Losing Ground: THE CONSERVATIVE ALLIANCE RECEDES

The imperious presence of Margaret Thatcher, no longer Britain’s prime minister, won’t be the only thing missing when President George Bush and the other “Group of Seven” leaders assemble in London for July’s economic summit. The upbeat economic confidence of the 1980s has vanished. The leaders will focus instead on this year’s scary agenda--how to avoid a trade war, a deeper global recession and the possible economic breakdown of the Soviet Union.

But a political threat will also be hanging over the economic summiteers. The great conservative tide of the 1980s is receding--with Thatcher among its first losses--and even Bush and the GOP are in more danger than they realize. Because most of the conservative G-7 leaders sitting down to discuss world affairs will be looking over their shoulders at home-front electoral jeopardies, international economic cooperation isn’t likely to continue.

It’s a truism that the tumultuous decade now unfolding may favor nationalism over internationalism. What’s less understood by diplomats--and even U.S. Presidents--preoccupied with international affairs is the potential disruption of grubby domestic politics and election calendars from London to Tokyo. This is already forcing G-7 leaders to forget togetherness and start concentrating on parochial considerations and opinion-poll results.

For Washington and the GOP White House, stakes couldn’t be higher. The war some now predict between Japan and the United States or Japan and Europe could become economic realities--or worse. Bush’s grandiose “new world order” could crumble like President Woodrow Wilson’s naive ambitions to reshape the world after World War I. Emerging continental trade blocs could cripple multilateral free-trade frameworks. The Soviet Union and Eastern Europe could emerge as proving grounds of resurgent ethnic nationalism, not revitalized free-market economics. And the life coming back into left-of-center politics worldwide could threaten the GOP--despite the Democrats’ ineptitude.

Economic collaboration will be undercut if British, French, German, Italian, Canadian, Japanese and U.S. leaders instead focus on domestic political crises and national elections. Virtually all the presidents and prime ministers due in London will confront just such a predicament.

For example, Japan’s ruling Liberal Democratic (conservative) Party will select a new leader in October, and experts expect Toshiki Kaifu, the prime minister, to be forced out. Britain’s embattled ruling Conservative Party, 10 points behind the rival Labor Party in the polls, is also in a leadership crisis. There’s growing doubt that Prime Minister John Major, Thatcher’s hapless successor, has the stature to keep his party in power in the general elections expected in spring, 1992.

In Canada, too, the governing Conservatives are in big trouble, trailing both opposition parties--the Liberals and the socialist New Democrats--in the polls. To make matters worse, the Conservative Party is itself coming unglued--supporters in western Canada have started a new “Reform Party.” Canadian Gallup polls earlier this year showed even the Reform group pulling ahead of the Conservatives.

As for Germany’s ruling conservative Christian Democrats (CDU), so far this year, they’ve lost three state elections--enabling the opposition Social Democrats to take control of the upper house of parliament. Chancellor Helmut Kohl’s popularity has dropped to the 30% range and, even though national elections aren’t required for several years, they could be forced at any time if the Free Democrats--now in coalition with the CDU--decided to organize a new government with the Social Democrats.

In volatile France--where conservatives took over the National Assembly, in 1986, and lost it again, in 1988--the possibility of an election is always present. This is also true of Italy, currently run by a multiparty coalition that includes the conservative Christian Democrats.

Bush, in fact, is the last conservative national leader in the G-7 with relatively solid domestic political fortunes. But he does not appreciate how much political economics have changed elsewhere--how different things are from just 4 years ago. Then, conservatives seemed to be taking over everywhere; editorial writers from London to Tokyo were discussing a worldwide capitalist tide. These two trends went together, and the ascendant conservative politicians knew what they shared--not just capitalist ideologies and agendas of tax reduction, deregulation and privatization, but also business and upper-bracket constituencies.

The first consequence was an aggressive, proselytizing international conservatism of a sort never seen before. In the late 1950s, to be sure, conservatives were almost as dominant--Dwight D. Eisenhower was President, Charles de Gaulle president of France, Harold MacMillan prime minister of Britain and Konrad Adenauer chancellor of West Germany. But they were all status quo conservatives, elderly leaders from the World II era. During the 1960s, most were replaced by younger liberals and socialists. The conservatives who took over in almost every G-7 country during the 1980s, by contrast, represented something far bolder--a militant commitment to free markets and tax reduction.

Consequence No. 2 was mushrooming international cooperation. Before the early 1980s, most conservatives had been suspicious of internationalism as an ideology of the left--of global bureaucrats and New York liberals who celebrated United Nations Day. But that changed during the 1980s, as international cooperation became conservative and capitalist, the stuff of shared commitments to deregulating world markets, coordinating currency values and even applying gunboat diplomacy where necessary.

Good chemistry between leaders helped. Ronald Reagan, particularly close to Thatcher, also worked well with Prime Minister Brian Mulroney of Canada and former Prime Minister Yasuhiro Nakasone of Japan. These ties helped Canada and the United States sign a free-trade agreement; Japan gave so much 1988 election help to the Reagan Administration--in stabilizing the dollar--that one economist joked that the Bank of Japan should register as a GOP political-action committee.

Now, however, just as the 1980s conservative surge nurtured G-7 political togetherness, the growing conservative reversals of the 1990s may push things apart. That’s especially true because part of rising voter unhappiness is about capitalist economics--issues like taxes, deregulation, health services and trade. To no small extent, global conservativism is in trouble because it went too far.

Regressive tax proposals, for example, played havoc with several governments. Thatcher was forced out of office by fierce negative reaction to her proposed local poll tax--designed to fall as heavily on a cleaning woman as on a duke. Canada’s Conservatives, in turn, collapsed in 1989 opinion polls for proposing a regressive 9% national sales tax right after reducing top income-tax rates.

In similar fashion, Japan’s Liberal Democrats lost control of the upper house of Parliament in 1989, after passing a regressive 3% national consumption tax while reducing income-tax rates on high earners. In Germany, Kohl lost credibility by breaking a no-tax-increase pledge--to finance the rebuilding of East Germany.

But it’s more than regressive taxes. Middle-class British voters are angry about reduced quality of public services, and the most recent Conservative defeat--in a May by-election--came after Labor made the contest a referendum on Britain’s declining national health service. In Canada, polls show a majority now opposes the free-trade agreement with the United States.

Finally, much of Europe seems to be turning against Japan on trade issues, with France’s new Socialist prime minister, Edith Cresson, accusing the Japanese of planning to wage economic war on Europe now that they’ve taken over as much as they can of the United States.

It’s fair to conclude that in many G-7 countries, politics is moving away from the 1980s emphasis on income-tax cuts and capitalist expansion and toward a renewed concern about tax fairness and better-maintained government services.

Attention is again focusing on domestic issues rather than on such abstractions as free trade and global marketplaces. As a result, several conservative governments are in trouble; others are making concessions to constituencies they would have treated cavalierly two years ago. Besides spurring economic nationalism, these trends could also reduce the other G-7 nations’ interest in international mechanisms and Bush’s new world order.

Bush may be putting too many political chips on international success. Even the Democrats, one of the more inept opposition parties in the G-7, may profit from some of the same new issues and disenchantments visible in the other major Western economic powers. Should global economic tensions worsen, or a further economic downturn strike the United States, the Republicans could find themselves in the sort of hot water now scalding conservative parties everywhere else.