finished, it was filled with workers late Wednesday.

The conference room itself, on the 35th floor, contains the customary oversized round granite-and-wood table built to accommodate the seven heads of government, their foreign ministers and their finance ministers, the only persons allowed inside the closed-door sessions.

Top Issues

In this setting, the summit leaders will discuss a range of environmental issues:

-- Global warming. Leaders of all seven summit countries are under new pressure from their constituents to take steps to reduce emissions of carbon dioxide, which scientists now blame for the so-called greenhouse effect, the gradual warming of the atmosphere.

-- Third World deforestation. The industrial countries worry that the disappearance of the rain forests is depriving the global environment of oxygen-producing trees and increasing the concentration of carbon dioxide around the globe.

-- The ozone layer. The seven leaders will seek to reinforce an accord reached at a Montreal conference in 1987 to help stem the depletion of the ozone layer in the stratosphere, which is being eaten away by chlorofluorocarbons, such as those that are used in spray cans.

-- International problems. The leaders will be groping for ways to heighten international cooperation in dealing with pollution problems such as ocean dumping that transcend national boundaries. In the wake of the Exxon Valdez oil spill in Alaska, they also may reinvigorate earlier efforts to improve technology.

How far the seven heads of government will go, however, remains uncertain.

Several European countries, notably West Germany and France, have proposed the creation of a new international organization that would be empowered to require countries to adopt specific regulations designed to help blunt the global warming trend, mainly by limiting the use of fossil fuels.

Last month, West German Chancellor Helmut Kohl sent a letter to President Bush calling for a worldwide convention to discuss long-term climatic trends, leading to “internationally binding obligations for limiting carbon dioxide emissions.”

But officials concede that the summit most likely will not produce any sweeping new agreements to regulate fuel consumption or emissions. Both the United States and Britain are adamantly opposed to creating any new international regulatory agency and will not participate in one.

Instead, the seven leaders are likely to call mainly for stepped-up monitoring of the situation and, possibly, for a new international conference later this year to discuss proposals to eliminate chlorofluorocarbons by the end of the century. Bush grudgingly endorsed that plan earlier this year.

For all the emphasis on the environment, the leaders will not ignore economic issues entirely. They are expected to discuss topics such as the continuing global trade imbalances; the Third World debt situation; the threat of renewed inflation; the new, more aggressive U.S. trade policy; international aid for Poland and Hungary; a more liberal restructuring of Poland’s debt, and a coordinating mechanism to channel the aid to the two Eastern European countries.

Although few decisions are expected, the summit is unlikely to be free of friction on economic issues. The United States is expected to lock horns with Europe and Japan over how much more the industrial nations should do to reduce the current global trade imbalances--America’s trade deficit and the others’ corresponding surpluses.

Washington wants its two major trading partners to bolster demand at home so that their consumers and businesses will buy more U.S. exports.

But the others are reluctant to do so for fear of aggravating inflation, which is already accelerating at home. They urge the United States to trim back its federal budget deficit, which would leave more of the nation’s savings available to finance the business investment that is needed to boost production capacity and spur productivity.

Bush also may run into some embarrassment over the Treasury Department’s new Third World debt strategy, which has yet to show any concrete results after 3 1/2 months in operation. The scheme has been dubbed the Brady plan after the U.S. treasury secretary, who is its author.

The Treasury had hoped to be able to tout a debt-reduction accord between Mexico and commercial banks as a symbol of the Brady plan’s success, but despite months of negotiations the two sides still are only edging toward an agreement in principle. (On Thursday, the United States said it is prepared to provide Mexico with a temporary “bridge” loan after talks are completed. Story in Business, Page 1.)

Mitterrand, never shy about trying to upstage the United States, invited leaders of about 30 Third World countries to an eve-of-summit dinner Thursday to discuss the debt situation, with the aim of calling for a world conference on the debt issue later this year.

Although Mitterrand is not expected to succeed, the summit’s endorsement of the Brady debt-reduction plan is considered likely to be tepid. Many critics fear that the strategy will not be able to provide enough relief to ease economic and political tensions in Latin America.

And despite the roller-coaster ups and downs of the dollar so far this year, the seven are unlikely to do anything to tighten the international exchange-rate system. Although France has been pushing for stricter limits on currency movements, the United States and others oppose any such move.

Times staff writer Douglas Jehl in Washington contributed to this article.

THE OTHER KEY PLAYERS Third World debt and environmental issues will probably top the agenda as President Bush meets with leaders of the six other major industrialized nations and the leader of the European Community. EUROPEAN COMMUNITY Jacques Delors President of Commission of 12-nation EC since 1984. Former French foreign minister. Effort to rid Europe of most barriers by 1992 has helped transform a backwater post into a powerful pulpit from which to promote European unity. Age 63. Married with one son, one daughter. Salary: $137,700. BRITAIN Margaret Thatcher In her third term, she is the longest-serving prime minister this century. First elected in May, 1979. Expected to back Bush’s plan to coordinate efforts to aid Hungary and Poland. Age 63. Married with one son, one daughter. Salary: Could earn $105,265, but elects to draw the same salary as Cabinet ministers--$86,214. CANADA Brian Mulroney Elected prime minister in September, 1984. Former business executive. Has stressed environmental issues. Will work to achieve a summit accord on common standards for measuring environmental damage. Age 50. Married with three sons, one daughter. Salary: $128,856. FRANCE Francois Mitterrand President since 1981. Will press his summit partners to take a tough stand on China’s use of troops and tanks to crush the student-led revolt. Also will push for action on global debt and the environment. Age 72. Married with two sons. Salary: $74,207. ITALY Ciriaco De Mita Caretaker prime minister. Heads Christian Democratic Party. Became prime minister in 1988 but resigned two months ago after a bitter split with his Socialist coalition partners. Not expected to play forceful role in summit. Age 61. Salary: $133,020. JAPAN Sosuke Uno Took over as prime minister last month in wake of Recruit scandal. He has been under fire since reports of his relationship with a geisha surfaced. Will pledge $35 billion for Third World countries and propose plan to protect environment. Age 66. Married with two daughters. Salary: $197,979. WEST GERMANY Helmut Kohl Elected chancellor in 1983; reelected in 1987. Expected--along with Britain--to give short shrift to plan to ease Third World debt burden, believing the taxpayer will end up bailing out international banks under the plan. Age 59. Married with two sons, one daughter. Salary: $154,550.