We’ve been fortunate during these past 8 years. America is a stronger nation than it was in 1980. Morale in our Armed Forces has been restored; our resolve has been shown. Our readiness has been improved, and we are at peace. There can no longer be any doubt that peace has been made more secure through strength. And when America is stronger, the world is safer.

Most people don’t realize that after the successful restoration of our strength, the Pentagon budget has actually been reduced in real terms for each of the last 4 years. We cannot tolerate continued real reduction in defense. In light of the compelling need to reduce the deficit, however, I support a 1-year freeze in the military budget, something I proposed last fall in my flexible freeze plan. And this freeze will apply for only 1 year, and after that, increases above inflation will be required. I will not sacrifice American preparedness, and I will not compromise American strength.

I should be clear on the conditions attached to my recommendation for the coming year: The savings must be allocated to those priorities for investing in our future that I’ve spoken about tonight. This defense freeze must be a part of a comprehensive budget agreement which meets the targets spelled out in Gramm-Rudman-Hollings law without raising taxes and which incorporates reforms in the budget process.

I’ve directed the National Security Council to review our national security and defense policies and report back to me within 90 days to ensure that our capabilities and resources meet our commitments and strategies. I’m also charging the Department of Defense with the task of developing a plan to improve the defense procurement process and management of the Pentagon, one which will fully implement the Packard commission report. Many of these changes can only be made with the participation of the Congress, and so, I ask for your help. We need fewer regulations. We need less bureaucracy. We need multiyear procurement and 2-year budgeting. And frankly--and don’t take this wrong--we need less congressional micromanagement of our nation’s military policy. I detect a slight division on that question, but nevertheless-- [laughter].

Securing a more peaceful world is perhaps the most important priority I’d like to address tonight. You know, we meet at a time of extraordinary hope. Never before in this century have our values of freedom, democracy, and economic opportunity been such a powerful and intellectual force around the globe. Never before has our leadership been so crucial, because while America has its eyes on the future, the world has its eyes on America.

And it’s a time of great change in the world, and especially in the Soviet Union. Prudence and common sense dictate that we try to understand the full meaning of the change going on there, review our policies, and then proceed with caution. But I’ve personally assured General Secretary Gorbachev that at the conclusion of such a review we will be ready to move forward. We will not miss any opportunity to work for peace. The fundamental facts remain that the Soviets retain a very powerful military machine in the service of objectives which are still too often in conflict with ours. So, let us take the new openness seriously, but let’s also be realistic. And let’s always be strong.

There are some pressing issues we must address. I will vigorously pursue the Strategic Defense Initiative. The spread, and even use, of sophisticated weaponry threatens global security as never before. Chemical weapons must be banned from the face of the Earth, never to be used again. And look, this won’t be easy. Verification--extraordinarily difficult, but civilization and human decency demand that we try. And the spread of nuclear weapons must be stopped. And I’ll work to strengthen the hand of the International Atomic Energy Agency. Our diplomacy must work every day against the proliferation of nuclear weapons.

And around the globe, we must continue to be freedom’s best friend. And we must stand firm for self-determination and democracy in Central America, including in Nicaragua. It is my strongly held conviction that when people are given the chance they inevitably will choose a free press, freedom of worship, and certifiably free and fair elections.

We must strengthen the alliance of the industrial democracies, as solid a force for peace as the world has ever known. And this is an alliance forged by the power of our ideals, not the pettiness of our differences. So, let’s lift our sights to rise above fighting about beef hormones, to building a better future, to move from protectionism to progress.

I’ve asked the Secretary of State to visit Europe next week and to consult with our allies on the wide range of challenges and opportunities we face together, including East-West relations. And I look forward to meeting with our NATO partners in the near future.