NEWS ANALYSIS : Bush Seeks Home Market for His Diplomatic Skills : Campaign: But with hard economic times, it is a reelection strategy that could backfire with the voters.

On top of his domestic difficulties, President Bush now faces the threat that foreign policy, once the cornerstone of his reelection hopes, could turn into a major liability.

The roots of Bush’s problem go deeper than the embarrassment he suffered during his ill-fated trade mission to Tokyo. And his difficulties are far more substantive than the complaint that his preference for the pomp and grandeur of the international arena has led him to neglect pressing needs at home.

The peril confronting the Bush reelection bid springs from a transformation in the way voters look at foreign policy and what it means for presidential politics, a sea change brought about by the end of the Cold War and the longest recession since World War II.

The evaporation of the Soviet threat and the mounting toll of the recession have blunted the old GOP charge that Democrats are soft on defense and spawned rebellion within the Republican Party by rekindling isolationist tendencies in its right wing. More fundamentally, the historic changes abroad and what Bush himself calls the nation’s economic “free fall” have shifted the focus of foreign policy debate from nuclear survival to economic competitiveness.

To deal with this new environment, the President and his strategists are seeking to bring about “a transition in emphasis” in the public perception of Bush’s foreign policy skills, said Charles Black, a senior adviser to the Bush presidential campaign.

“He has done great things in presiding over the collapse of communism and the Desert Storm victory and all that,” Black says. “People give him credit for being the best diplomat and the best international leader. Now we have to connect that with the economy and pocketbook issues.

“So you sell the proposition that President Bush can use his foreign policy skills and experience to open foreign markets to U.S. goods and services and create jobs in America. Which is really what the trip to Japan was all about.”

Such accomplishments are easier to describe than to achieve, as shown by the dismal outcome of the Asia tour. And Democrats are quick to note the inherent risk in a GOP strategy of linking Bush’s foreign policy credentials to his economic policy problems.

“Instead of pulling economic policy up, they could pull foreign policy down,” says Paul Tully, the Democratic Party’s national political director.

Meanwhile, Bush is being challenged on foreign policy and trade issues by critics across the ideological spectrum.

On the right, with the menace of Communist aggression gone for the first time in the post-World War II era, some of Bush’s erstwhile allies have turned into adversaries. They are rallying around the insurgent GOP candidacy of Patrick J. Buchanan, with his “America first” battle cry and his vitriolic mocking of Bush’s old campaign promises.

“In 1988 George Bush said, ‘We’re going to create 30 million new jobs,’ ” Buchanan reminds Republicans in recession-devastated New Hampshire. “What he didn’t tell us was that they were in Guangdong province (China), Yokohama and Mexico.”

On the left, Democrats once defensive about their image as pussycats in meeting military challenges abroad are now talking tough. They accuse Bush of failing to stand up to the economic threat posed by Japan and other prosperous trading partners.

Deriding Bush for going to Japan to “beg for a few concessions,” Democratic presidential candidate Sen. Bob Kerrey of Nebraska declares in a commercial now being shown in New Hampshire: “If I’m President, the time for begging is through.”

Bush still has the resounding Gulf War victory to fall back on. “That’s a card that can be played,” says Republican pollster Linda DiVall.

But in the face of hard times at home, some of the glory of that military triumph seems to be fading. In staunchly red, white and blue Orange County, bumper stickers offer a succinct judgment on the U.S. commitment to repel Iraqi aggression with a biting question: “Saddam Still Has His Job. Do You?”

Even with the demise of the Soviet Union, the world remains a volatile place, leaving Commander-in-Chief Bush in a potentially advantageous position to again seize the foreign policy initiative.

Before Election Day, notes pollster DiVall, some crisis could erupt “that would allow the President to remind people again of his steady hand in dealing with that area.”

But such a speculative possibility can hardly serve as a substitute for a new foreign policy strategy to match the changing times.

“The end of the Soviet threat has removed a very powerful support for the Republican Party and for the President in international relations,” says University of Virginia presidential scholar James Ceaser. “Even though the President can claim some credit for what’s happening, the reality is that people are more likely to vote on the basis of what they fear than out of gratitude for what has occurred.”

And the focus of fear among voters today is economic insecurity, not nuclear holocaust, producing what amounts to a redefinition of foreign policy in the public mind.

The recession’s mounting toll, contrasted with the seeming affluence of this country’s trading rivals, notably Japan, has heightened Americans’ anxieties about

themselves and also their antagonisms toward foreigners.

“There is a very deep, emotional concern that America may be losing its preeminence in the world, and this only a few months after winning a war,” says Democratic consultant Paul Begala, who managed Pennsylvania Sen. Harris Wofford’s upset victory over Bush ally Dick Thornburgh last year.

In a poll last fall for the nonpartisan Council on Competitivness, those interviewed agreed by a 52%-39% margin that “America has fallen behind economically because we worry too much about military competition and not enough about competing economically in the world.”

Similarly, 61% agreed with the idea that the federal government should play a direct role in promoting economic competitiveness, as opposed to only 29% who thought this task should be left to the private sector--a view more in tune with Bush’s free-market tendencies.

Reflecting the shifting public priorities on foreign policy, Democratic strategists say their party’s private polling shows that most voters now view building American economic strength and dealing with trade issues as more urgent problems than military aggression or Third World upheavals.

At times, Bush has seemed to respond to these changing public attitudes and the economic realities underlying them by veering away from his free-trade principles. Last week, in a speech in Kansas City, he accused the 12-nation European Community of “hiding behind its own iron curtain of protectionism” and vowed he would not scrap American farm subsidies until the Europeans end their own broad subsidy program.

Democrats deride such efforts as half-hearted, rendered ineffective because they are out of character for Bush. “You never sound very good playing the other fellow’s harmonica,” says Democratic consultant Begala, an aide to Arkansas Gov. Bill Clinton’s presidential campaign.

Most analysts expect the President will ultimately rely on his long-held faith in the open market. “George Bush has probably gotten as protectionist as he can get and still live with himself,” says Stephen Hess, a Brookings Institution fellow and former aide in the Eisenhower and Nixon administrations.

Bush adviser Black predicts that the President will soon take the offensive with his free-market arguments, even in New Hampshire, where he is being battered by his foes in both parties on the trade aspect of foreign policy.

Pointing out that New Hampshire relies heavily on exports to sustain its economy, Black says: “You got (Iowa Sen. Tom) Harkin and Kerrey out there talking up protectionism. But there are jobs (in the state) that wouldn’t exist if you had protectionism.”

Trade and economics are only part of the case Bush’s challengers make against him on foreign policy. In strikingly similar terms, Buchanan and Clinton both attack the President for being too linked to the status quo.

“The new challenges are coming from dynamic Asian capitalism and from the socialist super state in Europe,” Buchanan says. “And while (Bush) had the reputation of being a hard-line, tough President in dealing with (Iraqi President Saddam) Hussein, the word I’m getting up here in New Hampshire is that the President hasn’t been tough enough in dealing with these new challenges.”

Clinton, in a foreign policy address last month, charged: “The President seems to favor political stability and his personal relations with foreign leaders over a coherent policy of promoting freedom, democracy and economic growth.”

Whatever the merits of these critiques, politicians on both sides agree that the course of the economy remains the key to the public’s view of Bush’s presidency.

“If the economy picks up, the President should be a strong front-runner to get reelected,” says Black. “If it doesn’t, then we’re in a very close race and we’ll have to fight hard to take advantage of the areas where people give him credit.’

And one of Bush’s challenges between now and November is to turn foreign policy into one of those assets.