CONFIDENTIAL
US wish, however, to avoid any commitment to potentially large-scale financial assistance, which we believe is not the best way to help the Soviet economy. The meeting will take place against a background of rapid political change in the Soviet Union, and a lively struggle between reformist and reactionary forces. The PUS might draw on the following lines:
Important that Gorbachev meeting with G7 leaders should be handled properly. Must avoid appearance of sending Gorbachev away empty handed, but also avoid real or apparent commitment to potentially open-ended assistance.
Believe Gorbachev understands ground rules. Wicks (UK Sherpa) saw him on 1 July. Ran over ground thoroughly.
Message of Summit/meeting must be support for early, effective economic reform, and for movement towards genuine pluralism. In this context, announcement of umbrella movement for democratic reform on 1 July is encouraging.
EC-US Dispute on Airbus
10. Bilateral negotiations over limits on support for large aircraft broke down in February this year. We have so far failed to persuade the US Administration of the dangers of proceeding with action in the GATT against general government support for Airbus and of our willingness to reach a negotiated multilateral agreement limiting support.
11. The PUS could say:
seriously concerned that dispute should not be allowed to degenerate into full blown trade war and so undermine progress in Uruguay Round;
Airbus governments had moved some way in the course of bilateral negotiations. Disappointed that they broke down;
we are concerned at hardening attitudes and we hope that both sides can show some flexibility it is in everybody's best interests to keep negotiating;
POIAAJ
CONFIDENTIAL
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